Malaysia like other developing countries influenced significantly from high food prices because its food products imports are greater than exports. Therefore, this study by applying a computable general equilibrium (CGE) model attempts to analyze the effects of the rise in agricultural commodity prices on Malaysian poverty across 9 household groups, namely Malay, Chinese, Indian, Other in both rural and urban areas plus a noncitizen household. The findings suggest that an increase in agricultural commodity prices stimulates the investment in agricultural sectors, and leads to a reallocation of resource within the economy. Although the shock initially increases the poverty level for rural Chinese, rural Indian, urban Chinese and urban Indian households, it would significantly decrease the poverty level of rural Malay, rural Other, urban Malay, urban Other and noncitizen households.
