23 July 2013
A Special Report By Melati Mohd Ariff
KUALA LUMPUR, July 22 (Bernama) -- Every year, during Ramadan, consumers have to pay more for essential items such as sugar, cooking oil, and even chicken!
This Ramadan, for the first time after many years, the cost of sugar and cooking oil has remained stable. However, the price of chicken has shot up to between RM9 and RM10 per kilogramme, from an average of RM7-RM8!
As usual, consumers are both victims and part of the problem, and the matter is made worse by their indifferent attitude. Despite an increase in the price of chicken, consumers continue to prepare dishes that contain chicken meat.
Every year, the government intervenes to rectify the situation, and this year, the Agriculture and Agro-based Industry Ministry issued additional import licences to 34 companies to source chicken from China, Thailand, Australia, and the European Union (EU).
The government has listed chicken as one of the 20 price controlled items for the 2013 Hari Raya festive period. The government is planning to set the price of chicken at RM7.70 per kilogramme for standard chicken and RM8.50 per kilogramme for dressed/super dressed chicken from July 27 to Aug 26.
A RECURRING HEADACHE
Every year, this problem recurs during festive periods, and there seems to be no solution in sight. Those who try to analyse the situation will have a tough time identifying the culprits behind the price hike - the industry, government, or consumers themselves.
"Based on the analysis, including statements issued by the Federation of Livestock Farmers' Associations of Malaysia, the huge demand for chicken meat had pushed up the price.
"If this is the reason, consumers should consume less chicken meat to reduce the demand.
"Logically, this should help bring down the price," opined Mohd Yusof Abdul Rahman, Director of Communication at the Federation of Malaysian Consumers Associations (FOMCA).
NOTHING BUT EXCUSES
Nonetheless, for a seasoned observer, the supply-demand excuse is akin to the chicken or egg dilemma, with poultry industry players having the liberty to decide the demand and supply of poultry.
According to Mohd Yusof, another common excuse provided by livestock breeders is that the feed and medication costs have increased.
"Don't tell me that the cost goes up during festive seasons, which is why they have to increase the price of chicken meat.
He was also surprised to note that chicken feed and medication have to be imported.
Mohd Yusof is also all too familiar with breeders' 'explanation' that imported feed helps broiler chickens to grow faster.
"Now, don't tell me that local companies cannot come up with broiler chicken feed that is on par with imported feed?
"If the broiler chicken industry is profitable, I am sure there are local entrepreneurs capitalising on this industry by coming up with chicken feed that is acceptable to the industry.
"The problem here is that breeders have to decide whether to source the feed from within or depend on imports?" noted Mohd Yusof.
THERE IS A NEED TO CONTROL
According to consumer activists who are linked to Bernama, chicken meat was once a controlled item, with the price being controlled by the government.
Nonetheless, due to the intense lobbying by the industry, the government retracted the price cap.
Ever since, he said, the price of chicken meat is being decided by market forces, with industry players having most of the control.
It is only in the event of exceptional circumstances such as the bird flu episode sometime back when industry players have no control over the price of chicken meat. During the bird flu season, the demand for chicken meat reduced drastically, and industry players could not do anything to increase the demand.
"But when the demand for chicken meat returned to normal, the price was set at the maximum level to recoup previous losses," explained Mohd Yusof, as he spoke about strategies employed by poultry industry players.
SUPPLY PROBLEMS Yet, Ramadan and other festive periods return every year, resulting in an increase in the demand for chicken meat and other essential items.
According to Mohd Yusof, there can never be a shortage of chicken meat as industry players anticipate the demand in advance.
"The underlying issue here is not the inadequate supply of chicken, unlike fish, where the supply is genuinely down during the wet season.
"The real problem here is that some parties capitalise on the increased demand to make more money," he noted.
As stressed by Mohd Yusof, since industry players are able to decide the supply and price of chicken meat, they act as the regulators of the industry.
"If they want to increase the price of chicken meat, they can reduce the supply too.
"There was a time when industry players wanted to burn chicks alive to overcome an over-supply of chicken meat. They can easily manipulate the market price by increasing the ex-farm cost," he said.
"We can address this problem by creating a business environment where there is healthy competition among local and foreign industry players, provided imported poultry is cheaper than local poultry. This will create competition for local poultry, which is deemed costly by local industry players," added Mohd Yusof.
Output can be increased by involving more parties. According to him, a Government Linked Company (GLC) can look into poultry breeding, with marketing of products undertaken by the Federal Agricultural marketing Authority (FAMA).
This may help to keep the price of poultry stable.
"If there is no end in sight for this problem, and if consumers are not able to change their intake of chicken meat, then chicken meat would have to be categorised as a price control item to prevent the price from being manipulated," explained Mohd Yusof.
Mohd Yusof also made reference to the Price Control and Anti Profiteering Act 2011 that came into effect in April 2011 to punish unscrupulous parties - breeders, wholesalers, and retailers - who take advantage of the demand for chicken meat for quick profits.
Consumers can report errant traders who sell chicken meat at exorbitant prices to the enforcement unit of the Ministry of Domestic Trade and Consumer Affairs. This way, consumers will have some control over the price of chicken meat.
"It is not necessary to eat chicken meat every day; consuming chicken meat twice a week should be sufficient. If all of us can do this, we will be able to control the supply and price of chicken meat," said Mohd Yusof.