Malaysia permits chicken imports but prices increase further
To address the supply shortage and stabilise the price of chicken the Malaysian government will continue to issue import permits for frozen whole chicken despite the subsidies given to poultry farmers.
Malaysia’s deputy agriculture and food industries minister, Ahmad Hamzah: “We do not recommend that producers stop or reduce chicken imports because in the long run it will be detrimental […] The companies involved have also signed a long-term agreement and they cannot simply stop the supply.”
Free Malaysia Today reported that in February, to ease the burden of farmers following the increase in costs, especially for feed, the Cabinet agreed to provide subsidies for chicken and eggs to poultry farmers until 4 June under the Keluarga Malaysia Maximum Price Control Scheme (SHMKM). During this time, farmers will receive a subsidy of 60 sen (US$0.14) per kg for live chickens and whole chickens, and 5 sen (US$0.012) per egg from all categories.
This 4-month subsidy is expected to cost the government RM528.5 million (US$126 million), reports The Edge Malaysia Weekly.
Additional imports will add to the country’s growing food import bill which, according to the Department of Statistics Malaysia, rose by 10% from 2016 to RM51.4 billion (US$12.3 billion) in 2021.
Subsidies not a solution for poultry industry
Poultry players say there are more questions than answers following the announcement of this subsidy scheme. They urge that it is better in the longer term for market forces to determine prices while economists urge Malaysia to explore viable local alternatives to imported animal feed, which has shot up by 30% since October 2021, reports The Edge Malaysia Weekly.
Confusion over chicken farmgate prices
“There is also some confusion on the farmgate prices of broilers. According to the Ministry of Agriculture and Food Industries, this will be at RM5.90 (US$1.41) per kg. However, the price set by the Ministry of Domestic Trade and Consumer Affairs is RM5.60 (US$1.34) per kg, so there is some confusion here,” said Ng, adding that the rise in prices of commodities is at a record high right now and that the subsidy is inadequate, especially for smaller-sized poultry farms.
“It will definitely help the industry if the price control is removed — more than subsidies,” Ng added.
Russia and Ukraine conflict expected to furth exacerbate costs
Several traders and breeders’ associations are anticipating a further price hike of poultry due to the conflict between Russia and Ukraine, reports Malaysia’s New Straits Times.
The Federation of Livestock Farmers’ Associations of Malaysia advisor, Datuk Jeffrey Ng, said price increases are expected because the main ingredients used to produce chicken feed – namely corn, soybean and palm oil – have soared since Russia’s attack on Ukraine.
Ng has urged the government to increase the selling price of chicken from farms and said chicken rearers will eventually incur losses, adding that subsidies amounting to more than RM500 million (US$119 million) to the rearers was based on previous operating costs.
“If the matter cannot be resolved, Malaysia is at risk of a chicken supply shortage crisis,” he warned.
Malaysia’s poultry sector
The production of poultry meat in Malaysia fell 3% to 1.6 million tonnes in 2020 compared with 1.65 million tonnes in 2019, while production of eggs increased 22% to 825,876 tonnes in 2020 against 675,959 tonnes in 2019.
