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No chicken feed issue
FOOD inflation has now breached a decade high while overall inflation is starting to creep up with some economists expecting the cost of goods to push on more forcefully in the months ahead.
Yes, the price of commodities have started to ease and off the 52-week highs and that may offer some respite to the pressure inflation has put on the people.
But the key commodity that has most politicians here in Malaysia worried is the price of food.
If you ask economists, they will point to core inflation being relatively benign.
Unfortunately, overall inflation is the key for politicians as the voter base will have to eat to survive and pump petrol in their vehicles.
There is nothing that screams at the predicament politicians and the vote-base is at when it comes to the price of chicken.
The humble bird that finds its way onto the dining tables of Malaysians have a special place in the social makeup. It is because of the amount we consume as a country and directly, how much out of the pay packets we will eventually spend with what some will consider to be the cheapest cost of protein.
If you ask economists, they will point to core inflation being relatively benign. Unfortunately, overall inflation is the key for politicians as the voter base will have to eat to survive and pump petrol in their vehicles.
The government has indicated that the price of chicken would not be floated from July but did a few days ago, concede that the price per kg of chicken would have to be higher than the old price ceiling.
At RM8.90 a kg, that is likely going to be below the cost of production. Even with import permits of chicken now abolished, and companies will be free to import chicken, it will be hard pressed to find sources of chicken that will be willing to sell to Malaysia as the current selling price of a kg of chicken is above RM11 in countries in the region.
It is more than RM14 a kg in the Philippines and it is nearly RM29 a kg in Singapore.
So the price of chicken will have to rise but when Malaysia is one of the largest consumers of chicken on a per capita basis in the world – higher than just about any Western country, then it is understandable why the cost of the “cheapest” source of protein will need to be kept in check.
The cost to keep the price of chicken low will mean that the government will continue to incur a large subsidy bill to maintain the price of goods and try to keep a lid on inflation.