EGG producers have had to mortgage their assets to maintain their operations and pay off debts, farmers said.

They said this was because while production costs continue to rise, the ceiling price set by the government is too low for producers to turn a profit.

Federation of Livestock Farmers Associations of Malaysia deputy president Lee Yoon Yeau said producers are losing money monthly.

Malaysians consume 27 million to 28 million eggs a day, with grades A, B and C accounting for 90% of their consumption, while Omega eggs only accounts for 10%, Lee said.

While it only takes 30 days to raise chicken, it takes seven months to produce eggs, which is compounded by the high daily volume, he said.

A small farm can produce up to 300,000 eggs a day, a medium sized one can produce between 500,000 and 800,000 eggs a day while large farms can produce three to four million eggs daily.

Since July 1, the government has fixed the ceiling price for Grade A chicken eggs at 45 sen each, Grade B (43 sen) and Grade C (41 sen).

Lee said feed such as corn and soybean cost 80% more but eggs are being sold below market price while producers only get a three sen subsidy.

If this situation continues, smaller producers will be driven out of business, he said.

“Small farms don’t invest much in technology nor do they have huge debts, so they can close down anytime,” Lee said.

“Large farms which are run by cooperatives can still go on, but small and medium sized farms cannot.”

“Even for medium sized farms, unless someone buys over their business, they can’t afford to close down due to debts.”

The biggest problem for farmers now is capital flow, Lee said.

“For each egg we produce, we lose six sen. If we produce three million eggs, that is a loss of RM180,000 per day, or RM2 million a month and RM50 million a year. How much do we have to make to balance these losses?,” Lee asked.

Since the Covid-19 pandemic, Lee said suppliers only accept cash transactions, at the same time, the subsidy payout by the government has been delayed by two months.

On top of that, producers have to find cash flow, repay debts, pay salaries, overheads and the bank, Lee said.

This situation is made worse by the fact that banks are hesitant to provide loans as the industry is considered unstable, he said.

“The only way we are able to continue doing business is by asking suppliers to extend repayment dates. In the worst case scenario, we will have to mortgage and sell our assets to cash out.”

“The government keeps asking us the same question, ‘where we are getting money to lose in the first place’, they don’t realise that we have been selling our assets.”

Most farms have been in operation for 20 to 30 years, so they rely on old capital, land or other assets to keep their business afloat.

“Even if we want to sell the business now, we must first clear our debts, especially those who have borrowed heavily to invest in technology.”

Lee said the government should consider removing the price control or increase the subsidy to help producers.

“The ceiling price has been in place for too long, our business is no longer profitable. This is serious and can bring down the industry.”

At the moment, most farms have reduced their output due to cash flow problems, he said.

Grocery store supply unaffected

Hong Chee Meng, president of the Federation of Sundry Goods Merchants Associations of Malaysia said supply in Johor, Taiping and Perak is stable.

He said demand will, however, increase this week due to the school holidays, as many will travel and eat out.

Chaang, an egg wholesaler said one tray of 30 eggs cost RM11 while Grade AA eggs cost RM15 per tray. His profit stands at 5% to 8%.

“Demand for eggs in sundry stores is small as it is only regular customers in the neighbourhood that purchase eggs, so supply is not affected. It is different in supermarkets and hypermarkets,” he said.

Lai Yee Kein, president of the Malaysian Bakery, Biscuit, Confectionery, Mee and Kuey Teow Merchants Association said manufacturers have not hiked up their prices in light of the egg shortage.

However, if the prices of eggs go up, Lai said it will affect the cost of manufacturing cakes, bread and noodles.

Mydin Ameer Ali Mydin, managing director of supermarket chain Mydin said there is only a 30% supply of eggs in the market.

“I’ve mentioned the shortage many times but the authorities don’t appear to be addressing the problem,” he said.

“Eggs are the cheapest source of protein, without it, poor families will suffer.” – September 8, 2022.