January 12, 2022 @ 12:23am
LETTERS: IT is depressing for consumers to hear that the price of essentials, such as chicken and egg, is likely to increase after Feb 4.
Consumers are already suffering from increased prices of other essentials, like fruits, vegetables and fish.
The Federation of Malaysia Consumers Associations (Fomca) has been highlighting the impact of increasing prices of food and essentials on consumers, especially low-income earners.
Low-income consumers are hard hit by high food prices as a substantial part of their earnings is spent on food.
Two factors that increase food prices are price manipulation and the abuse of approved permits (APs).
We have always said that monopolistic practices in the food supply chain had inflated prices.
A 2019 report on the market review of key food items by the Malaysia Competition Commission (MyCC) found that one of the key reasons for high food prices was distortion and manipulation in the supply chain.
For example, the price of ikan kembong increased six times between what the fisherman was paid and what the consumer forked out at the market. Another example is cabbage. The price at the farm is RM1.60, while the consumer paid RM3.90, an increase of 143 per cent.
MyCC in their report identified several causes of exorbitant food prices, including market manipulation by middlemen and intermediaries, causing unreasonable increases in food prices.
For example, in the fish supply chain, middlemen would hoard fish when prices are low, thus restricting supply and forcing the prices of fish to increase. There is also opaqueness in price determination along the supply chain.
MyCC has suggested the establishment of wholesale markets to promote competition through greater transparency and market competition with the removal of market inefficiencies.
Another reason for increased prices stated in the MyCC report is the manipulation of APs. While Fomca has continuously spoken against the use of APs for food and essentials, we have often been told that there are no APs for food.
Yet, recently Mydin hypermarket had questioned who are the holders of APs to import whole chicken and asked that retailers be allowed to import chicken themselves.
The abuse of APs results in increased prices of food and other essentials.
Fomca calls on the government to be transparent in the issuance of APs for food and other essential items. If retailers or other sellers can directly import chicken or other essential items, the price of food will be lowered.
If the government is serious about decreasing food prices, it should take action against those manipulating prices.
These offenders have been identified in the food supply chain market study by MyCC.
The government has two pieces of powerful legislation to act against price manipulators: the Price Control and Anti-Profiteering Act, 2011 and the Competition Act, 2010.
The awarding of APs also need to be reviewed and the importation of food and essentials are undertaken by parties that would ensure lower prices.
Dr Paul Selva Raj