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The Federation of Livestock Farmers’ Associations of Malaysia (FLFAM) would like to inform consumers and the general public that poultry producers have been suffering from increasing costs of production since the beginning of 2006. As Malaysia is an importer of most of the ingredients used in the production of livestock commodities it is subject to the global price changes in these commodities. The price of most ingredients like corn and soyabean meal included in compounded feeds used in the poultry industry has shown significant increases since the beginning of the year 2006 (see attachment A & B). It is important to note that even the price of crude palm oil available locally has increased to RM3800-00 per metric ton in February 2008 compared to RM1460-00 per metric ton in January 2006. As a result of these increases the price of compound feed has shown a net increase of RM565-00 per metric ton between January 2006 and March 2008 (Attachment C). As an example, the nominal price of broiler starter mash ration has increased from RM1273-00 per metric ton in January 2006 to RM1788-00 per metric ton in March 2008 (Attachment D & E).

What is of more concern is that the outlook on the global commodities prices appear to continue to be on a rising trend due to the combination of increased consumption demand in China and India and the diversion of corn and vegetable oils for ethanol and bio-diesel production respectively in the western countries. Poor grain harvests in some of the major producing countries of the world have also contributed to the steep increases in the price of these commodities. As we are all aware the price of crude palm oil has also been at an all time high in recent weeks.

The increases in petroleum and electricity prices during 2006 have also contributed to the rising cost of production at all levels of the production system and in a free market system these have a significant impact on the viability and sustainability of the local food producers. The industry receives no direct subsidies from the government.

As a reflection of the above the calculated cost of production has shown a continuous increase from the beginning of 2006 to the present date. As shown in Attachment F the calculated cost of production has increased from RM3.45 per kilogram January 2006 to RM4.53 per kilogram in March 2008. This represents an increase of 31 percent. (Attachment F)

The FLFAM would also like to inform that farmers that produce the chicken and eggs can only sell what they produce at prices that the wholesalers are willing to pay. This is related to the law of supply and demand. If the supply is greater than demand the farmers will get a lower price regardless of what the cost of production and the government ceiling price is. Due to strong competition among big and small producers the supply has been in excess of demand during most of the year 2007 until now except for a short period at the beginning of the fasting month as shown in attachment F.

The FLFAM has always strived to be open and transparent in its communication with consumers and the government authorities concerned. In this regard and due to the fact that the ceiling price has been imposed throughout the year on broiler sales by the government the FLFAM has made representations to the Ministry of Domestic Trade and Consumer Affairs in July 2007 for the ceiling price currently in force to be removed altogether or to be adjusted to be more reflective of the cost of production based on the actual price of commodities and other costs involved in the production system. Our request was never considered even though promises were made that it will be reviewed after each of Hari Raya, Deepavali, Chinese New Year festival at the end of last year and early this year.

We are very disappointed with the stand of the government over this matter. While it was willing to agree to subsidize the flour milling industry to the tune of RM30 million per month due to the increase in wheat price it has not been willing to consider the plight of farmers and smallholders struggling to earn an adequate income from their farming effort.

We would like to point out that the ceiling price regime only benefited wholesalers and retailers as consumers still pay the fixed ceiling price while farmers get paid the wholesalers price as determined by the law of supply and demand. Because of the ceiling price there is often a large gap between the ex-farm price and the price paid by the consumers. It is better for consumers to pay for their chicken price that moves up and down according to the market supply and demand in an open and transparent manner. Removal of the ceiling price does not mean there will be a steep increase the price chicken as they are still competitively produced by a large number of farmers in an open and transparent market system.

We are therefore appealing to the government to remove the ceiling price regime immediately to ensure the viability and sustainability of the local poultry industry in the interest of food security. At the same time the FLFAM seeks the understanding and appreciation of the consumers and the public as a whole on the matter and the industry is always seeking to improve its efficiency and strive to serve the needs of the public for adequate supply of wholesome food at the most reasonable prices possible.

Thank you and best regards,

Kwei Yew Tong
Chairman, Broiler Unit
Federation of Livestock Farmers’ Associations of Malaysia(FLFAM)



马来西亚禽畜业联合总会欲通知消费人和公众说,自2006年以来,我们便饱受生产成本暴涨之苦。由于我国入口大部分的饲料原料,因此受到全球性的价格变动所影响。主要原料如玉米和大豆的价格自2006年初开始便剧增(参见附件A & B)。即便是本地的原棕油,价格也从2006年1月的每公吨RM1460暴涨至2007年12月的RM2950。结果这导致混合饲料的售价从2006年至2008年3月每公吨涨RM565 (参见附件C)。这其中的例子是,肉小鸡饲料的价格从2006年1月的每公吨RM1273 一路涨至2008年3月的RM1788。。(参见附件D & E)