December 6, 2023

 

Malaysian poultry industry will benefit from removal of subsidies, say experts

Experts believe that freeing up the market and the removal of subsidies will benefit the Malaysian poultry industry, resulting in increased investment, curbing subsidy leakage, and fostering innovation, Free Malaysia Today reported.

 

The removal of subsidies for chicken in Malaysia, implemented on November 1, has already resulted in substantial savings. The government reportedly saved MYR 100 million (US$21.4 million) in just a month, as stated by the Ministry of Agriculture and Food Security. This considerable sum could potentially be reinvested to bolster the poultry sector.

 

Market experts emphasise that price ceilings and subsidies often distort the production structure, leading to market imbalances.

 

Carmelo Ferlito, CEO of the Centre for Market Education, said that subsidies were initially introduced to mitigate the limitations imposed by price ceilings. He said that as long as price ceilings are absent, subsidies become unnecessary.

 

Subsidies and price ceilings have been longstanding features of the Malaysian economy, with reports indicating that, since February 2022, the government has allocated MYR 3.8 billion (US$813 million) for egg and chicken subsidies.

 

But issues such as leakage in the disbursement process and unequal access to benefits by foreigners and high-income groups prompted the decision to eliminate chicken subsidies on November 1.

 

Ferlito expressed confidence in Malaysia's poultry industry, stating that it is well-prepared to navigate challenges resulting from the subsidy removal. He noted that, before the introduction of price ceilings, the poultry industry was self-sufficient, meeting local demand with local supply.

 

Research fellow Fatimah Mohamed Arshad said that removing price controls for chicken will stimulate investment among local suppliers. Drawing from experiences in the paddy and rice sector, she notes that controlling both farm and retail prices has hindered investment in the poultry industry.

 

She said that lifting price control will offer a clearer picture of market supply and demand, fostering smart decisions and encouraging innovation.

 

A free market, she said, promotes innovation and necessitates the introduction of systems like grading. Furthermore, it encourages producers to find ways to reduce costs, leading to the development of new value propositions.

 

Fatimah said the removal of price controls on chicken is an opportunity to lower dependence on imported meats and potentially increase exports. However, she also stressed the need for investment in research to enhance animal feed, reducing reliance on imports to maintain competitiveness.

 

-      Free Malaysia Today