Rants and Points of View (POVs) by
Nur Erma Nardiah binti Nazami, Associate Analyst
Poultry and eggs are two essential sources of protein and nutrition for people worldwide. Both poultry and eggs are widely consumed in Malaysia, and they play a crucial role in the country’s food security and economy. The Gross Domestic Product (GDP) for the Poultry industry has increased steadily over the years, as shown in Figure 1. The poultry industry also contributed about 0.7% of the share of the GDP[1] in 2021.
Figure 1 Gross Domestic Product Poultry Industry
Poultry and eggs are affordable sources of protein and are widely consumed in Malaysia. According to the Department of Statistics Malaysia, the average Malaysian consumed 41.8 kilograms of poultry meat and 224 eggs in 2020. Both poultry and eggs have achieved Self-Sufficiency Rate (SSR) above 100%, 136% for poultry, and 114.4% for eggs[2]. As shown in Table 1 below, the price of eggs and chicken are relatively low as compared to other neighboring countries. However, there have been concerns about the supply and price of poultry and eggs from Malaysian in recent years.
Table 1 Comparison Price of Egg per Piece and Chicken per Kg with Neighbouring Countries, December 2022
| No. | Country | Price of Egg (RM/piece) | Price of Chicken (RM/kg) |
| 1. | Malaysia | RM0.54 | RM9.08 |
| 2. | Singapore | RM1.03 | RM42.12 |
| 3. | Thailand | RM0.75 | RM16.02 |
| 4. | Indonesia | Rm0.07 | RM11.66 |
Source: Global Product Prices
One of the main factors driving up the price of poultry and eggs is the rising cost of poultry feed, as Malaysia imports much of its poultry feed. The cost of these imports has been increasing due to supply chain disruptions and rising global commodity prices. According to the Malaysian Feedmillers Association, estimated as much as 6 million metric tons of animal feed was produced during the period a year, with an estimated 85% of it being raw materials imports. The Report of Special Study on Production Cost of Chicken and Egg in 2020 shows that poultry feed has the highest composition in the production of chicken which is 65.13% for chicken broilers [3] and 76.18% for chicken layer[4], as shown in Table 2. This has led to higher production costs for poultry farmers, which are then passed on to consumers in the form of higher retail prices.
Table 2 Composition of Production Cost in Farm (%)
| Category | Composition of Production Cost in Farm (%) | |
| Chicken Broiler | Chicken Layer | |
| Direct Cost | 98.61 | 96.89 |
| Poultry Feed | 65.13 | 76.18 |
| Day-old Chick | 16.00 | 2.61 |
| Utilities | 7.20 | 8.82 |
| Salaries and Wages | 5.85 | 7.02 |
| Vitamins/Vaccines | 2.89 | 2.23 |
| Coop-related | 1.53 | 0.04 |
| Indirect Cost | 1.39 | 3.11 |
| Fees and Taxes | 0.09 | 0.05 |
| Insurance Fee | 0.03 | 0.13 |
| Licence Fee | 0.02 | 0.01 |
| Others | 1.26 | 2.92 |
| Total | 100 | 100 |
Source: DOSM
The surge in commodity prices of soybean and corn, depicted in Figure 2, has a direct impact on the cost of poultry feed. The price of soybean surged from RM1.48K to RM3.2K per metric ton following the outbreak of COVID-19, while the cost of corn rose from RM0.62K per metric ton in January 2018 to a peak of RM1.61K in October 2022, indicating almost a threefold increase over five years. The rising cost of grain corn and soybean can significantly affect the overall cost of poultry feed and, consequently, the cost of poultry products for consumers. It is important to understand the composition of poultry feedstock because a substantial proportion of animal feedstock, around 55% to 69.2% for corn grain and 19.1% to 32.0% for soybean, is typically made up of these ingredients[5]. To meet the domestic market’s needs, Malaysia imported 3.8 million metric tons, equal to RM3.3 billion of grain corn in 2020 alone[6].
Figure 2 Soybean and Corn Commodity Price (RM/MT)
Source: IndexMundi
The COVID-19 pandemic has disrupted the supply chain of the poultry and egg industry in Malaysia, leading to shortages and price increases. The fall in currency exchange and export markets has contributed to this issue. To ensure access to affordable and nutritious food, it is crucial to address these issues. Increasing investment, improving collaboration, and shifting focus on R&D is essential. This can be achieved through regular meetings, research grants, and partnerships, which align with strategy 5 in the livestock subsector under Dasar Agromakanan Negara 2.0 (DAN 2.0) to reduce dependency on imported animal feed. Additionally, the government should conduct a thorough study of the poultry market, consider external factors, and set a ceiling price for poultry products to ensure a stable and sustainable market. A reasonable ceiling price benefits both farmers and consumers.
Poultry and eggs are crucial sources of nutrition for people in Malaysia and worldwide. Malaysia must continue investing in measures to ensure they remain affordable and accessible, in line with DAN 2.0 objectives, which seek to raise the self-sufficiency ratio (SSR) of poultry meat by 140% and eggs by 123%.To mitigate supply constraints and price increases, a multidimensional approach is needed. Improving production efficiency through modern technology and better breeding practices can reduce production costs and increase supply. Market incentives such as subsidies and tax breaks can stimulate production, and trade policy can regulate imports to balance supply and demand. These measures will help ensure consumers have access to affordable and high-quality poultry products.
Strat369 Consulting Sdn Bhd is a Consulting company in the field of Strategy and Economics. Established in 2016 and registered with the Ministry of Finance (MOF), we have expertise in conducting studies covering 3 key areas, namely Strategy & Economy, Public-Private Partnership and Capital Projects & Infrastructure. We also have experience in the poultry sector covering the financial aspects. We have been conducting a project to identify players that are capable of producing 150,000-200,000 broilers per day and integrating into the value chain. Additionally, we have prior experience in conducting a project to import poultry into Malaysia while adhering to Malaysia Halal Certification Guideline.
[1] https://www.dosm.gov.my/AgriculturalAnalyticalSystem/
[2] DOSM
[3] Chicken that is bred and raised specifically for meat production
[4] Chicken that is raised for the purpose of commercial egg production
[5] Report of Special Study on Production Cost of Chicken and Egg, 2022