POULTRY FARMERS AND THE CEILING PRICE REGIME FOR BROILERS

MR LEE AH FATT, PRESIDENT,

FEDERATION OF LIVESTOCK FARMERS’ ASSOCIATIONS OF MALAYSIA

POULTRY FARMERS AND THE CEILING PRICE REGIME FOR BROILERS

With reference to the above the Federation of Livestock Farmers’ Association of Malaysia (FLFAM) takes the cue from the lifting of the ceiling price of steel as an indication that the ceiling price of chickens is no longer applicable.

Poultry farmers have been laboring under steep increases in the cost of production in the one and a half years and it exceeded the ex-farm ceiling price for broilers of RM4.00 per kilogram sometime in the middle of 2007. Our appeals for the ceiling price to be removed were not entertained by the Ministry of Domestic Trade and Consumer Affairs (MDTCA) despite numerous meetings and consultation between the FLFAM and the MDTCA since the middle of 2007.

The FLFAM would like to reiterate that whatever the ceiling price is it can only sell their output at the price the market is willing to pay. Due to stiff competition among producers they have only been able to obtain selling price at around the ceiling price level or below notwithstanding that their calculated cost of production having now soared to RM4.53 per kilogram.

While the situation does not appear to currently disrupt the local supply of chickens to any extent so far there has been a continuous erosion of economic viability of the producers with the smaller farmers suffering the greatest impact. What is not visible is the ongoing transformation of independent farmers becoming contract farmers and integrators increasingly growing the broilers using their own resources to make up for the capacity shortfall. The losses incurred will eventually lead to a reduction in production capacity and supplies to the market may fall below the optimum volume rather than more than the optimum volume currently prevailing.

The FLFAM has to inform that when that situation takes place where the supply is lower than the optimum volume required the ex-farm price of chicken is going to be traded above the current ex-farm ceiling price imposed by the MDTCA. The farmers have no choice as they need to trade the output at or above their cost of production in order to ensure their continued long term viability and sustainability.

The farmers seek the understanding and the appreciation of the consumers on this matter as ensuring local food security requires that consumers pay for the food they consume at a price that allows the producers recover their cost of production. This is consistent with the global situation of demands for food that is moving ahead of the resources available to meet the requirements. 13^th May 2008