May 26, 2022

Does Anyone In The Cabinet Understand The “Chicken and Egg” Problem?

Current government responses to food inflation and chicken shortages include:
1. Fix ceiling price of chicken
2. Ban exports of chicken
3. Remove AP for certain food items to facilitate imports.

None of these measures enhances our food security!

When government fix the ceiling price of chicken, less will be invested in production of chicken! Worse still is when a profitable business is made risky because of export ban. The cost will go up due to higher investment risk. The future supply in the domestic market will be squeezed!

Even removing AP may not prevent food inflation because food shortage is becoming a global problem, and this is aggravated by the weakening Ringgit! The decision to remove AP may stifle domestic investment in food production in the long run!

What the government should do is to increase local food production, ie more investment, more incentives, more land and less bureaucratic barrier for new investment or expansion in local food production.

The only sure bet on food security is when local production can meet the basic needs of our population!

Dr Lee Boon Chye

Related Posts