Ceiling price for chicken, eggs a win-win solution - FOMCA

KUALA LUMPUR: The new government ceiling price for chicken and eggs is a win-win situation for all parties, especially farmers and consumers, taking into account the still unstable market situation.

Federation of Malaysian Consumer Associations (FOMCA) deputy president Mohd Yusof Abdul Rahman said this was because the increase in the ceiling price of chicken and eggs will help farmers cover the cost of poultry and guarantees that buyers will not be burdened with overly high prices.

He said that even though there is an increase in the ceiling price on the two raw materials, it was still at a rate that did not have a big impact on consumers compared to if the price is floated.

"Some say if the price is floated, the price for chicken, for example, may reach RM15 per kg but this (new ceiling price) is not too high to cost consumers that much more.

"For suppliers (breeders) and traders, the (new) ceiling price may be acceptable because it can cover the cost of livestock production, so we (Fomca) hope that in this way (setting ceiling price), there is no issue of reduced chicken production. Instead, it should recover to the usual prices," he told Bernama.

Yesterday, the government decided not to float the price of chicken but continued with the subsidy by setting the standard retail ceiling price of chicken at RM9.40 per kg for Peninsular Malaysia starting tomorrow, while the retail ceiling price of eggs for grade A was set at 45 sen; grade B (43 cents) and grade C (41 sen).

Previously, the maximum retail price of chicken and eggs for Peninsular Malaysia for standard whole chicken was RM8.90 kg and super whole chicken (slaughtered and cleaned without legs, head, liver and gizzard) at RM9.90 per kg; maximum price of grade A eggs was set at 43 sen each, grade B (41 sen) and grade C (39 sen).

Meanwhile, senior lecturer at the Faculty of Economics and Administration at Universiti Malaya, Dr Mohammad Tawfik Yaakub said the increase in the ceiling price was only temporary until supply and economy of the community returned to stability.

"On the part of the breeders, there may be some who will be a little disappointed because the profits earned are not too high but it (new ceiling price) will not last forever.

"I am sure the government will review the ceiling price since farmers are also contributors to the national economy but in the present situation, the government needs to think of a win-win situation because this matter involves the livelihood of the people," he said.

Mohammad Tawfik said with Malaysians consuming an estimated two million chickens a day or 60 million chickens a month, the supply of chicken and eggs should be stabilised in the market with the government looking at other alternatives including using existing manpower resources to help farmers increase production.

At the same time, he hoped that the value of the compound under the Price Control and Anti-Profiteering Act 2011, which was imposed on traders who defaulted on the ceiling price, could be increased in order to deter other rogue traders.

"Apart from the compound, there must also be an amendment to the rule (Act) for stiffer punishment. If enforcement is not strict and the rules are not sufficient (for deterrence) and the value of the compound is low and easily paid by traders, then we will not get anywhere," he said.

For economist Dr Barjoyai Bardai, the government should have a forensic audit mechanism on chicken trading transactions as part of enforcement action so that a thorough investigation can be done on the supply chain if there is a supply disruption or breach in ceiling price.

He said this was important because retailers are the ones that are mostly affected by enforcement action for failing to comply with the ceiling price as their profit margin is not as big as enjoyed by breeders.

"Sometimes a retailer buys chicken from a supplier for RM8.80, then if he sells at RM8.90, it will not cover other costs. So retailers have to sell at a higher price while some charge a labour cost of cutting chicken which eventually results in a price of RM9.40 or more.

"This is of course illegal and if caught, it is the retailer who will be blamed as he deals directly with consumers while the supplier who has made a profit will not be fined. Therefore, there needs to be a thorough investigation to know who is taking the higher profit margin," he said.

-- BERNAMA