January 25, 2022
IT is indeed depressing for consumers to hear that the prices of essential goods such as chicken and eggs are likely to increase after Feb 4.
Consumers are already suffering from an overall increase in prices of essential goods, including fruits, vegetables and fish.
To further hear that the prices of chicken and eggs will increase is indeed sad and disheartening.
Federation of Malaysian Consumers Associations (Fomca) has always been raising the issue of the impact of increasing prices of food and essentials on consumers, especially low-income consumers.
Low-income consumers are especially impacted by high food prices as a substantial part of their household income is spent on food. Therefore, price increases have a drastic negative impact on them.
Two factors that contribute to the increase are price manipulation and the abuse of Approved Permits (AP).
We have always suggested that one of the key factors of the high price of food is monopolistic practices along with various parts of the food supply chain.
A 2019 report on the market review of key food items by the Malaysia Competition Commission (MyCC) confirms that one of the key reasons for high food prices is distortions and manipulations in the food supply chain.
For example, the price of ikan kembong has increased by six times between the price received by the fisherman and the price paid by the consumer.
Another example of a substantial price increase is the price of cabbage, priced at the farm for RM1.60 while the consumer pays a retail price of RM3.90, an increase of 143%.
MyCC in their report has identified multiple causes of the exorbitant food price in the market.
The reasons include market manipulation by middlemen and multiple intermediaries, causing an unreasonable hike in food prices.
For example, in the fish supply chain, middlemen are known to hoard fish when prices are low, thus restricting supply and forcing the prices of fish to increase. There is also no transparency in price determination along the supply chain.
MyCC has also suggested the establishment of new wholesale markets to promote competition through greater transparency and market competition through the removal of market inefficiencies.
Another reason stated in the MyCC Report is the manipulation of AP which results in increasing food prices.
While Fomca has continuously spoken against the use of AP for food and essentials, we have often been told that there are no AP for food.
Yet, recently Datuk Ameer Ali Mydin has questioned as to who are the holders of the AP to import whole chicken.
Furthermore, he had requested that retailers be allowed to import chicken directly and thus do not need to go through AP holders.
The abuse of AP clearly results in increases in the price of food and other essentials.
Fomca calls on the government to be transparent on the issuance of AP for food and other essential items.
If retailers or other sellers can directly import chicken or other essential items, it is certain that the prices of food will be lowered.
If the government is serious about decreasing food prices then it should seriously take action against those manipulating prices and thus causing suffering among consumers, especially low-income consumers.
Through the food supply chain market study by the MyCC, these offenders have been identified.
The government has two powerful legislations to act against price manipulators, which are the Price Control and Anti-Profiteering Act 2011 and the Competition Act 2010.
These legislations are powerful instruments to detect price manipulation practices and profiteering, and more importantly to take strong action against manipulators and profiteers.
The awarding of AP also needs to be reviewed. Concrete steps need to be taken to ensure that imported food and essentials are undertaken by parties that will ensure lower prices for consumers.
Profiting by AP holders should be terminated. Consumers will then benefit through lower prices of imported chicken and food.
Dr Paul Selva Raj, Fomca Secretary-General