COMMENT | Position food security as top national agenda

COMMENT | Immediate-term measures by the government to overcome chicken supply and price issues are not sustainable and are a significant disruption to the market.

Malaysia needs effective policies and medium- to long-term actions now to avoid similar problems in the future.

The supposed increase in the supply of small importers via the abolishment of the approved permits (AP) to import chicken could be undone through the “middle-men” effect of the limited distribution network, resulting in increased prices passed to consumers.

As for price controls, if there is a cartel that is opposing this price ceiling and is colluding to withhold supply to pressure the government to increase the price ceiling and/or to increase the quantum and speed of subsidies, then the price control fails to increase affordable chicken supply. 

Furthermore, price controls may force some suppliers to close down to minimise losses-exacerbating supply.

Although price control proponents may argue that there would be a backwards pressure on the supply chain to reduce prices, backwards pressure requires an insulated supply chain where all players respond accordingly (independently) to the regulatory limits. 

In the case of external supply chains, such as the feed for poultry farms from South America and elsewhere, these are not affected by local regulatory pressures as these foreign suppliers can shift products elsewhere as global demand is high. 

Backwards pressure would also not work especially if the market is dominated by a few major suppliers that don’t respond independently, but rather, as a group to resist government...