MALAYSIA’S shortage in chicken can be resolved by the recently imposed export ban, industry experts said.

However, they said this is only a temporary measure as the exports only account for 5% of all chicken produced.

Mydin hypermarket managing director Ameer Ali Mydin said the suspension of chicken exports will help bolster local supply.

He said exports should resume after a month to increase foreign exchange earnings.

According to the Statistics Department, poultry farmers produce 98.2% of the country’s chicken supply.

Skyrocketing feed prices have, however, led to a shortage of chicken as farmers resort to producing less.

This saw the government announcing a halt to the export of 3.6 million chickens per month starting June 1 while subsidies to farmers will stop from July 1.

The RM8.90 per kg ceiling price was put in place in February and will end on June 30.

Ameer said the removal of the ceiling price come July 1 will see prices of standard chicken go up to RM11.90 to RM12.90 per kg.

With the cancellation of the ceiling price, Ameer hopes that the government will also remove the cooking oil subsidy and pivot towards targeted subsidy, which will help the B40 group.

“There are two issues with subsidies. First, we help the wrong people, such as the T20 and M40 groups,” he said.

“Then, there are leakages in the economy because subsidies could lead to smuggling, which also benefits the wrong people.”

A temporary solution

Lau Ka Keng, a member of the Johor small- and medium-sized poultry farmers’ association, said the exports only account for 5% of all chicken produced while Malaysia needs 60 million chickens monthly.

The ban is only a temporary solution, he said.

In announcing the ban, Prime Minister Ismail Sabri Yaakob said the government was disappointed with the action of certain chicken producers who had affected the price and supply of chicken.

He said since February 5, the ceiling price for standard chicken had been fixed at RM8.90 per kg and the government had allocated RM729.43 million in subsidies.

To date, RM50 million worth of subsidies has been paid out, mostly to small companies.

Ismail said the government is aware of claims of cartels controlling the price and supply of chicken among big companies.

Poultry is raised in Malaysia through a system known as integrated contract farming, whereby small farmers raise chickens for processors, millers or integrators.

In return for rearing the chickens, the integrators provide farmers with chicks, feed, vaccines and healthcare.

Once the chicks are fully grown, the chickens and eggs would be bought by the large players.

Lau said Johor accounts for 28% of Malaysia’s supply but 75% of the farms in the state have fewer than 100,000 chickens.

Most of these chickens belong to the integrators and the number raised is determined by the contact.

Therefore, Lau said, farmers should not be blamed for the shortage.

Integrators are also losing money

Integrators who spoke to The Malaysian Insight anonymously said they lost RM30 million during the Covid-19 pandemic period.

Demand during the period came down, therefore, the number of chicks raised was also reduced, they said.

“We didn’t reduce production, but the opening of the economy means we couldn’t keep up with the demand.

“Chickens have to be raised for 40 days before they are sent to the market. But now, this has been slashed to 35 days.

“If chickens sold used to weigh 2.2kg before, now they are 600g lighter as they are being processed earlier.”

The weather and feed quality are also affecting output, they said.

“The economy opened in April and there was a sudden surge in demand.

“We didn’t have time to adjust the number of chicks being reared, so now we are being accused of reducing supply.

“We couldn’t stockpile chicks without any demand (during the pandemic) as we will be unable to maintain our cash flow.” – June 7, 2022.