PETALING JAYA: The rise in chicken prices since the start of Ramadan has ruffled the feathers of many consumers, forcing the authorities to intervene.
Chicken is the most widely consumed meat in the country, with the average Malaysian eating an average of 50.9kg of poultry a year. Any rise in prices is therefore always an issue.
It was reported recently that the price of chicken had rocketed from RM7.50 per kg to between RM9 and RM10 per kg.
FMT takes a look at the factors affecting poultry prices and explores what can be done to address the issue.
According to a poultry farmer who declined to be named, the main factor affecting chicken prices is the cost of production.
The main ingredients in chicken feed are corn, soya bean meal, and crude palm oil (CPO). The prices of these have been going up.
In recent months, the farmer said, the prices of imported corn had increased by 41.5%, imported soya bean meal by 57.6% and CPO by 43.3%.
“People often ask why we don’t feed chickens with cheaper food like palm kernel cakes. It boils down to nutrition as corn and soya bean meal offer the best nutrition.
“Lower quality feed affects the growth of the chickens. This means it will take longer for the chicken to reach a size and weight suitable for sale.”
Another major cost for producers is labour, and this has been affected by the return of foreign workers to their home countries and farmers’ inability to get replacements.
“With fewer workers, existing ones have to put in overtime. Thus, our costs will increase.”
He said the amended Workers’ Minimum Standards of Housing and Amenities Act had also contributed to the rise in costs since farmers now had to invest in accommodation for their employees. Housing facilities have to be outside the farms, he said, adding that this meant additional costs for transportation.
The Price Control and Anti-Profiteering Act allows the government to control prices to protect consumers against unreasonable increases in prices of goods and services.
The festive season price-control scheme caps the prices of essential goods like chicken during six festivals, namely Hari Raya Aidilfitri, Chinese New Year, Deepavali, Christmas, Kaamatan and Gawai.
Economist Carmelo Ferlito told FMT price controls were “dangerous” as they could push producers to cut down on production if costs were higher than the selling price.
“Allowing market forces to determine prices is still the most efficient way to control prices because when prices rise, it sends a signal to producers to increase supply, and this then leads to prices dropping.”
Ferlito, who heads the Center for Market Education (CME), said the country could look to increasing its import of chickens so as to increase supply and reduce prices.
T Saravanan, chief operating officer of the Federation of Malaysian Consumers Associations (Fomca), said the government could issue more permits for the import of chickens.
He said this could help reduce prices, especially when demand was high and supply limited.
Former prime minister Najib Razak said the government should raise the windfall tax by 3% to 5% as it would not have a big impact on the profits of palm oil producers in Malaysia.
“The revenue from the windfall tax can be used to subsidise chicken feed to lower chicken prices again as long as commodity prices remain high,” he said.
The farmer who spoke to FMT said this did not mean that prices would drop as costs were increasing not just in Malaysia but around the world.
“These days, we pay higher prices for everything,” he said. “We pay more for a cup of coffee and a jar of peanut butter. So why should chicken be any different?
“We simply cannot run away from higher costs. People expect their wages to increase. That is an increased cost for employers.”
What those in power say about chicken prices
Domestic trade and consumer affairs minister Alexander Nanta Linggi: “Our enforcement teams will be present at public places to monitor the situation. This is to protect consumers from excessive profiteering by unethical traders during the festive season.
“If the wholesalers and poultry breeders are trying to take advantage of the situation by hiking up the price of chicken, we can offer APs (approved permits) to interested companies. I believe this problem can be solved by issuing more APs to import chicken.”
Agriculture and food industries minister Ronald Kiandee: “We don’t produce enough corn to use as animal feed. If it is imported, we can’t control the price.”