Chicken and egg
A question of price? Or more?
THERE is no end to the chicken and egg story. Come festivals — there are many in Malaysia — it is a chicken or egg story. Sometimes a chicken and egg story, like it is now during this Ramadan. But which came first, the maximum price fixed by the Domestic Trade and Consumer Affairs Ministry or the price set by the market? Its minister, Datuk Seri Alexander Nanta Linggi, seems to suggest that the fixed maximum price may have come first. How else do we read his statement on the chicken price hike at his press conference on Thursday? “We are putting a lot of pressure on suppliers and farmers by insisting that they produce chicken at low prices when most of their operational costs have increased.” If the fixed maximum price is a low price, what then is the right price? If the low price is not the right price, why fix a low price? These and many more questions remain unanswered. To the extent these questions remain up in the air, the allegations of “hidden hands” behind the price hike will be a festival refrain.
Perhaps a more transparent process may resolve this perennial issue of price hike. True, costs have gone up. Some reasonably, some unreasonably. Traders, suppliers and farmers, all have their version of the story. Granted, the poultry industry is a web of complexity composed of an extensive supply chain and multiple sub-sectors, such as chicken feed manufacturing, supply of day-old chicks, chicken farming and chicken distributorship. But the authorities are best placed to know the backstory of the price hike in this complex web and they must help explain this to the public. To dismiss consumer complaints as mere allegations isn’t the best way to tell the backstory. What’s worse, such a response will only help cartels bloom.
Chicken and egg cartels are not unheard of in Malaysia. If not cartels, collusion among some in the complex web is a possibility. In mid-December 2018 when egg prices shot up 30 per cent in a week, the Domestic Trade and Consumer Affairs Ministry launched an investigation, thinking some form of collusion was at work. According to Bloomberg’s report on Dec 18, the cost of a tray of 10 eggs in Putrajaya was as high as RM5.11 at the start of the month. It was only RM3.98 a week earlier. As expected, the ministry did not disclose the findings of the investigation. Ministries work in mysterious ways, especially Malaysian ones. But times are achanging and people need to know. The Malaysian Competition Commission (MyCC), the enforcement agency in charge of overseeing competition law, announced on Friday, in a statement, that it was investigating allegations of cartel operations in the poultry industry. MyCC said a task force was set up on Feb 1. Given the complexity of the Malaysian poultry industry, it is hard to say when MyCC will complete the investigation. What we can be sure of is that the findings won’t be ready before Hari Raya Aidilfitri. More importantly, we hope MyCC is enabled to make the findings public once it is completed. We think this isn’t a big ask. Transparency is a must for building trust among people. So it is for growing ethical business in Malaysia.
Ministries work in mysterious ways, especially Malaysian ones. But times are a-changing and people need to know.