Chicken-Eggs shortage: A feeding matter

Malaysia currently has a shortage in the chicken and egg supply section, which if not addressed quickly, can escalate into a serious quagmire.

The shortage has been going on for the past few weeks with little solution in sight.

What is really going on? How will the government solve the matter?

An age old industry

Before dissecting the woes faced by the sector, it is best that the industry is thoroughly inspected.

The chicken and egg industry is dominated by about 150 livestock farmers, of which some are public listed firms.

It is a closely monitored industry by the government as chicken and eggs are a socio-economically sensitive industry to Malaysians.

Almost all Malaysians from all layers of society consume chicken and eggs.

Thus the food items are among the many food types controlled by the government to curb excessive profiteering.

Simply put, livestock farmers cannot sell their chickens and eggs at exorbitant prices set by their whims and fancy.

All traders of the trade must abide with the price control as stipulated under the Price Control Anti-Profiteering Act 2011.

Rising chicken feed prices at the heart of the matter

The main reason why there is a shortage in chicken and egg supply is due to the rising cost of production.

Klang-based wholesaler Mohd Zamzuri Ahmad said chicken feed prices which are mostly imported have risen more than 50 per cent for the past few months.

"Corn prices have spiked up more than 50 per cent in Argentina and Brazil and has equaled the cost of production. The ringgit has also weakened against the US dollar and the chicken broilers have no choice but to fork more ringgit to buy imported chicken feed which is priced in the US dollar," Zamzuri told Sinar Daily.

As a result, raw material prices have become costlier thus squeezing profit margins of the livestock farmers.

Who benefits? The chicken and supply crunch has definitely benefitted a few parties.

These include companies such as QL Resources and Leong Hup whose share prices have spiked up in recent weeks.

But again with the price control of chicken and eggs from Feb 5 to June 5 this year, the potential gains might be restricted coupled with the rising cost of production.

What should be done to mitigate the situation? As a temporary measure, the government has alleviated the chicken supply shortage by allowing imports.

Universiti Putra Malaysia Putra Business School senior lecturer Associate Professor Dr Ahmed Razman Abdul Latiff said the import permits, however, is just a stop gap measure.

"It is a tricky situation for the government as they have yet to address the crux of the matter which is the increase in chicken feed prices.

"For now, the government should subsidize the chicken feed as a short term measure until a long term solution can be found," Razman told Sinar Daily.

He added import permits can be problematic if the price of import is higher than the ceiling price or if it takes time to deliver them to the market.

An alternative to corn? There was research done by the Malaysian Palm Oil Board to replace chickenfeed with palm oil-based chicken feed.

Maybe the industry should consider this idea more seriously to reduce dependency on pricey imported corn-based chicken feed.

Restructure the industry

The age old chicken and egg industry have been around for decades.

The industry can be seen as "cartel like" and is swarming with middlemen.

These middlemen are the ones who mark up the prices beyond reasonable prices.

It is time to do away with the middleman system and supply directly to retailers or wholesalers and eventually to customers.

Government must hold its ground It is true that the situation is dire but the government must strive to the best of its ability to look after the welfare of the people.

The government must not know tow to the bullying tactics of some from the livestock industry whom are hoarding the supply of chicken and eggs.

But at the same time, the government must play its role to balance the delicate needs of the people while taking care on the needs of the livestock industry at the same time.

The government, however, must act fast as Ramadan and Hari Raya Aidildilfitri is approaching in two months time.

The Federation of Livestock Farmers Association deputy president Lee Yean Yeau told the media over the weekend that the country faces a shortage of 90 million eggs by Ramadan if the situation persists. If that is the case, then the government must do all it can to alleviate the crisis.

Otherwise, Malaysians for just this year, may have to give their favourite ayam rendang dish a miss during the celebrations and temporarily eat something else for breakfast other than roti canai telur.