[COLUMNIST] Food security is not for everyone under the present system

KUALA LUMPUR: In recent weeks, there have been a lot of discussions on the topic of food security. The two factors most commonly mentioned are the inflationary situation facing many countries and the Ukraine-Russian war.

The former is causing prices of almost everything to go up. The latter is because Ukraine and Russia are the world's leading suppliers of grains and fertilizers.

For example, Ukraine's wheat production accounts for 11.5% of the world market, while Russia's share is 16.8%. Any fall in wheat production in these two countries will undoubtedly reduce the world supply.

Some countries have worsened the situation by banning exports of certain agricultural commodities. Examples include Argentina, which bans exports of soybean meal and oil; India, which bans exports of wheat; Iran, which denies exports of potatoes; Egypt, which bans exports of vegetable oil, maize, and other foods; Tunisia, which bans exports of fruits; Russia which bans exports of sugar, sunflower seeds, and wheat; and our own country which bans exports of chickens. So it is not a surprise that everyone is talking about food security.

But what is the concept of food security? The United Nations' Committee on World Food Security defines food security as all people, at all times, having physical, social, and economic access to sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life.

Based on that definition, in reality, a situation of food insecurity has long existed in our country. The reason is that many people do not earn enough income to afford to buy sufficient, safe, and nutritious food that meets their food preferences and dietary needs for an active and healthy life.

As we know, the Malaysian government has implemented the minimum wage of RM1,500 effective on May 1, 2022. In other words, before this date, many employers were paying wages that were way below that.

But in reality, even a monthly salary of RM1,500 is simply insufficient to support a family living in the Klang Valley.

The typical monthly rental rate of a small medium-cost apartment is RM1,000. If the family has only one income earner, only RM500 is left to pay for everything else, such as transport, clothing, fees, books, and utilities.

After spending all that, it is highly likely there will not be enough money left to buy food for the family which is sufficient, safe, and nutritious enough to ensure the family members can lead an active and healthy life.

Some employers complain they cannot afford to pay their employees the minimum wage. But should we blame the employers for the above situation?

For example, the CEO of Mydin said that the minimum wage of RM1500 will cause the company's total wage bill to go up by RM25 million a year. Apparently, all this while Mydin was paying many of its workers wages below that level.

The CEO also stated that the wage increase would lead to increased costs for businesses, which will lead to a rise in the price of goods, implying that Mydin will probably need to increase the prices of goods it sells in its hypermarkets. He also suggested that in the end, society would suffer collectively from the move to raise the minimum wage.

The question is, why is it challenging for employers to increase the wage levels of their employees? The answer lies in their debt burden, which forced them to try to cut costs as much as possible, especially wage costs.

For example, in the case of Mydin, its total liabilities at the end of the financial year 2019 were RM1.29 billion. It suffered a loss in 2020. The recent COVID-19 pandemic will make it extremely difficult for the company to increase revenues to pare down its liabilities.

But Mydin's story is not an exception. Many other companies face substantial debt burdens that will not allow them to quickly increase their profits unless a drastic reduction in costs, including wages, is done.

One way out of the problem will be to reduce the number of workers. However, if companies resort to that move, which many did during the height of the COVID-19 pandemic and MCO rules, then the plight of the workers will worsen. They will have no income to pay for their expenditures, including food for their families.

Furthermore, the debt burden that arises in society is directly from the operation of the banking system that supplies the debt.

Most people don’t realize that every time a bank gives out a loan, the bank is creating new money from thin air. The larger the loan, the more new money is created by the bank. The result is that the purchasing power of money will decline if the banking industry continues to grow.

The growth of the banking industry is the main factor why 30 years ago we only needed RM3 for lunch at a restaurant, compared to the RM8 or RM10 required now.

The subsequent implication is that as long as the banking industry continues to grow, the minimum wage required by employees will sooner or later have to be raised to RM3,000 a month in the next few years. Among workers, more and more will need two or three jobs to earn enough income to support their families.

In conclusion, the issue of food security has long been around for the poor segments in our society. At some universities, there were stories of students being able to afford only one meal a day which they take in the afternoon. However, all this while their plights have been ignored.

The solution is not as simple as asking people to plant vegetables in their gardens. The answer is to revamp our debt-based economic system so that the phenomenon of the rich getting richer while the poor are getting poorer can be ended for good.

---

* Prof Mohd Nazari Ismail is an Honorary Professor at the Faculty of Business and Economics in University of Malaya.

** The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the position of Astro AWANI.