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Measuring the impact of import liberalization on market prices for selected livestock products in Malaysia

Aimi Athirah,A.*, Roslina,A., Nik Rozana,N.M.M., and Rozita, M.Y.

Economic and Social Science Research Centre, Malaysian Agricultural Research and Development Institute, 43400 Serdang, Selangor, Malaysia

Malaysian J. Anim. Sci. 2019 22(1): 55-64

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Malaysia has moved towards import liberalization for selected agricultural primary products since 2016. Ruminant livestock products are among the country?s major concerns due to their relatively lower rate of self-sufficiency. Since the livestock sub-sector has encouraged value added agricultural based industry, liberalizing import quotas for livestock could expand both of the domestic and export markets as well as for economic growth. For many years, beef and lamb/mutton indicated increasing consumption trends while stagnating and even declining in domestic production. As a result, these products from local producers were short in supply in the market. This situation would negatively affect market equilibrium thus, saddling consumers with incredibly high market prices. This study aimed to analyze the factors affecting market prices of beef, lamb, and mutton in Malaysia. Monthly data which included import quota (import price) and market price, and exchange rate from 2016-2017 were analyzed using quantitative analysis. A Mann-Kendall trend test was initially employed to measure the trend and magnitude of the market prices. The results showed that market prices significantly (p<0.05) increased for beef and lamb/mutton with magnitudes of RM 0.20/kg and RM 0.04/kg, respectively. A multivariate regression analysis revealed that exchange rates and import prices significantly (p<0.1) influenced market prices of beef and lamb/mutton, respectively. As Malaysia relies highly on imported meat products to meet the shortfall in domestic production, a market diversification for imported livestock products could be a policy strategy to protect both the industry players and consumers. Perhaps, a tremendous increasing trend of global demand in the last two decades has surged the world prices of meat products, thus reflected in the livestock industry in Malaysia.