Malaysia’s paddy and rice sector is one of the most assisted and subsidized industries within the country, which has severe implications on the cost of rice production as well as the productivity of the industry. The government is faced with a challenging sectorial objective to balance between national food security, farmer welfare and low consumer prices. With the paddy sector’s stagnating productivity growth and the subsidy programs presenting an ever-increasing fiscal burden, there is a call to review and recalibrate how we approach these challenges.

In 2018, IDEAS conducted a research study of 125 interviews with paddy farmers from two major granary areas, MADA and IADABLS, to explore the efficacy of subsidies in Malaysia’s paddy sector in improving farmers’ welfare. Additional data were collected through focus group discussions with farmers and institutional officers to cross-reference the data collected. This Policy Ideas presents the findings of the study and the impact that agricultural subsidies have on farmers’ yield, income, cost and behavior.