It is indeed depressing for consumers to hear that price of essentials that is chicken and egg prices are likely to increase after February 4. Consumers are already suffering from an overall increase in prices of essentials including fruits, vegetables and fish. To further hear that prices of chicken and eggs will increase is indeed sad and disheartening.
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; thus price increases of food has especially a drastic negative impact on them .
Two factors that contributes to increase food prices is price manipulation and the abuse of Approved Permits.
We have always suggested that one of the key factors of the high price of food was monopolistic practices along the various parts of the food supply chain. The 2019 report on the market review of key food items by the Malaysia Competition Commission 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 substantial price increase is the price of cabbage; price at the farm is RM 1.60 while consumer pay a retail price of RM 3.90, and increase of 143%.
Malaysia Competition Commission (MyCC) in their report have identified multiple causes of the exorbitant food price in the market. The reasons include market manipulation by middlemen, and multiple intermediaries causing unreasonable increase in food prices.
For example in the fish supply chain, middle man are known to hoard fish when prices are low, thus restricting supplying and forcing the prices of fish to increase. There is also opaqueness in price determination along the supply chain. MyCC has also suggested the establishment of a new wholesale markets to promote competition through greater transparency and market competition through the removal of market inefficiencies.
Another reason stated the MyCC Report is the manipulation of Approved Permits which results in increasing food prices. While FOMCA has continuously spoken against the use of APs for food an essentials, we have often been told that there are no APS for food.
Yet, recently Mr Mydin has questioned as to who are the holders of APs to import whole chicken. And further he had requested that retailers be allowed to import chicken directly and thus do not need to go through AP holders. The abuse of APs clearly results in increase price 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, it is for certain that the price of food will be lowered.
If the government is serious about decreasing food prices than it should seriously take action against those manipulating prices and thus causing suffering amongst 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 legislation to act against price manipulators that is, the Price Control and Anti-Profiteering Act, 2011 and the Competition Act, 2010. These legislation are powerful instruments to detect price manipulation practices and profiteering as well as more importantly to take strong actions against the manipulators and profiteers.
The awarding of APs also need to be reviewed. Concrete steps need to be taken to ensure that imported food and essentials are undertaken by parties that would ensure lower prices for consumers. Profiting by AP holders should be terminated. Consumers will then benefit through lower prices of imported chicken and food.
