Govt not panicking over chicken supply shortage

ONE wonders why when there is a national issue like the current shortage of chickens, some opposition politicians are still having a confrontational stance against whatever solutions the government has.

According to the Statistics Department, Malaysia is growing more dependent on imported food products and is running a trade deficit in the area.

The import dependency ratio (IDR) – the percentage of a country’s dependency on imports of food products to meet domestic needs – is on the rise.

A higher IDR means more supply of food products will be imported. The IDR of the country as a whole rose to 13.7% in 2015, up from 7.4% in 1987.

Against this backdrop, it is indeed a blessing Malaysia is considered self-sufficient in poultry meat, producing some 98.2% of its domestic needs.

But the Achilles heel is that the poultry farming industry is highly reliant on imported chicken feed. Almost all of the grain needed to make chicken feed is imported from the Americas in US dollars and is vulnerable to currency fluctuations.

And fertilisers, which are needed to grow grains, are also experiencing an increase in price. This has resulted in a hefty increase in the prices of grain, making it costly for poultry farmers, who were already suffering from the weakening ringgit.

The Federation of Livestock Farmers’ Associations of Malaysia (FLFAM) said supply of animal feed was disrupted due to adverse weather conditions in supplier countries, which the governments there attributed to climate change.

The Agriculture and Food Industries Ministry estimated grain corn prices have gone up from RM500 per tonne to RM1,900 per tonne.

The Domestic Trade and Consumer Affairs Ministry said the sharp increase in the cost of corn and soybean feed resulted in a 70% hike in poultry farming costs.

Since the beginning of the year the cost of wheat has risen by more than 60%. In the 2021-2022 season that began in July last year, Russian suppliers accounted for 16% of global wheat exports, and Ukrainian producers accounted for 10%.

But due to the conflict, both countries banned wheat exports. Anti-Russia sanctions forced international companies to sever long-standing business ties and leave Russia, which caused supply disruptions.

The situation was also exacerbated after Kazakhstan, another major grain supplier, largely banned exports to protect its domestic food supplies.

Early last week, wheat prices reportedly soared by further 6% shortly after India prohibited all exports of the vital food commodity with immediate effect because of an alarming heatwave.

The above backdrop is essential in order to understand the issue of the shortage of chickens in Malaysia.

Aside from the problem of chicken feed import, FLFAM also said the heatwave currently affecting Malaysia had hampered chicken growth.

“The situation makes the chickens eat less, have no appetite, get tired quickly and drink a lot of water,” FLFAM adviser Jeffrey Ng said.

This means the chicks are growing at a slower rate, so poultry producers cannot supply at the same rate. It has also prompted some chicken factories to shut down temporarily while waiting for the chicken to grow to the size needed.

It was reported that a factory in Jasin, Malacca, closed temporarily to wait for the chicken to grow from 1.1kg each to 1.8kg, as demanded by the market.

All the factors elucidated above have contributed to a higher chicken price since last year, culminating in recent weeks in a shortage of chickens in the country.

It is as if a significant number of the supply of chickens has disappeared from the market, affecting the business of restaurants and eateries specialising in chicken.

Also affected are regular consumers, wet market chicken sellers and supermarkets. Even fast food outlets are feeling the pinch.

In other words, it has become a national crisis.    

There is an adage if you want to come up with solutions. You must first know, understand and grasp succinctly what the problems are. Putting it differently, another adage says knowing the problems is already half the solution.

The government went into overdrive, which shows it has a sense of urgency by bringing forward its regular Wednesday cabinet meeting to tomorrow just to devote time to find a solution to the crisis.

The root problem with the current shortage of chickens lie in firstly, the higher price, which then culminates in the shortage of chickens.

Higher price of chickens translates into higher cost of living, affecting the lower income group the most. Poultry meat as well as chicken and duck eggs are particularly important food as they are the most consumed animal products in Malaysia and are a key source of protein.

Malaysians consumed 47.4kg of poultry meat and 20.7kg of chicken and duck eggs per person in 2020, compared to other meat like beef (5.7kg per person), mutton (1.3kg) and pork (17.5kg).

The price of chickens went on a drastic rise last year – from RM7 per kg in July to more than RM10 per kg before the Malaysian Family Maximum Price Scheme (SHMKM) was implemented on December 7, 2021 to February 4.

By early January, the implementation of SHMKM brought down the maximum retail price of chicken to RM9.10 per kg from a high of more than RM10 per kg.

But in some places it was observed that the lower ceiling price was accompanied by a shortage of chickens in the market, although it is not as acute now.

Some analysts say this is because the lower ceiling price has made it unprofitable for some poultry farmers to continue operating. The most important thing, they say, is for the government to realise there is a global inflation. Just let the market determine the price.

Other analysts contended if the government wants to set a ceiling price, it has to be reasonable. It can’t be to the point that poultry farmers lose money and go out of business.

In recognising poultry farmers are also members of the Keluarga Malaysia, the government, in mitigating their hardship, has further reduced  the ceiling price of chickens by a reasonable 20 sen to RM8.90 per kg from February 5 to June 4, this time with a subsidy for chicken feed for farmers at a tune of 60 sen per kg, totalling some RM729 million. 

So the criticism on lower ceiling price for chickens especially from opposition politicians is really uncalled for. Yes it would distort the market and the economy, but to begin with, the economy is already distorted by the pandemic, climate change and the war in Ukraine.

While the pandemic, climate change and the war have all brought negative impacts, there is a silver lining in the lower ceiling price, bringing down the price of chickens from a high of more than RM10 per kg to RM8.90 per kg.

The rakyat at large, including owners of restaurants and eateries specialising in chicken, as well as ordinary street hawkers offering such menus, benefit from this price stabilisation.

And the impact of this distortion on the poultry farmers has been mitigated with a hefty subsidy on chicken feed.

If ever there is a justified criticism, it is so far only RM50 million in subsidy had been paid out from the total RM729 million.

But the government is rectifying this by pledging to send out more officers to the states to speed up the payments to boost chicken production. 

On threats by a cartel planning to close poultry farms last weekend over unpaid subsidies, Prime Minister Ismail Sabri Yaakob said the ministry had been directed to expedite payment.

“I have received a report that certain procedures have resulted in late payments and I want this to be looked into.

“The ministry said it was still waiting for farmers to submit their claims. I call on farmers to put in their claims so payments can be made,” he added.

This reduced ceiling price has an expiry date on June 4, which means it’s a short-term measure to stabilise price, and not worth the effort to make it an issue.

Domestic Trade and Consumer Affairs Minister Alexander Nanta Linggi has already said the government was still considering whether to continue the SHMKM, which expires on June 4.

He also has hit out at DAP for “politicising” the government’s decision to ban the export of chickens and cancelling the approved permits (APs) for importing certain food products, following a shortage in supply.

These measures, he added, was based on complaints by the public over the shortage in the supply of foodstuff, including chicken.

“We are prioritising the people. If DAP says (that we rushed through our decision), then when is the right time (to impose chicken export ban and cancelling APs)?” he asked, adding that the public had responded positively to the export ban, contrary to claims by the poultry industry. – May 29, 2022.

* Jamari Mohtar is the editor of Let’s Talk!, an e-newsletter on current affairs.

* 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.

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