Malaysia will announce two programs next month to increase food supplies to maintain reasonable and stable prices, Agriculture Minister Mustapa Mohamed said on Thursday. Like its Asian neighbors, Malaysia is battling inflation and food security concerns amid worries the prospect of rising prices could prompt hoarding and social unrest. “To maintain reasonable and stable prices, I will be announcing in June, two programs to ensure food supply in the country,” Mustapa told a conference, without elaborating. Malaysia this week bought 200,000 tons of Thai rice and is in talks to secure another 300,000 tons, a Thai official said on Tuesday, amid a global rush to lock in supplies for the dwindling food staple. Food prices pose a risk to a government already struggling to bolster its flagging popularity, and could push the economy into an environment of rising prices and slowing growth. The government said this week it expected to spend at least 725 million ringgit ($225.9 million) to subsidize 500,000 tons of imported rice and maintain affordable retail prices of the grain. Malaysia's rice imports are likely to jump almost a third to 900,000 tons this year, as the nation steps up efforts to boost reserves and rein in inflation to stave off social unrest. Global prices of staple foods have risen more than 40 percent in the last year, causing shortages, hoarding and riots in some developing countries. “Normally we import 700,000 tons a year,” Mustapa told reporters. “We have signed a deal to buy 200,000 tons more to boost our stockpile.” Malaysia, which meets nearly 70 percent of its rice demand from domestic production, is studying a proposal to increase land under paddy cultivation. The country grows rice on some 680,000 hectares (1.68 million acres) and plans to increase acreage in its eastern states of Sabah and Sarawak on Borneo island and in the northeastern state of Terengganu. “We expect no less than an additional 100,000 hectares,” Mustapa said. Rice prices have soared this year, and with world stocks at their lowest since the early 1980s, governments and importers have scrambled to boost production and stock up amid fears of shortages. But US July rice futures dropped more than 4 percent in Asian trade on Thursday, after falling overnight on easing worries over global supplies. US rice prices have been falling all week, with the July contract down 9 percent from Friday's close, after the US Department of Agriculture forecast a record world rice crop for 2008. Malaysia, the world's second-largest palm oil producer, is unlikely to replace plantations with rice farms since it was more profitable to produce edible oil, Mustapa said. “Looking at the economics of it, it does not appear to be viable, the minister said, adding that aerial views of Sabah revealed areas completely swathed in oil palm. “For the moment it is not necessary to remove oil palm and replace it with rice.” Malaysia, which grows oil palm on 75 percent of its agricultural land, or more than 4 million hectares, has been benefiting from surging global vegetable oil prices, which have more than doubled since 2007. Rising food prices pose a risk to the Malaysian government, which is struggling to bolster its flagging popularity after surprise national elections in March denied the ruling coalition a two-thirds majority in parliament for the first time in 40 years. Rising food costs also threaten to swell a ballooning subsidy bill, which is expected to hit 50 billion ringgit ($15.32 billion) this year as fuel and food prices soar. The government will spend at least 725 million ringgit to subsidze 500,000 tons of imported rice.
