January 28, 2004

Malaysia Wary of Skyrocketing Chicken Feed Prices

Industry sources say skyrocketing prices of imported soy and corn, the main ingredients of chicken feed, may lead to comparable increase in ceiling prices of chickens in Malaysia.

While chicken is a controlled item in Malaysia with the price fixed at RM3.50 for ex-farm birds, the price of soybean meal has risen by more than 70 per cent and corn meal by more than 50 per cent, all in the last four months.

Corn meal, which now costs up to RM665 a tonne from RM450 a tonne in September, gained by RM19 a tonne in one week alone.

Inproser group of companies president and chief executive Henri ten Have said chicken feed makes up 70 per cent of the total cost of rearing chicken, and if chicken feed continues to become more expensive, breeders may need to pass on the cost to consumers.

Inproser is a specialist in animal feed technology based on biotechnology.

Selangor and Kuala Lumpur Poultry Traders Association adviser Dr Lee Chong Meng agrees.

"What the chicken breeders are more concerned about is the high cost of production. We would like the price of chicken to go up," he told Business Times.

Lee said prior to the price increase of feed meal, the cost of producing a chicken was RM2.70. With the increase in the price of feedmeal, cost of production has gone up to RM3 per chicken.

He said the farmers have only a 30 sen or 10 per cent margin per kg.

Lee said the reason that farmers have thus far been able to offer such a good price is due to their efficiency.

"They will be forced out of their business for inefficiency.

If they demand for a 10 per cent increase, consumers should accept. If they make no profit this RM6 billion industry may collapse entirely," Lee said.

The composition of chicken feed depends on what the chickens are bred for. For poultry broilers, 50 per cent to 55 per cent is corn and 30 per cent is soybean meal. The remaining composition is fishmeal, vitamins and amino acids.

For chicken reared for eggs, the composition of the two main ingredients is somewhat similar but other ingredients are prepared to make the chicken live at least one-and-a-half to two years. Chickens usually lay eggs within six months and lay for about 300 days.

Malaysia imports its soybean from the US via China. The beans are roasted and treated to make it digestible for the chickens. Soya is also imported from Brazil.

Corn is also imported from the US, Brazil and Argentina. Malaysia recently started to import corn from India.

The shortage is a result of the draught in Australia, which saw the country importing the commodities; and increased demand from countries like China where more people are able to afford chicken compared to before.

Europeans are also consuming more chicken as a result of people eating less beef after the mad cow disease scare.