Cost Of Living Increases During COVID-19 Pandemic

 Cost Of Living Increases During COVID-19 Pandemic

Two days into the year 2021, consumers aka Sarawakians were hit with the news of an increase in the price of chicken, from RM8.50 per kg to RM9.00, an increase of RM0.50 per kg (5.6% increase) According to the Sarawak Livestock Breeders Association the increase was in part due to rising cost of rearing chickens due to the global shortage supply of corn. It would be a matter of time before we hear announcements on an increase in prices for pork and reared fish as a significant component in feed meals for swine and fish is corn.

The statement from the association hinted at rising corn prices due to a global shortage in corn.

https://www.theborneopost.com/2021/01/02/chicken-now-priced-at-rm9-per-kg-after-50-sen-price-hike/

The only corn producing country in the world that has said that they were expecting a real shortage of corn in the 2020/2021 is China. A Jan 2020 news report said that they could face a shortage of up to 30 million tonnes or around 10% of its total crop. China reportedly attributed this to a severe flooding in south China. This news was later ‘contradicted’ by another news report in August 2020 which said that the price of corn in northern China has skyrocketed. The price increase was however reported as driven by speculative trading and deep-processing enterprises. An agricultural analyst reassured the market by saying the supply and demand of corn is heading toward a balance after the country's efforts of destocking. 

https://www.globaltimes.cn/content/1196454.shtml 

https://www.agriculture.com/markets/newswire/chinas-looming-corn-shortage-fans-food-security-unease

Malaysia imports the bulk of her need for corn grain from south America - from Argentina and Brazil and so the shortage in China, real or otherwise, does not affect Malaysia’s supply although Malaysia cannot be exempted from the additional cost arising from fluctuations in foreign exchange rates.

In 2020, maize imports quantity for Malaysia was 4,100,000 tonnes. In 2018, 80% of Malaysia’s corn grain import was from Argentina and Brazil. 

https://knoema.com/atlas/Malaysia/topics/Agriculture/Trade-Import-Quantity/Maize-imports-quantity

https://apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfilename?filename=Grain%20and%20Feed%20Annual_Kuala%20Lumpur_Malaysia_3-20-2019.pdf

The real situation is beyond this article but we do know one thing: A price increase in any foodstuff during times such as the one we are going through now is very bad news. The COVID.19 pandemic has caused many to lose their jobs and causing families to fall into stress filled financial situations. It is therefore imperative for the government to cushion the impact of the price increase and to find a long term solution that can contain unwarranted price increases. Key to this is the ability to utilise locally produced components for the feed meals.

In Feb 2019, then Deputy Agriculture and Agro-based Industry Minister Sim Tze Zin reportedly said Malaysia has to step up the production of corn as the nation spends RM3.09 billion a year to import grain corn. Again, the ability of Malaysia to produce sufficient corn domestically is beyond this article but we do know there is an viable alternative, a locally produced component that is both sustainable in supply and suitable in quality - oil palm.

This is not something that is unknown to the government because a federal government GLC had successfully produced a high quality feed meal suitable for the poultry, swine and fish industry from oil palm.

In April 2017, Sime Darby Oil Palms Bhd announced that they have developed a new highly refined feed derived from oil palm kernel cake. Datuk Seri Ahmad Shabery Cheek, then Minister of Agriculture and Agro-based Industry had officiated at the launch of the product. Sime Darby Oils touted the product as having the potential to transform the Malaysian feed meal market.

https://www.feednavigator.com/Article/2018/04/25/Malaysia-looks-to-cut-back-on-poultry-feed-imports

https://www.theedgemarkets.com/article/sime-darby-plantation-introduces-new-animal-feed-product#:~:text=KUALA%20LUMPUR%20(April%2025)%3A,Kernel%20Crushing%20Plant%20in%20Klang.

At least 3.31 million hectares on land in Malaysia are planted with oil palm. Of that total, at least 1.57 million hectares are in Sarawak.

There are at least 452 oil palm mills in Malaysia today and of that total, 81 mills are located in Sarawak. In 2019, Malaysia exported 4,237,100 tonnes of palm kernel cake. In 2020, Malaysia imported 4,100,000 tonnes of corn grain from Argentina and Brazil. On the face of it, it seems that Malaysia can actually stop importing corn grain for feed meals and instead use locally produced components extracted from palm oil kernel. It is of high quality, sustainable because of Malaysia’s huge oil palm industry and because it is a locally produced component and not subjected to fluctuations in foreign currency exchange, it is much cheaper.

https://www.statista.com/statistics/1093066/malaysia-oil-palm-total-planted-areas-in-sarawak/

http://bepi.mpob.gov.my/index.php/en/summary-2/summary-2019/summary-of-the-malaysian-palm-oil-industry-2019.html

So, it brings us to this crucial question - why do feed millers in Malaysia insist on importing grain corn from overseas when there is a proven good quality locally produced alternative? Is it because there are powerful people with vested interest in the importation of corn business who do not want the industry to switch to a locally produce component? Why is the federal government unable to resolve this problem that is increasing the burden of Malaysians in particular Sarawakians.

"If the GPS is unable or unwilling to do this then they should not be allowed to remain in office after the next PRN."

Sarawak is among the three states in Malaysia with the highest rate of poverty. Over 54% of all households in Sarawak are in the B40 category. Any increase in prices of any food items will greatly add to the burden and sufferings of these families.

Sarawak is among the three states in Malaysia with the highest rate of poverty. 

If the GPS government can force Petronas to pay the 5% SST on O&G products through the processes of courts, it can also force feed meal millers to switch from corn grain to palm oil kernel cakes. There is at least one oil palm miller in Bintulu that is already producing palm oil kernel cakes. If the GPS is unable or unwilling to do this then they should not be allowed to remain in office after the next PRN. It is completely unacceptable that a few are allowed to profit and enrich themselves at the expense of the rest of the people especially the poor.