PRICE TRANSMISSION IN MALAYSIA’S AGRIFOOD SECTOR: CURRENT EVIDENCE, METHODOLOGICAL TRENDS AND RESEARCH GAPS
DOI:
https://doi.org/10.55197/qjssh.v7si4.1637Keywords:
price transmission, asymmetric price transmission, agrifood markets, food security, MalaysiaAbstract
Food prices, rising import dependencies, and improved food security have become major concerns worldwide and at the national level; therefore, a clear understanding of price transmission is essential for supporting, developing the market, and providing insight to policymakers. This study examines the current data, methodologies, and gaps related to research on price transmission in the agrifood sector of Malaysia. Using a narrative literature review approach, the study integrates the results of empirical research on price transmission in vertical and horizontal settings. However, many studies also reveal asymmetric price transmission, where price increases are communicated more quickly and completely than decreases in costs. This indicates the presence of market inefficiencies, unequal bargaining power, adjustment rigidities, and the influence of a dominant middleman in the supply chain. In addition, external factors such as exchange rates, global food prices, and import dependency increasingly affect domestic food prices. Methodologically, the literature demonstrates the use of nonlinear econometric approaches, such as Threshold Autoregressive (TAR), Error Correction Model (ECM), Autoregressive Distributed Lag (ARDL), and Nonlinear ARDL (NARDL) models to evaluate asymmetric market behaviour. The results of this study indicate differences in expenses at different levels of the agrifood supply chain, with some degree of temporal connection across the supply chain. Nonetheless, research in Malaysia’s agrifood sector remains fragmented and limited to selected commodities and methodological diversity. Therefore, broader empirical research is needed to strengthen evidence-based agricultural policies and improve market efficiency as well as food security in Malaysia.
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