CHICKEN farmers contracted to supply poultry production companies say the government’s 60 sen subsidy per kg of chicken only benefits the big players and not small farmers like them.

Those who spoke to The Malaysian Insight said the system, known as integrated contract farming, requires them to split the 60 sen subsidy with the company that provides the small farmers with feed and vaccines.

What’s more, these are provided to the chicken breeders on credit and deducted from their dues after the chickens are sold.

A chicken farmer, 42, who only wanted to be known as Mashitah, said she does not like the system but has to go with it as it gives her more security.

The poultry production company has better market access than a small breeder like her would, she said, and refused to provide her full name to avoid any consequences from the company she is contracted with.

“Many farmers like me feel it is unfair that part of our subsidy is shared with large companies. They are public listed companies that make huge profits.

“Their costs are passed on to us in the form of loans, or debts for us, which are cleared when they deduct our sale of chickens to them,” she said.

The inputs that the poultry producers cover upfront include chicks, feed, vaccines and the service of veterinarians.

Farmers like Mashitah, meanwhile, bear the cost of farm operations and labour.

Mashitah said she used to farm chickens independently but opted for the contract system two years ago when she could no longer cope with price hikes for chicken feed.

The 60 sen subsidy enables the government to fix the ceiling price of standard chicken at RM8.90 per kg under the current price control scheme effective February 5 to June 5.

However, a chicken shortage has been brewing since early this month, as millions celebrated Hari Raya Aidilfitri after two years of subdued festivities under movement restrictions due to the Covid-19 pandemic.

Besides the surge in demand, chicken supply has also been affected by the higher cost of feed and other inputs due to the Russia-Ukraine war, which began in February. Farmers also say that the price of feed as a whole had been on the rise even before that.

Last weekend, the shortage was felt in several markets in the Klang Valley and Seremban. At the same time, a poultry processing plant in Jasin, Malacca, closed as the chickens supplied to it had not reached the desired weight.

Various news reports, meanwhile, attributed the shortage in chicken to delays in the subsidy reaching farmers.

Troublesome process to qualify for subsidy

Prime Minister Ismail Sabri Yaakob in a statement to address the chicken supply shortage earlier this week said the 60 sen subsidy is costing the government RM729.43 million in total.

However, he said only RM50 million has been paid, but did not elaborate on the reason.

Amid complaints about subsidy delays, the Agriculture and Food Industry Ministry (Mafi) said in a separate statement that it would expedite the payment of subsidies to farmers and also simplify the application process.

However, Mashitah said the reality is that many farmers who applied were rejected for incomplete documentation and for not meeting eligibility requirements.

“They gave us very strict conditions such as having to possess invoices for our chickens, feed and other items, but most of these small farmers are older people who aren’t good with paperwork and have no one to help them. They find it difficult to comply with these rules.

“And a new condition was just imposed, which is to open an account with AgroBank, when this was not required before,” Mashitah said.

Reduced profits for small farmers

Another chicken farmer, Rizalman Ismail, did not like the integrated contract farming system either as it reduced his profits.

He said most smallholders felt they had little choice but to continue with this system as it assured them of continued income.

“It is a safer market. We don’t have to worry about finding someone to buy our chickens.

“The system has its good and bad points, such as when the price of chicken fell during the Covid-19 movement control orders to RM3 or RM4 per kg, we were not impacted as the companies bought from us at RM5.90.

“But right now, especially with the higher price of feed, which increases twice a month, the company still buys from us according to the price in the contract, at RM5.90.

“The cost of feed has gone up, but their purchase price has not increased. If we follow the margin, we lose out,” Rizalman said.

Mohd Hamizan Zakaria, 26, said he knows of independent farmers who decided to stop work and close their farms, or to switch to the contract system.

“With feed prices up, I spend RM180,000 for the 20,000 chickens that I have. That’s not to mention other costs such as vaccines and labour.

“That is why many farmers have closed their farms. And many are also switching to a contract system like mine even though it is not profitable,” he said.

The young chicken farmer said he feels that sharing the 60 sen subsidy with big companies is unfair.

“The problem of chicken supply will continue, even with subsidies, as long as the government doesn’t look at it from the farmers’ point of view,” he said. – May 26, 2022.