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May 2022 Vol 2 No 19

Your Editor, Jamari Mohtar, is wondering why when there is a national issue like the current shortage of chickens in the country, some opposition politicians are still having a confrontational stance against whatever solutions the government has.

  • According to the Statistics Department, Malaysia is growing more dependent on imported food products and is running a trade deficit in the area.
  • The import dependency ratio (IDR) – the percentage of a country’s dependency on imports of food products to meet domestic needs – is on the rise.
  • A higher IDR means more supply of food products is to be imported. The IDR of the country as a whole rose to 13.7% in 2015, up from 7.4% in 1987.
  • Against this backdrop, it is indeed a blessing Malaysia is considered self-sufficient in poultry meat, producing some 98.2% of its domestic needs.
  • But the Achilles heel lies in that the poultry farming industry is highly reliant on imported chicken feed. Almost all of the grain needed to make chicken feed is imported from the Americas in US dollars and is vulnerable to currency fluctuations.
  • This animal feed is made from grain corn and soybean, among others, and Malaysia imports approximately 80% of its grain corn from Brazil and Argentina, while 96% of soybean comes from Argentina.
  • And fertilizers, which are needed to grow grain corn and soybean, are also experiencing an increase in price. This has resulted in a hefty increase in the prices of grain, making it costly for poultry farmers, who were already suffering from the weakening ringgit.
  • The Federation of Livestock Farmers’ Associations of Malaysia (FLFAM) said supply of animal feed was disrupted due to adverse weather conditions in supplier countries, which the governments there attributed to climate change.
  • The Agriculture and Food Industries Ministry estimates grain corn prices have gone up from RM500 per tonne to RM1,900 per tonne in some instances.
  • The Domestic Trade and Consumer Affairs Ministry said the sharp increase in the cost of corn and soybean feed resulted in a 70% hike in poultry farming costs.
  • To begin with, supply chain disruptions as a result of the pandemic plus climate change have already caused a sharp increase in the prices of grains and fertilizers.
  • This was compounded by the Russia-Ukraine war, which began in late February and is still on-going, as the two countries provide nearly a third of the globe’s wheat exports.
  • Since the beginning of the year the cost of wheat has risen in price by more than 60%. In the 2021-2022 season that began in July last year, Russian suppliers accounted for 16% of global wheat exports, and Ukrainian producers accounted for 10%.
  • But due to the conflict both countries banned wheat exports. In February Russia restricted the export of all grains (wheat, rye, barley and corn) outside the Eurasian Economic Union until June 30. Meanwhile, Ukraine has shut its only remaining port in Odessa.
  • Anti-Russia sanctions forced international companies to sever long-standing business ties and leave Russia, which caused supply disruptions.
  • In one example, the EU recently banned cooperation with the Black Sea Novorossiysk Commercial Sea Port, through which more than half of the exported grain is shipped.
  • The situation was also exacerbated after Kazakhstan, another major grain supplier, largely banned exports to protect its domestic food supplies.
  • Earlier this week, wheat prices reportedly soared by further 6% shortly after India prohibited all exports of the vital food commodity with immediate effect because of an alarming heatwave.
  • The number of people who cannot be sure of getting enough to eat has reportedly surged to 1.6 billion, while nearly 250 million are on the brink of famine. Hundreds of millions more could fall into poverty.
  • On May 18, Antonio Guterres, the UN secretary general, warned that the coming months threaten “the spectre of a global food shortage” that could last for years.
  • He warned that a fifth of humanity was at risk of poverty and hunger due to the current situation in the grain market, with wheat prices soaring following Western sanctions imposed on Russia and Belarus.
  • Russian President Vladimir Putin recently stated that the threat of a global famine is the result of the West’s “sanctions obsession.”
  • According to Guterres, instead of being the sole reason behind the current food crisis, Russia’s military operation has added to the problems that were already affecting the situation, namely climate change and the Covid-19 pandemic.
  • Russia, Ukraine and Belarus, he stressed, are leaders in the production of fertilizers and food products, which should not be overlooked.
  • Guterres pointed out that Moscow should stop blocking the export of food from Ukrainian ports. At the same time, fertilizers and food products from Russia should be allowed to the world markets without obstacles, as well, he continued.
  • Global food insecurity has reached levels not seen since the financial crisis of 2008, according to Sara Menker, CEO of Gro Intelligence, a global company that uses artificial intelligence and public and private data to predict food supply trends.
  • She told the UN that the world has about 10 weeks’ worth of wheat on hand. While addressing a special meeting of the Security Council on Saturday (May 21), she said that the Russia-Ukraine conflict was not the cause of the food security crisis but “simply added fuel to a fire that was long burning.”
  • The expert pointed to widespread fertilizer shortages, supply-chain issues and record droughts as the major reasons behind the crisis.
  • “This isn’t cyclical. This is seismic,” Menker said, noting that “even if the war were to end tomorrow, our food security problem isn’t going away anytime soon without concerted action.”
  • The executive director for the UN’s World Food Programme, David Beasley, had earlier said that 49 million people in 43 countries are already “knocking on famine’s door.”
  • The above backdrop is essential in order to understand the issue of the shortage of chickens in Malaysia. 
  • Aside from the problem of chicken feed import, FLFAM also said the heatwave currently affecting Malaysia had hampered chicken growth.
  • “The situation makes the chickens eat less, have no appetite, get tired quickly and drink a lot of water,” FLFAM adviser Jeffrey Ng said.
  • The hot weather is expected to last until September, the Meteorological Department said, although extreme heat is expected to abate by the end of this month.
  • This means the chicks are growing slower, so poultry producers cannot supply at the same rate.
  • It has also prompted some chicken factories to shut down temporarily while waiting for the chicken to grow to the size needed.
  • It was reported that in Jasin, Melaka, a factory closed temporarily to wait for the chicken to grow from 1.1kg each to 1.8kg, as demanded by the market. 
  • All the factors elucidated above have contributed to a higher chicken price since last year, culminating in recent weeks in a shortage of chickens in the country.
  • It is as if a significant number of the supply of chickens has disappeared from the market, affecting the business of restaurants and eateries specialising in chicken food menu.
  • Also affected are regular consumers, wet market chicken sellers and supermarkets. Even fast food outlets are feeling the pinch. In other words, it has become a national crisis.   
  • There is an adage if you want to come up with solutions, you must first know, understand and grasp succinctly what the problems are. Putting it differently, another adage says knowing the problems are already half the solution.
  • The government went into overdrive which shows it has a sense of urgency by bringing forward its regular Wednesday Cabinet meeting to Monday (May 23) just to devote on a discussion on the solution to the crisis.
  • The root problems with the current shortage of chickens lie in firstly, the higher price of chickens which then culminates in the shortage of chickens.
  • Higher price of chickens translates into higher cost of living, affecting the lower income group the most. Poultry meat as well as chicken and duck eggs are particularly important food as they are the most consumed animal product in Malaysia and are a key source of protein.
  • Malaysians consumed 47.4kg of poultry meat and 20.7kg of chicken and duck eggs per person in 2020, compared to other meat like beef (5.7kg per person), mutton (1.3kg) and pork (17.5kg).
  • Higher price of chickens will definitely increase the cost of living of the rakyat, and hence there is a crucial need to stabilise the price of chickens.
  • The price of chickens went on a drastic rise last year – from RM7/kg in July to more than RM10/kg before the Malaysian Family Maximum Price Scheme (SHMKM) was implemented on Dec 7 last year to Feb 4.
  • By early January, the implementation of SHMKM has brought down the maximum retail price of chicken to RM9.10/kg from a high of more than RM10/kg.
  • But in some places it was observed that the lower ceiling price was accompanied by a shortage of chickens in the market though not so acute as in recent weeks.
  • Some analysts say this is because the lower ceiling price has made it unprofitable for some poultry farmers to continue operation. The most important thing, they added, is for the government to realise there is a global inflation. Just let the market determine the price.
  • Other analysts contended if the government wants to set a ceiling price, it has to be reasonable. It can’t be to the point that poultry farmers lose money and go out of business.
  • Poultry farmers, they say, are not stupid. They won’t price themselves out. If it’s easier to sell fruits, why rear chickens and lose money?”
  • From these arguments, we can see how the introduction of a lower ceiling price for chickens is a boon to the consumers and the rakyat at large, and a bane to the producers – poultry farmers.
  • It is in recognition the poultry farmers are also members of the Keluarga Malaysia and hence, their hardships need to be mitigated that the government has reduced further the ceiling price of chickens by a reasonable 20 sen to RM8.90/kg from Feb 5 to June 4, this time with a subsidy for chicken feed for farmers at a tune of 60 sen/kg, totalling some RM729 million.
  • So the criticism on lower ceiling price for chickens especially from opposition politicians is really uncalled for. Yes it would distort the market and the economy but to begin with, the economy is already distorted by the pandemic, climate change and the war in Ukraine.
  • While the consequences of the distortion caused by the pandemic, climate change and the war are all negative, at least the distortion caused by lower ceiling price has a silver lining in that it brought down the price of chickens from a high of over RM10/kg to RM8.90/kg.
  • The rakyat at large benefits from this price stabilization including owners of restaurants and eateries specialising in chicken food menu, and even the ordinary street hawkers selling such menus.
  • And the impact of this distortion on the poultry farmers had been mitigated with a hefty subsidy on chicken feed.
  • If ever there is a justified criticism, it is so far only RM50 million in subsidy had been paid out from the total RM729 million.
  • But the government is rectifying this by pledging to send out more officers to the states to speed up the payments to boost chicken production.
  • On threats by a cartel planning to close poultry farms last weekend over unpaid subsidies, PM Ismail Sabri said the ministry had been directed to expedite payment.
  • “I have received a report that certain procedures have resulted in late payments and I want this to be looked into.
  • “The ministry said it was still waiting for farmers to submit their claims. I call on farmers to put in their claims so payments can be made,” he said.
  • Anyway this reduced ceiling price has an expiry date on June 4 – a matter of just a few more days, which means it’s a short-term measure to stabilize price.
  • Domestic trade and consumer affairs minister Alexander Nanta Linggi had already said the government was still considering whether to continue the Keluarga Malaysia Maximum Price Control Scheme, which expires on June 4.
  • He also has hit out at DAP for “politicising” the government’s decision to ban the export of chickens and cancelling the approved permits (APs) for importing certain food products, following a shortage in supply.
  • These measures, he added, was based on complaints by the public over the shortage in the supply of foodstuff, including chicken.
  • “We are prioritising the people. If DAP says (that we rushed through our decision), then when is the right time (to impose chicken export ban and cancelling APs)?” he asked, adding that the public had responded positively to the export ban, contrary to claims by the poultry industry.
  • Among the slew of measures announced by PM Ismail Sabri after Monday’s (May 23) Cabinet meeting on the shortage of chickens were cancelling APs and imposing export ban.
  • Buffer stocks will also be created to optimise cold storage facilities owned by the Agriculture and Food Industries Ministry as well as its agencies.
  • According to Malaysia University of Science and Technology’s Prof Geoffrey Williams, in order to tackle rising food inflation, the removal of APs on all imports and the removal of all restrictions on domestic food production, processing and distribution through the supply chain would help.
  • Price caps and petrol subsidies are also helpful, although they are not long-term solutions, he added.
  • He also suggested direct cash transfers, which are always preferable to other schemes, but such cash transfers are one-off in nature and are not a long-term solution.
  • “One form is a tax credit or negative income tax scheme where people are given a cash transfer through the Inland Revenue Board (IRB) if their income falls below a threshold and they pay tax as normal above the threshold.
  • “This is targeted, it gives people direct cash to spend as they choose, it can be administered through the IRB and it distorts the market less.
  • “It provides a long-term solution which is similar to cash transfers but varies according to people’s income. So it can be cheaper overall,” he said.
  • For the long term, Williams opined that full liberalisation of markets, especially food and supply chain businesses, is necessary to support domestic production and reduce dependence on imports.
  • “This must be part of a full market liberalisation agenda, which would include changes in APs, other licensing and permits, issuing of concessions and contracts and ownerships requirements for companies involved in food production.
  • “It will also require labour market reform,” said Williams.
  • Rising food prices are not exclusive to Malaysia alone and have been affecting both advanced and developing economies alike.
  • Global supply chain disruption, which is also caused by post-reopening of economies, lockdowns in China and the Russia-Ukraine war have, among others, caused a spike in inflation globally.
  • In its earlier assessment, Bank Negara expects Malaysia’s core inflation to trend higher to average between 2% and 3% in 2022, up from 0.7% in 2021.
  • “Core inflation is expected to average higher for the year, reflecting the improvement in economic activity and continued cost pressures.
  • “The inflation outlook continues to be subject to global commodity price developments, as well as domestic policy measures on administered prices,” the central bank said.
  • On the imposition of an export ban which involves halting the exports of up to 3.6 million chickens from June 1, until chicken prices and production stabilise, PM Ismail Sabri said this is a short-term measure for the on-going chicken shortage issue.
  • The abolishment of APs for chicken, including whole chicken and chicken parts is aimed at allowing importers to provide more sources of supply and simplify the subsidy claim process by poultry producers, he added.
  • Also, as a short term measure, the Cabinet meeting on Monday also decided on adding and recognising slaughterhouses abroad to increase production of poultry supply, the prime minister said.
  • “The government is aware of reports on the existence of cartels controlling chicken prices and production among the larger companies.
  • The Malaysian Competition Commission (MyCC) is investigating this and we expect the probe to be completed in June. “If it is found that there is such an agreement between cartels, the government will take legal action against them,” he said.
  • The government, at the same time, will reduce the role of middlemen who manipulate supply and prices, adding that it will also re-introduce “the war against middlemen” campaign that was initially carried out in 2014 with the National Farmers Organisation (NAFAS) to take the lead role.
  • On views by the Cabinet for the cultivation of corn and the use of palm kernel cake (PKC) as chicken feed alternatives, Ismail Sabri said Ministry of Agriculture and Food Industries and the Domestic Trade and Consumer Affairs Ministry have been asked to present plans on the proposal.
  • He said government-linked companies, government agencies, farmers’ organisations and cooperatives were also encouraged to be involved in poultry farming, adding that the government would study the types of assistance that can be provided.
  • The prime minister said the government regrets and was disappointed with the actions of some companies who halted chicken production, which in turn resulted in a shortage of supply and price hikes.
  • He said currently, the ceiling price of standard chicken was set at RM8.90/kg with a subsidy of RM729.43 million provided under the Keluarga Malaysia Price Control Scheme (SKHKM) and implemented since Feb 5.
  • “However, the government found there are several large companies who are not interested in applying for the subsidies and want the government to allow chicken prices to be determined by the market. So far, only RM50 million in subsidies have been paid to breeders, most of whom own small companies,” he said.
  • Ismail Sabri said legal action can be taken on this, and Attorney-General Tan Sri Idrus Harun was also part of the Cabinet meeting on Monday, where he advised the government to apply the Control of Supplies Act 1961 (Act 122) if there were elements of hoarding, storing or sabotage on chicken supplies, adding that their licence can also be revoked immediately.
  • In addition, he said Ministry of Agriculture and Food Industries and the Domestic Trade and Consumer Affairs Ministry have been told to conduct monitoring and inspections, with stern action to be taken against those who violate the Control of Supplies Act 1961 (Supply Control Regulations 1974).
  • The Control of Supplies Act 1961 (Act 122) and (Supply Control Regulations 1974) provide for fines of up to RM1 million or imprisonment not exceeding three years, or both, for individuals and fines of up to RM2 million for corporations or companies.
  • “I would like to stress that the government will not compromise with any party that tries to jeopardise the lives of the people.
  • “As such, I ask for members of Keluarga Malaysia to support these measures taken by the government to safeguard the people’s interests who have been burdened by rising prices and cost of living, as well as shortage of supplies,” he said.
Read more on the shortage of chickens crisis in Malaysia:
World has only 10 weeks of wheat supply left, expert warns
PM lambasts poultry companies behind chicken shortage and soaring prices
AP for wheat imports abolished, says Ismail Sabri
  • One long term solution mentioned in PM Ismail Sabri’s statement after the May 23 Cabinet meeting is to be self-sufficient in producing chicken feed so as to reduce the hefty cost of poultry farming in light of the high cost of fertilizers and wheat, and the vulnerability of imports to currency fluctuations
  • The Ministry of Agriculture and Food Industries, and the Domestic Trade and Consumer Affairs Ministry have been asked to present plans on the proposal for the cultivation of corn and the use of palm kernel cake (PKC) as chicken feed alternatives.
  • In response, the Kelantan government is ready to cultivate corn as a long-term alternative to poultry feed.
  • Its state executive councillor for Agriculture, Agro-based Industry, Biotechnology, Green Technology and Environment, Tuan Mohd Saripudin Tuan Ismail is reported to have said several corn varieties of the cereal crop for animal feed planted in Bachok four years ago had been proven to have high yields, but the programme was stopped due to the lack of market demand at that time.
  • “In the past, we planted grain corn to be processed as animal feed, including chicken, but had to be replaced with sweet corn, pearl corn and fat corn because grain corn was less popular in the market at that time.
  • “Now the government is ready to convert the existing maize crop to grain maize to be processed into food for livestock,” he is quoted as saying.
  • “The state government and farmers are ready to work together for the development of animal feed that can be done on a large scale, including on abandoned agricultural lands.
  • “They need support from the federal government through incentives and subsidies related to fertilisers and pesticides because they are burdened with a double increase in the price of the planting material and need to ensure that it can be sold, for example through contract agreements with any relevant parties,” he added.
  • Also, the state government is working to increase its maize yield in Jeli, from one million crop to 10 million.
  • “Kelantan also has maize crops of these types in Lojing, Gua Musang, Tanah Merah and Bachok which can be used as animal feed based on a study.
  • “It’s just that the corn needs to go through a drying process and be crushed as well as added with ingredients such as soy to increase the nutrition to be given to livestock,” he said.
  • Last Monday, the federal Cabinet asked state governments, government agencies and government-linked companies to grant Temporary Occupancy Licences to farmers so they could cultivate maize as poultry feed.
  • The Cabinet also gave an immediate green light for cooperatives involved in the plantation sector to hire foreign workers, to overcome the current poultry shortage in the country.
  • The government’s move towards self sufficiency in animal feed was already announced last month by the Agriculture and Food Industries Minister Ronald Kiandee when he said the government is formulating a policy to reduce dependence on animal feed imports by promoting grain corn farming.
  • The ministry announced then 80,000ha nationwide will be used to plant grain corn by the year 2023, and it encouraged private large scale farming of this crop.
  • It is unclear if this is linked to the Grain Corn Development Master Plan (2018-2032) launched by the government in 2016 with the aim of producing 30% of grain corn required for domestic consumption.
  • The government had grappled with the grain corn production issue since the 1980s when it was identified as a key vulnerability to the nation’s food security.
  • From 1989 to 1992, a commercial trial was conducted, but the yield was low compared to other crops such as oil palm and thus deemed unsustainable. The project was terminated in 1996.
  • In the past years, the ministry has evaluated grain corn industries in neighbouring Thailand, the Philippines and Indonesia and believes it can succeed this time by following these countries’ lead, according to the Malaysian Agricultural Research and Development Institute (Mardi).
  • Indonesia produced 12 million metric tonnes of grain corn in 2020, followed by the Philippines (8.0 million metric tonnes), Thailand (5.5 million metric tonnes) and Vietnam (4.54 million metric tonnes).
  • In contrast, Malaysia produced 80,000 metric tonnes of corn, much of which is sweet corn not used for animal feed.
  • Under the 2016 Master Plan, the ministry aimed to open 30,000ha of land for grain corn farming in low humidity flatlands like in Chuping, Perlis; Seberang Perai, Penang; and Bachok, Kelantan which was estimated to result in the production of 1.4 million metric tonnes of grain corn.
  • A pilot project commenced in 2020 in which Mardi has been collaborating with the Indonesian Cereals Research Institute to share technology and hybrid seeds since 2018.
  • Mardi researchers said Indonesia’s grain production grew after it replicated and adapted what was done in the US, so Malaysia is learning from Indonesia and adapting these practices locally.
  • “It is not too late to revitalise the corn industry and become one of the grain corn players in the world,” the researchers said.
  • Last week, the Selangor and Negeri Sembilan governments also signed a memorandum of agreement to plant grain corn in Gemas and the Kuala Langat Selatan Forest Reserve.
  • RM3 million is allocated to the joint venture, involving 238.3 ha (700 acres) of land, with land clearing expected to start in the third quarter of this year.
  • The project is expected to produce 5,490 tonnes of grain corn a year, with the aim of reducing import dependence by 2 to 3%.
  • Another long-term solution that needs to be thought of is the impact of climate change on farming in which unpredictable rain-causing floods occur with greater frequency.
  • This is actually the province of the Environment Ministry where global warming has caused climate change with tragic consequences.
  • What the Ministry of Agriculture and Food Industries can do is to think of ways and means on how the animal feed farmers can be financially compensated when force majeure occurs, i.e. unforeseeable circumstances that prevent someone from fulfilling a contract.
  • Common examples of force majeure events include acts of war, terrorist attacks, epidemics, pandemics like COVID-19, death, labor strikes, riots, crime or property theft, acts of God, natural disasters (like blizzards, earthquakes, or hurricanes), or acts of terrorism.
  • This can take the form of legislation for the animal feed farmers to keep aside a certain sum with ringgit to ringgit matching by the government so that they can still continue their farming operation after a certain force majeure occurs.
  • Or an insurance scheme against force majeure in which the annual premium is partly subsidized by the government.
  • Finally, in order to attract the participation of the youth in this animal feed farming industry, the government has to make this industry more appealing and sexier to them by introducing extensively fourth industrial revolution (4IR) technologies.
    Read more on the long-term solutions for shortage of chickens crisis in Malaysia:
    • Street corners will have meters that dispense electricity. Companies will install electrical recharging stations; in fact, they’ve already started in the developed world.
    • Smart major auto manufacturers have already designated money to start building new plants that only build electric cars.
    • A baby of today will only see personal cars in museums. The FUTURE is approaching faster than most of us can handle.

    Coal industries and gasoline/oil companies will go away

    • Drilling for oil will stop. So say goodbye to Opec! The Middle-East is in trouble.
    • Homes will produce and store more electrical energy during the day more than they use and will sell it back to the grid. The grid stores it and dispenses it to industries that are high electricity users. Has anybody seen the Tesla Roof?
    • Electric cars will become mainstream about 2030. Cities will be less noisy because all new cars will run on electricity.
    • Cities will have much cleaner air as well.

    Disappearing business model

    • In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide. Within just a few years, their business model disappeared and they went bankrupt. Who would have thought of that ever happening?
    • What happened to Kodak and Polaroid will happen to a lot of industries in the next 5-10 years … and most people don’t see it coming.
    • Did you think in 1998 that three years later, you would never take pictures on film again? With today’s smart phones, who even has a camera these days?
    • Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s Law. So as with all exponential technologies, it was a disappointment for a time, before it became way superior and became mainstream in only a few short years.
    • It will now happen again (but much faster) with Artificial Intelligence (AI), health, autonomous and electric cars, education, 3D printing, agriculture and jobs.
    • Forget the Book, “Future Shock”, welcome to the 4th Industrial Revolution.
    • Computers become exponentially better in understanding the world. This year, a computer beat the best Go-Player in the World, ten years earlier than expected.
    • In the US, young lawyers already don’t get jobs. Because of IBM’s Watson, you can get legal advice (so far for right now the basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans. So, if you study law, stop immediately. There will be 90% fewer lawyers in the future, (what a thought!) because only omniscient specialists will remain.
    • Watson already is helping nurses in diagnosing cancer. It’s four times more accurate than human nurses.
    • Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans.
    • Solar production has been on an exponential curve for 30 years, but you can now see the burgeoning impact. And it’s just getting ramped up.
    • Fossil energy companies are desperately trying to limit access to the grid to prevent competition from Home Solar installations, but that simply cannot continue – technology will take care of that strategy.
    Screen Shot 2022-05-31 at 2.53.20 AM

    Health

    • The Tricorder X price will be announced this year. There are companies who will build a medical device (called the “Tricorder” from Star Trek) that works with your Phone, which takes your retina scan, your blood sample and your breath into it.
    • It then analyses 54 bio-markers that will identify nearly any disease.
    • There are dozens of phone apps out there right now for health purposes.

    Supremacy of software tool

    • Software has disrupted and will continue to disrupt most traditional industries in the next 5-10 years.
    • Uber is just a software tool, they don’t own any cars, but are now the biggest taxi company in the world! Ask any taxi driver if they saw that coming.
    • Airbnb is now the biggest hotel company in the world, although they don’t own any properties. Ask Hilton Hotels if they saw that coming.
      According to the Statistics Department, Malaysia is growing more dependent on imported food products and is running a trade deficit in the area.
      The import dependency ratio (IDR) – the percentage of a country’s dependency on imports of food products to meet domestic needs – is on the rise.
      A higher IDR means more supply of food products is to be imported. The IDR of the country as a whole rose to 13.7% in 2015, up from 7.4% in 1987.
      Against this backdrop, it is indeed a blessing Malaysia is considered self-sufficient in poultry meat, producing some 98.2% of its domestic needs.
      But the Achilles heel lies in that the poultry farming industry is highly reliant on imported chicken feed. Almost all of the grain needed to make chicken feed is imported from the Americas in US dollars and is vulnerable to currency fluctuations.
      And fertilizers, which are needed to grow grains, are also experiencing an increase in price. This has resulted in a hefty increase in the prices of grain, making it costly for poultry farmers, who were already suffering from the weakening ringgit.
      The Federation of Livestock Farmers’ Associations of Malaysia (FLFAM) said supply of animal feed was disrupted due to adverse weather conditions in supplier countries, which the governments there attributed to climate change.
      The Ministry of Agriculture and Food Industries (Mafi) estimates grain corn prices have gone up from RM500 per tonne to RM1,900 per tonne in some instances.
      The Domestic Trade and Consumer Affairs Ministry said the sharp increase in the cost of corn and soybean feed resulted in a 70% hike in poultry farming costs.
      To begin with, supply chain disruptions as a result of the pandemic plus climate change have already caused a sharp increase in the prices of grains and fertilizers.
      This was compounded by the Russia-Ukraine war, as the two countries provide nearly a third of the globe’s wheat exports.
      Since the beginning of the year the cost of wheat has risen in price by more than 60%. In the 2021-2022 season that began in July last year, Russian suppliers accounted for 16% of global wheat exports, and Ukrainian producers accounted for 10%.
      But due to the conflict both countries banned wheat exports. Anti-Russia sanctions forced international companies to sever long-standing business ties and leave Russia, which caused supply disruptions.
      The situation was also exacerbated after Kazakhstan, another major grain supplier, largely banned exports to protect its domestic food supplies.
      Earlier this week, wheat prices reportedly soared by further 6% shortly after India prohibited all exports of the vital food commodity with immediate effect because of an alarming heatwave.
      The above backdrop is essential in order to understand the issue of the shortage of chickens in Malaysia.
      Aside from the problem of chicken feed import, FLFAM also said the heatwave currently affecting Malaysia had hampered chicken growth.
      “The situation makes the chickens eat less, have no appetite, get tired quickly and drink a lot of water,” FLFAM adviser Jeffrey Ng said.
      This means the chicks are growing slower, so poultry producers cannot supply at the same rate. It has also prompted some chicken factories to shut down temporarily while waiting for the chicken to grow to the size needed.
      It was reported that in Jasin, Melaka, a factory closed temporarily to wait for the chicken to grow from 1.1kg each to 1.8kg, as demanded by the market.
      All the factors elucidated above have contributed to a higher chicken price since last year, culminating in recent weeks in a shortage of chickens in the country.
      It is as if a significant number of the supply of chickens has disappeared from the market, affecting the business of restaurants and eateries specialising in chicken food menu.
      Also affected are regular consumers, wet market chicken sellers and supermarkets. Even fast food outlets are feeling the pinch. In other words, it has become a national crisis.
      There is an adage if you want to come up with solutions, you must first know, understand and grasp succinctly what the problems are. Putting it differently, another adage says knowing the problems are already half the solution.
      The government went into overdrive which shows it has a sense of urgency by bringing forward its regular Wednesday Cabinet meeting to Monday (May 23) just to devote on a discussion on the solution to the crisis.
      The root problems with the current shortage of chickens lie in firstly, the higher price of chickens which then culminates in the shortage of chickens.
      Higher price of chickens translates into higher cost of living, affecting the lower income group the most. Poultry meat as well as chicken and duck eggs are particularly important food as they are the most consumed animal product in Malaysia and are a key source of protein.
      Malaysians consumed 47.4kg of poultry meat and 20.7kg of chicken and duck eggs per person in 2020, compared to other meat like beef (5.7kg per person), mutton (1.3kg) and pork (17.5kg).
      The price of chickens went on a drastic rise last year – from RM7/kg in July to more than RM10/kg before the Malaysian Family Maximum Price Scheme (SHMKM) was implemented on Dec 7 last year to Feb 4.
      By early January, the implementation of SHMKM has brought down the maximum retail price of chicken to RM9.10/kg from a high of more than RM10/kg.
      But in some places it was observed that the lower ceiling price was accompanied by a shortage of chickens in the market though not so acute as in recent weeks.
      Some analysts say this is because the lower ceiling price has made it unprofitable for some poultry farmers to continue operation. The most important thing, they added, is for the government to realise there is a global inflation. Just let the market determine the price.
      Other analysts contended if the government wants to set a ceiling price, it has to be reasonable. It can’t be to the point that poultry farmers lose money and go out of business.
      It is in recognition the poultry farmers are also members of the Keluarga Malaysia and hence, their hardships need to be mitigated that the government has reduced further the ceiling price of chickens by a reasonable 20 sen to RM8.90/kg from Feb 5 to June 4, this time with a subsidy for chicken feed for farmers at a tune of 60 sen/kg, totalling some RM729 million.
      So the criticism on lower ceiling price for chickens especially from opposition politicians is really uncalled for. Yes it would distort the market and the economy but to begin with, the economy is already distorted by the pandemic, climate change and the war in Ukraine.
      While the consequences of the distortion caused by the pandemic, climate change and the war are all negative, at least the distortion caused by lower ceiling price has a silver lining in that it brought down the price of chickens from a high of over RM10/kg to RM8.90/kg.
      The rakyat at large benefits from this price stabilization including owners of restaurants and eateries specialising in chicken food menu, and even the ordinary street hawkers selling such menus.
      And the impact of this distortion on the poultry farmers had been mitigated with a hefty subsidy on chicken feed.
      If ever there is a justified criticism, it is so far only RM50 million in subsidy had been paid out from the total RM729 million.
      But the government is rectifying this by pledging to send out more officers to the states to speed up the payments to boost chicken production.
      On threats by a cartel planning to close poultry farms last weekend over unpaid subsidies, PM Ismail Sabri said the ministry had been directed to expedite payment.
      “I have received a report that certain procedures have resulted in late payments and I want this to be looked into.
      “The ministry said it was still waiting for farmers to submit their claims. I call on farmers to put in their claims so payments can be made,” he said.
      Anyway this reduced ceiling price has an expiry date on June 4 – a matter of just a few more days, which means it’s a short-term measure to stabilize price.
      Domestic trade and consumer affairs minister Alexander Nanta Linggi had already said the government was still considering whether to continue the SHMKM which expires on June 4.
      He also has hit out at DAP for “politicising” the government’s decision to ban the export of chickens and cancelling the approved permits (APs) for importing certain food products, following a shortage in supply.
      These measures, he added, was based on complaints by the public over the shortage in the supply of foodstuff, including chicken.
      “We are prioritising the people. If DAP says (that we rushed through our decision), then when is the right time (to impose chicken export ban and cancelling APs)?” he asked, adding that the public had responded positively to the export ban, contrary to claims by the poultry industry.
      Meanwhile the prime minister said the government regrets and was disappointed with the actions of some companies who halted chicken production, which in turn resulted in a shortage of supply and price hikes.
      “There are several large companies who are not interested in applying for the subsidies and want the government to allow chicken prices to be determined by the market. So far, only RM50 million in subsidies have been paid to breeders, most of whom own small companies,” he said.
      Ismail Sabri said legal action can be taken on this, and Attorney-General Tan Sri Idrus Harun was also part of the Cabinet meeting on Monday, where he advised the government to apply the Control of Supplies Act 1961 (Act 122) if there were elements of hoarding, storing or sabotage on chicken supplies, adding that their licence can also be revoked immediately.
      Regards,
      Jamari Mohtar
      Editor, Let’s Talk!
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