Andrew Sia in Malaysiakini - May 26, 2022
COMMENT | What is chickensh*t economics? That's when the costs of chicken farming keep shooting up but the government keeps forcing breeders to lower selling prices. Eventually, it leads to disaster.
This has been going on for over one year in the poultry industry, and now some farms are closing shop. The root problem is that the cost of chicken feed is no longer, as they say, “chicken feed”. MAFI, the Ministry of Agriculture and Food Industries, itself revealed that prices of imported grain feed (which is 70 percent of farming costs) have tripled from RM500 to RM1,900 per tonne in some cases. The weakening ringgit and Ukraine crisis have only worsened this inflation.
Yet, the ceiling price for chickens set by the Skim Harga Maksimum Keluarga Malaysia, (SHMKM) has been steadily reduced from RM9.50/kg during Deepavali 2021 to RM9.30 (December 2021), further to RM9.10 (January 2022) and then to RM8.90 (February to June 2022). This is obviously unsustainable. Does the government expect farmers to keep suffering losses? Even the Mydin boss has said that the ceiling price should be raised to RM9.90.
Keluarga Malaysia may be a good slogan to win votes but it has been steadily strangling chicken farmers, who apparently don’t belong to this loving “Malaysian Family”. Is it because most large-scale farmers don’t belong to the right political party? Or community?
MAFI admitted way back in September last year that the answer to keeping chicken prices low was for the government to subsidise farmers. Agriculture and Food Industries Minister Ronald Kiandee said then, “Industry players need to be protected, the people (consumers) need to be protected as well.”
Nothing was done for months until Jan 31 this year. That’s when Prime Minister Ismail Sabri Yaacob announced that the grand-sounding National Action Council on Cost of Living (NACCOL) had decided subsidies for chicken farmers would be given out.
Okay, great, but where’s the beef? I mean, the money? That depends on who you believe.
Several poultry companies were reported to have suspended operations over the May 21-22 weekend to “protest” the government’s delay in providing the subsidies. Yup, a chicken strike.
Others downplayed this and said, no la, it’s not a protest, just that our birds are “still too small” to sell due to the “hot weather”. Okay, whatever. Either way, shortages of chickens were reported in various places.
Yet RM729 million in subsidies had been supposedly set aside for farmers to stabilise chicken prices since February. What happened? Did the money "sangkut" or "get stuck" somewhere? On May 19, Ismail said that “certain procedures” had resulted in late payments and he wanted this to be “looked into”.
But on May 23, he changed his tune and blasted big companies, claiming they had rejected the subsidies and only “small farmers” had accepted them. This, he added, was "regrettable and disappointing" and had “greatly inconvenienced the people”.
In other words, he blamed the big farmers for the whole fiasco.
Really? This is the first time that I’ve heard of businessmen refusing free money! Or was Ismail playing the politician, trying to divert the people’s anger from the government’s own inefficiency over, as he mentioned four days earlier, “certain procedures”?
Perhaps a more accurate explanation came from MAFI which admitted that so far, only RM50 million in subsidies had been paid out from the total of RM729 million. Thus, the ministry pledged to send out “more officers to the states” to speed up the payments to boost chicken production. In other words, they kinda confessed that they had been knuckleheads in implementing the subsidies decided by NACCOL.
So the chicken strike worked! Well, not really. Ismail showed them who was boss by totally banning the export of chickens, starting June 1. Will that strangle the industry further?
Cutting farmers off from valuable foreign exchange that can cross-subsidise the supply of cheap chickens locally? And cause other countries to doubt the reliability of Malaysia’s supply contracts? Ismail also wants to import more chicken from overseas, thus further pressing local producers.
All this is a crying shame because poultry is the one area where Malaysia is self-sufficient in meat supply (98 percent). In contrast, we are forced to import 52 percent of our cuttlefish or sotong, 78 percent of our beef and 90 percent of our mutton. Strangling our most successful meat industry is like killing the chicken that laid the golden egg.
More ominously, Ismail warned that the government is probing possible chicken price cartels. And he promised a “jihad” or “holy war” against middlemen which had “all this while manipulated supply and prices”.
Sorry for asking, but when a “jihad” is declared, is it usually against the enemies of a certain religion? So I guess those folks are no longer welcome in Keluarga Malaysia?
This attack is all the more stunning because it’s a reversal of what he said in November 2021, that “traders and wholesalers are not responsible” for the hike in essential goods prices. Instead, it was due to accumulated costs in the supply chain.
“I see it as resulting from the supply chain. Take chicken as an example. Breeders, factories and wholesalers all have their own costs,” he said then. So why the U-turn now?
If “cartels” exist, I certainly don’t wish to defend them. In fact, the government should have cracked down ages ago. Why wait till now to go after them? Surely such cartels, if any, must have existed for years? Or are they a convenient bogeyman, tinted with religious overtones, only after the chickensh*t has hit the fan (with the farm closures)?
In other words, is Ismail’s attack on “middlemen” and alleged “cartels” a political ploy to distract from his government’s failure to holistically manage the long-brewing problems of food prices and production?
Part of this holistic response is to produce chicken feed locally (and cheaply). In April, MAFI announced that 80,000 ha nationwide will be used to plant grain corn by 2023. This is a much-belated implementation of the Grain Corn Development Masterplan, which was launched by the government way back in 2016.
Will it work? DAP secretary-general Anthony Loke said, "We have vast land for agriculture. The problem is, the coordination between the federal government and the state governments has a lot of bureaucracy.”
“Bureaucracy” is a soft way to describe it. Activist Mariam Mokhtar alleges that some state governments have taken away land from those who want to do farming, for example, the pomelo growers and vegetable farmers of Perak. This is probably why, despite being blessed with fertile land plus abundant rain and sunshine, Malaysia still has to import 86 percent of its mangoes.
I have nothing personal against Ismail Sabri. But this is not the first time that he has failed at managing things, be it his signature Mara Digital Mall, the devastating floods last December or the incompetent/confusing MCOs that caused spiralling Covid cases/deaths and huge economic losses.
All the Keluarga Malaysia branding in the world (paid for with taxpayers’ money with its shameless self-given 90 percent score) and grandiose "national action councils", can no longer make up for poor performances.
We need more capable leaders such as Rafidah Aziz who can talk to all the stakeholders and then come out with a practical strategy to manage our chicken production and agriculture. Because food is far too important a matter to be left to the chickens*t economics of blundering politicians.
ANDREW SIA is a veteran journalist who likes teh tarik khau kurang manis. You are welcome to give him ideas to brew at email@example.com.
Though we were not enthusiastic with him quoting Anthony Loke, and Miriam Mokhtar as well as praising Rafidah Aziz, that is his prerogative as writer. Agree to disagree.
Government announced RM150 million grant for Pertubuhan Peladang and NAFAS in their effort to replace the chicken cartels.
Others would, but we will not make a fuzz over Ismail's brother as NAFAS Chairman. He is a long and active member of Pertubuhan Peladang. There is a genuine doubt in the effectiveness of these organisations.
These are government organisations psychologically dependent on grants and subsidies to stay relevance. There will be no motivation for them to help the under pressure Ismail to make the chicken problem temporary.
Such government organisations have long been viewed as part and parcel of the food cartel in which insiders from within MAFI are on the take. Seriously there is nothing hopeful in this initiative announced with much fanfare.
Apparently FGV is promoting their cheaper chicken feed formula and doing a media blitz over the plan to increase production. But this was the formula that caused a farm to fall short in chicken weight by 40%. It was never about the current hot weather.
MARDI did the research to use palm kernel in the formula for 10 years. They may have some convincing finding. Unfortunately, it failed to deliver at industrial scale and under crisis.
Thus the big promotion to grow corn grain locally, which is supposed to be suitable for chicken feed. Perhaps the Pertubuhan Peladang members will be encouraged and more will balik kampong tanam jagong.
It is found that production cost for corn grown up north is RM4,000 per tonne. Compared to Chicago Mercantile Exchange and Indonesia, it is only RM1,700 and RM2,300 per tonne, respectively with generous government subsidy given to Indonesian farmers.
Unthought through corn growing program may end up as the Malay saying hangat hangat taik ayam (literally meaning warm warm chicken shit). Farmers will be better off growing the humanly edible sweet corn.
When it is not financially feasible, it unlikely to be sustainable. So was the poultry industry in Malaysia all the while.
For Ismail, if he cannot solve the chicken problem, the political reality he will eventually have to face is that he may not be feasible as BN poster boy. The chicken problem is not too complex to understand yet it has been on-going for quite sometime.
He has a list of blunders that cannot be allowed to let past by anymore. It is affecting peoples' life and the local economy. And, it is not good for BN to lose a general election because of ayam.
At least in the last GE14, BN lost to slanders and Jho Loh's multibillion ringgit 1MDB scam.
Updated and edited: 31/5 10.30 AM