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System Dynamics Modelling and Simulation of the Malaysian Rice Value Chain: Effects of the Removal of Price Controls and an Import Monopoly on Rice Prices and Self‐sufficiency Levels in Malaysia
Author(s) -
Chung Bonhee
Publication year - 2017
Publication title -
systems research and behavioral science
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.371
H-Index - 45
eISSN - 1099-1743
pISSN - 1092-7026
DOI - 10.1002/sres.2477
Subject(s) - monopoly , value (mathematics) , economics , business , agricultural economics , microeconomics , industrial organization , mathematics , statistics
A system dynamics model is developed to describe the dynamic structure of and decision‐making processes occurring along the Malaysian rice value chain; then, the impacts of removing price controls and an import monopoly on rice prices and self‐sufficiency levels (SSLs) in Malaysia are examined. The simulation results show that removing price controls would lead to sharp increases in rice prices but that Malaysia could, in turn, achieve 100% self‐sufficiency. Terminating the import monopoly would stabilize rice prices, but Malaysia cannot achieve self‐sufficiency. There are two alternative policies that Malaysia could pursue to reduce the trade‐off between rice prices and SSL. Although irrigation development would stabilize rice prices, it would place heavy financial burdens on Malaysia. Therefore, Malaysia should explore the feasibility of paddy importation strategies, which could not only increase rice outputs, stabilize prices and achieve 100% SSL but also create more business opportunities and jobs in Malaysia's rural areas. Copyright © 2017 John Wiley & Sons, Ltd.