KUALA LUMPUR: Listed poultry companies have warned that the latest price of chicken and eggs set by the government will severely affect industry players.

They claimed that many producers would struggle to break even due to rising production costs.

Industry players have seen raw materials especially bran become costlier, rising between 30 per cent and 40 per cent since early this year.

This came before the government placed chicken and eggs (Grades A, B and C) under the Maximum Price Control Scheme from Feb 5 until June 5 this year.

Leong Hup International Bhd group chief financial officer Chew Eng Loke said the price-fixing move would affect the poultry industry.

"We expect many producers especially small and medium farmers who make up the majority of the industry producers, to struggle to break even vis-a-vis the increased in cost of production, due mainly to elevated raw material and logistic costs," he told the New Straits Times (NST).

Nevertheless, Chew said Leong Hup has farms located across the country and the economies of scale to operate efficiently.

"Leong Hup is geographically diversified across five countries in the region with Malaysia contributing about 30 per cent of the group's total revenue," he said.

Chew said Leong Hup was involved in the commodity business and the management was cognisant of the importance of maintaining cost leadership.

"Leong Hup has been moving downstream by expanding The Bakers Cottage, our business-to-consumer channel in Malaysia. This is in line with the group's strategy to enhance the integration of its "Farm-to-Plate" business model," he added.

An industry source said the move to regulate the ceiling price for chicken and eggs had taken a heavy toll on companies' earnings, adding that the regulation was unfair without bran subsidy given to livestock farmers and egg-producing hen breeders.

"The poultry industry has been badly affected by the Covid-19 pandemic over the past two years due to disruption in the supply chain, caused by the borders closure and movement restriction imposed by countries.

"We (breeders) have limited supply of animal feed (bran) and higher products cost, arising from labour shortage and feed cost, amid the supply chain disruption," the source added.

Industry players collectively urged the government to expedite subsidising the purchase of bran to ensure continual production and supply of chicken and eggs in the country.

Egg-producing hen breeders could not produce sufficient volumes currently, causing a shortage in the market as they could not accommodate the spiralling cost of bran.

They warned that Malaysia could face a severe shortage of chicken and eggs supply, with the situation worsening during Ramadan and Hari Raya without the government's intervention through subsidy.

Federation of Livestock Farmers' Associations of Malaysia (FLFAM) said the industry was "shocked and disappointed" by the price-fixing move.

"The rising cost of chicken and egg production is real and the industry is still suffering losses. In addition, the industry is still waiting for financial assistance such as soft loans or feed cost subsidies from the government.

"With the heavy pressure from ex-farm price controls on the broiler and egg industry, it is likely that some parts of the industry, especially the small and medium farms that have suffered huge losses, will have to stop operating in the coming months," FLFAM said recently.

Industry sources said governments in regional markets such as Singapore and Thailand did not control their chicken and eggs price.

"It does not make sense for the government to control the price because the import of raw materials has increased between 30 per cent and 40 per cent. If they (government) put a limitation on a ceiling price, we are at the losing end. Nobody wants to do business if they operate at a loss," one of them told the NST.

The source added that the current situation had made chicken and eggs prices high as producers were unable to cope with the rising cost of raw materials, and some players had shut down their operations.

"Eventually, the rising of animal feed cost/raw materials will kill the poultry industry and the entire agriculture industry. This is the backbone of the Malaysia's economy (food products and food security) where the government should pay attention to - they can't control food prices, unless the raw materials did not increase.

"The government should let market forces to decide - it is unavoidable and it happens globally," he added.

Among key poultry players, as of Feb 11, shares of Leong Hup and Cakaran Corp Bhd remain unchanged at 55 sen and 52 sen respectively year-to-date.

QL Resources Bhd gained 4.5 per cent or 22 sen to RM4.9 year-todate, Lay Hong Bhd increased 4.0 per cent or one sen at 25 sen, CCK Consolidated Holdings Bhd rose 5.1 per cent or three sen at 57 sen, Teo Seng Capital Bhd rose 4.9 per cent or four 2 sen at 81 sen and Sinmah Capital Bhd's rose 5.6 per cent or one sen at 18 sen per share.

Meanwhile, PWF Corp Bhd eased one sen at 59 sen year-todate, TPC Plus Bhd slipped 5.6 per cent or one sen at 18 sen and LTKM Bhd lost 2.3 per cent or three sen at RM1.33.