A FEW recent news headlines attracted my attention. “Ministry’s audit finds leakages in delivery of cooking oil subsidy”, “Price controls for eggs remain, subsidies for chicken to be lifted from Nov 1”, “Integrated poultry and eggs producer nearly doubles earnings in 3Q 2023”, and “PM has high trust in civil service”.

The first highlighted leakages and misappropriation and a full audit done to determine the effectiveness and weaknesses of the subsidy. About RM500 million was allocated for the cooking oil subsidy, and price hikes could drive it to RM1.9 billion by year’s end.

The audit is set to be completed in January and we trust the findings will be made public.

The second is self-explanatory and egg producers and other stakeholders have given their assurance they will make an effort to ensure adequate supply of eggs.

The third reported that a company with higher revenue backed by higher selling prices and sales volume earnings for the third quarter of 2023. The easing of feed input costs, particularly corn and soybean meal, provided relief to the industry. Cumulatively, for the nine-month period, profit after tax and minority interests saw an increase of more than 70%.

A point to note is the United States Department of Agriculture’s oilseed and grain June reports showed soybean prices trended downwards in May due to favourable crops. For corn, prices slid to the lowest level in three years since August.

And the subsidies continued.

The fourth is also self-explanatory.

In June, news reports said the government would float chicken and egg prices from July 1 after removing subsidies at the end of the month. However, subsidies remained as the government was concerned people were facing financial difficulties due to rising costs.

A special December 30, 2022, Statistics Department report showed on average that the production cost of broiler chicken in Malaysia was RM6.53 per kg and the profit margin of chicken at the wholesale and retail levels were RM1.30 per kg and RM1.25 per kg, at a retail price of RM9.08 per kg. The average production cost of an egg was RM0.48 while the profit margins were RM0.04 for wholesale and RM0.02 for retail, at a retail price of RM0.54.

The government paid subsidies of between RM0.60 and RM1.40 per kg of chicken from February to October 2022, and between RM0.03 and RM0.08 per egg during the same period.

Local producers (more than 2,000) in Peninsular Malaysia said the “best way forward” was to float the price. Producers would scale down to respond or retool their operations if they did not receive enough subsidies to sustain themselves and had to operate at a loss.

If the float mechanism results in lower demand due to higher prices and supply/stock increased, how would the producers act then – ask for incentives and subsidy again from the government?

High feed input cost was the favourite excuse for price hikes. Higher electricity bills, labour shortage and increase in minimum wages have also been used to justify cost increases.

In business, there are always risks and one cannot expect to make profits all the time.

A subsidiary of the company in the third report, in August 2022, received a Notice of Proposed Decision issued by the Malaysia Competition Commission (MyCC) pursuant to section 36 of the Competition Act 2010 on the allegation it had engaged in agreements and/or concerted practices to fix the quantum of poultry feed price. In October 2022, it received an Amended and Supplementary Proposed Decision.

There were four other companies investigated and given 30 days to respond to the MyCC’s allegations and faced hefty fines if convicted.

In March, the MyCC said a decision on “chicken cartel” firms was set for the third quarter, but in November, it said it would decide by year-end.

Why is the MyCC dragging its feet?

Why did the government decide to maintain subsidies after July 1 when reports showed soybean and corn prices trended downwards since May?

Since February 2022, the government incurred RM3.8 billion for egg and chicken subsidies or it’s not worth the effort to act swiftly? This is not in line with the aspirations of the Madani government and we could have used the money for other welfare initiatives.

The subsidy was intended to last for four months as a stopgap measure.

The government assured it would conduct regular monitoring of chicken prices from farms to retail outlets and I trust this was not just lip service.

We should move away from overreliance on imported feed and look for alternatives such as palm oil kernels or high-quality, low-protein diet technology.

How much have big producers spent on research and development and the use of the latest technology to reduce production costs, besides product development?

Are production design and processes efficient and reliable?

Last year, the National Farmers Organization and Malaysia National Cooperative Movement targeted 170 million annual chicken production, but what is the progress now?

Civil servants should be well-prepared for negotiations with proper attention to detail, especially people in the Finance Ministry, since we may be spending billions unnecessarily.

Monitor stakeholders that have given their assurance to ensure an adequate supply of eggs in the future.

How about the high trust in the civil service, can they be depended upon? I trust the secretaries-general of all ministries can be more proactive and play a more important role to carry out Madani initiatives.

I trust leakages would be properly plugged, not arbitrarily siphoned to the wrong parties.

I would also suggest reviewing functions between the Agriculture and Food Security Ministry and the Domestic Trade and Cost of Living Ministry to give more focus on current issues, and for one minister to be held accountable.

By the way, let’s have some urgency to appoint someone to the domestic trade and cost of living minister post, which has been vacant for over four months. – December 3, 2023.

* Saleh Mohammed reads The Malaysian Insight.

* This is the opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insight. Article may be edited for brevity and clarity.