Subsidy withdrawal: Why did chicken prices fall?

 

Contrary to concerns that prices will shoot up after the discontinuation of subsidies, the price of chicken throughout Malaysia dropped below the previous controlled price of RM9.40 per kg.

“Why not?” replied Federation of Livestock Farmers' Associations of Malaysia (FLFAM) adviser Jeffrey Ng when the question was posed to him.

Explaining that prices are dependent on the law of supply and demand, he told Malaysiakini that there is always adequate chicken supply.

According to him, demand is only high for a short period of time during festive seasons.

“We tend to forget that sometimes we buy chicken meat at a cheaper price and sometimes, it is expensive. That is the phenomenon of the free market.

“Sometimes it’s up, sometimes it’s down,” he added.

As part of a broader policy shift from bulk subsidies to targeted subsidies, the government has discontinued subsidies for poultry beginning Nov 1, though price control for eggs will continue.

On the eve of the transition, Acting Domestic Trade and Cost of Living Minister Armizan Mohd Ali said industry players have assured there would not be a surge in prices, and it could fall below the RM9.40 per kg ceiling price instead.

Meanwhile, asked whether there has been a change in the demand for poultry, Ng said there was not.

‘Promoting health competition’

He also said while consumers may fear the floating chicken prices because they are not used to them, and it could theoretically result in higher prices, that is not always the case.

It could instead promote healthy competition between sellers.

“All the supermarkets compete on price: RM7 per kg at Mydin and RM7.50 per kg at Lotus’s.

“As consumers, that’s what we want so we can get the best offer instead of just one price, which is the ceiling price. There are fewer offers since everyone knows there is only one price.

“The floating price gives better and bigger business opportunities and creates better offers to consumers,” Ng said. - Mkini