Alleged Cartels, Price Caps and Animal Feed: How M’sia’s ‘Self-Sufficient’ Chicken Industry Was Brought to Its Knees – Mothership.SG

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On June 1, 2022, chicken exports from Malaysia will come to an abrupt halt, cutting off Singapore by around a third of its poultry supply.

The reason? As neighboring Prime Minister Ismail Sabri Yaakob revealed on May 23, Malaysia is currently experiencing a nationwide shortage of chickens.

Already in Singapore we are seeing the ramifications of the impending suspension.

Chickens are flying off supermarket shelves, while chicken rice prices are set to rise, according to reports from Bloomberg and The time of the straits.

Some chicken rice stalls will even have to close temporarily.

So what’s behind the shortage in Malaysia?

Chicken feed is expensive

According malaysiankini, our neighbors are in fact almost entirely self-sufficient in chickens; Malaysia produces 98.2% of its poultry needs.

Yet its poultry industry relies heavily on imported chicken feed, which is derived from grain purchased largely from Brazil and Argentina.

S&P Global reported in February this year that weather conditions in both countries had led to significant reductions in crop yields, leading to higher grain prices for the first half of 2022.

Against a backdrop of a weakening ringgit, this meant that chicken farmers in Malaysia faced an ever-increasing cost of their operations.

The Malaysian Ministry of Agriculture and Food Industries, said malaysiankiniestimated that grain maize prices increased from RM500 (S$156.22) per tonne to RM1,900 (S$593.63) per tonne in some cases, an increase of 280%.

While the government has responded to soaring chicken feed prices with subsidies, Malaysian farmers said delays in its distribution and the continued downward trend in ringgits have made the situation worse.

Ultimately, this means that chickens now on a leaner diet are not growing at the same rate, resulting in a lag in supply.

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Chicken cartels exacerbating the problem?

When announcing the export halt, Ismail Sabri said his government was aware of reports of chicken cartels controlling poultry prices and production, the report wrote. malaysian mail.

He added that the Malaysian Competition Commission was investigating the veracity of the reports.

“If it turns out there is a cartel, the government will take legal action against them,” he said.

The investigation followed a series of reports from malaysia claiming that a group of poultry industry cartels were planning to close farms on May 21 and 22 in protest at the government’s delay in providing subsidies.

Cartels, if they exist, are deemed controlling almost the entire poultry industry in Malaysia, influencing market prices.

There is no doubt that such supply cuts are felt almost immediately in the market.

“I used to get 1,000 fresh chickens sent to me a day, but that has been reduced to between 400 and 500,” said a chicken vendor at a wet market in Klang, speaking to The new time of the straits.

“I think they are deliberately holding stock now,” he added, without direct reference to a cartel.

Price cap hits hard

When supply is short and demand remains, market forces generally dictate that prices will rise – unless a higher power intervenes.

Malaysia already had price controls on standard feed – chickens included – before Ismail Sabri announced he would temporarily lower the price cap for chickens by RM0.20 (S$0.06) to 8.90 RM (S$2.78) per kg.

“Proactive measures are needed to ensure that the price of chicken remains affordable while at the same time the poultry industry will not be affected and supply remains stable,” he said in a statement. a press release on January 31 according to The star.

The lower cap was to last from February 5 to June 5, but the government recently announced that it was considering a extension of the control measure.

The price cap, while attempting to help consumers, further complicates the matter when considering the rising costs of chicken production explored above.

If producers cannot raise the price of chickens in line with chicken feed costs, profit margins will inevitably suffer.

For farms already struggling to make ends meet, such a development could spell disaster.

Unless of course you can export your chickens to a country where such a price cap does not exist.

“Exporting helps keep farms going as government price cap at RM8.90 (S$2.78) keeps chicken prices low, but chicken feed costs continue to rise month by month,” Caleb Rajah Selvarajah, a farmer from Johor, told CNA.

Additionally, earning Singapore dollars from exports, with its relative strength against the ringgit, would help maintain the viability of Caleb Rajah’s business.

However, if current conditions continue – the export ban, lower price caps and high feed costs – a closure to stem losses may make more sense for small farms.

Fewer farms ultimately means fewer chickens.

Can Singapore overcome the chicken shortage?

With disruption expected here in Singapore, Minister of State for Sustainable Development and Environment Desmond Tan said on May 26 that the country would have an adequate supply of chickens.

“A third of our chicken imports come from Malaysia, and almost all of them are live chickens that are slaughtered and chilled in Singapore,” Tan wrote on Facebook.

“However, rest assured that our supply of the remaining 70% of frozen chicken from other countries has not been affected.”

Tan also urged Singaporeans not to hoard chickens and buy them “responsibly”.

“We can also play our part by only buying what we need. I encourage everyone to be open to other options such as frozen chicken, processed chicken like canned chicken and chicken nuggets. chicken, and other types of protein.”

The SFA is monitoring the situation closely.

The Singapore Food Agency (SFA) released its own statement saying it was monitoring the situation closely and working with importers to minimize disruption.

“For example, they will activate their supply chains to increase imports of chilled chicken from alternative sources, increase imports of frozen chicken from existing non-Malaysian suppliers or draw on their poultry stocks,” reads a statement. agency statement.

Meanwhile, local supplier Kee Song has pledged to increase chicken production before Malaysia halts the export of chickens on June 1.

In a TikTok Video published on Wednesday May 25, the company said it would process “as much fresh chicken during this time to ensure there is more stock available before the ban takes effect.”

The video was accompanied by the caption: “Don’t worry, we work very hard to provide the best while we can.”

Top image of Arisa Chattasa

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