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Malaysian Government Plans to Remove Price Controls on Chicken and Eggs to BoostMarket Efficiency

July 15, 2023

Ryan Gun Kim

KUALA LUMPUR - In a move to balance supply and demand and promote market efficiency, the Malaysian government has announced plans to remove price controls on chicken and eggs. The decision has been hailed as the "best way forward" by local farmers and industry experts.

Malaysia is currently grappling with a severe chicken shortage, leading to a significant drop in supply and soaring prices. The poultry sector holds a dominant position in Malaysia's livestock industry, providing over 80 % of the country's total meat needs. The shortage is attributed to a combination of factors, including labor shortages, rising costs of chicken feed, and poultry diseases. These challenges have affected farmers' ability to rear chickens and maintain production levels.

One local farmer In Malaysia, a man named Daing Mohd Haidir, has experienced a significant decrease in chicken production, from 90,000 broilers per breeding cycle to 60,000. This decline is attributed to the shortage of labor caused by the pandemic, as well as the increase in the minimum wage, making it difficult to afford new foreign workers. Moreover, many farmers currently face losses due to diseases and unpredictable weather conditions affecting chicken health and growth.

Agriculture and food security minister, Mohamad Sabu, confirmed that the prices of eggs and chicken in the market will be floated from July 1. Government subsidies for these items will end after June 30, with the domestic trade and cost of living ministry assuming control over price regulation.

"To ensure the supply of chicken and eggs in the market is stable after the subsidies end, the ministry will implement several soft-landing mechanisms," stated Mohamad. These mechanisms include lifting the ban on exporting day-old chicks, whole chickens, and chicken parts from July 1. Additionally, the import of eggs and chicken from recognized source countries will be allowed. Source countries for chicken imports include Thailand, China, Brazil, and Denmark, while eggs will only be imported from Thailand and Ukraine.

The ministry has also taken steps to stockpile whole chicken under the Farmers' Organization Authority, with 63% of the target of 2,177 tonnes of whole chickens already stored as of May 7. These measures are part of the government's efforts to ensure a smooth transition as the market adjusts to the new pricing system.

Mohamad addressed concerns raised by Mas Ermieyati Samsudin (PN-Masjid Tanah) about the effects of this policy change. He assured the government had conducted a comprehensive study on the matter, considering the potential implications and necessary safeguards. The decision to remove price controls follows the government's earlier plan to float the price of eggs and chicken after June. It was estimated that subsidizing chicken eggs until June would have cost the government around RM1.28 billion.

Currently, the retail price ceiling for a standard chicken is RM9.40 per kilogram, while the prices for eggs are as follows in the peninsula: Grade A (45 sen per egg), Grade B (43 sen per egg), and Grade C (41 sen per egg). Different maximum prices for both items apply in Langkawi, Sabah, Sarawak, and Labuan, varying according to the respective zones and districts. Moreover, Mohamad highlighted that Malaysia had imported food worth RM347.4 billion over the past six years, with RM75.5 billion imported in the previous year alone. China emerged as the main source country for food imports, contributing RM41.3 billion during the six-year period. Other significant source countries include Argentina (RM32 billion), Thailand (RM29.5 billion), India (RM26.6 billion), and Australia (RM22.5 billion).

The move to remove price controls aligns with the government's broader objective of fostering a free market economy and promoting economic efficiency. While there are expectations of increased supply and potentially lower prices, it is essential to consider factors such as rising production costs, including chicken feed prices, electricity bills, and salaries.

The removal of price controls on chicken and eggs holds significant importance for Malaysia, where these food items are considered necessities in the daily diet of the population. Chicken, in particular, is a staple protein source for Malaysians, and eggs are widely consumed for their affordability and nutritional value. With the government's decision to float the prices of these essential commodities, it is expected that the market will become more responsive to supply and demand dynamics. This move aims to ensure a fair and competitive marketplace that benefits both consumers and producers, fostering a sustainable and efficient chicken and egg industry in Malaysia.

Disclaimer: This news article is based on statements made by industry experts and government officials. The views and opinions expressed in this article do not necessarily reflect those of the publisher.

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