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CONSUMERS must be distressed to hear that prices of essentials will likely increase after February 4.
They are already suffering from an overall price hike involving fish, fruits and vegetables, and to further hear that prices of chickens and eggs will also increase is sad and disheartening.
The Federation of Malaysian Consumers Associations (Fomca) has raised the issue of the impact of increasing prices of food and essentials on consumers, especially those in the low-income group, who have to fork out a substantial part of their household income on food.
There are two contributing factors to the price hike – price manipulation and abuse of approved permits (AP).
Fomca has suggested that one of the key factors of the price hike is monopolistic practices in the food supply chain.
A Malaysia Competition Commission (MyCC) 2019 report on the market review of key food items confirms that one of the key factors for high food prices is the distortion and manipulation in the food supply chain.
For example, the price of ikan kembong increases sixfold between the initial price received by fishermen and price paid by consumers. The price of cabbage, too, sees a substantial increase – 143% – between the initial price at the farm (RM 1.60) and price paid by consumers (RM 3.90).
MyCC, in its report, identifies multiple causes of high food prices in the market, including market manipulation by middlemen and multiple intermediaries.
For example, in the fish supply chain, middlemen are known to hoard fish when prices are low, thus restricting supply and forcing fish prices to increase. The supply chain also has opaqueness in price determination.
MyCC has suggested the establishment of new wholesale markets to promote competition through greater transparency and the removal of inefficiencies.
The report also identifies AP manipulation as a cause of high food prices in the market.
Fomca has continuously spoken against AP use for food and essentials, and often been told that there are no AP for food.
Mr Mydin recently questioned who are the AP holders to import whole chicken. He also requested retailers be allowed to directly import chicken without needing to go through AP holders. AP abuse clearly results in an overall price hike.
Fomca calls on the government to be transparent in the issuance of AP for food and essentials. If retailers or sellers can directly import chicken or other essential goods, it is a certain that the price of that food or item will be lowered.
If the government is serious about decreasing food prices, then it should seriously take action against price manipulators, who have been identified through the food supply chain market study by the MyCC.
The government has two powerful laws – the Price Control and Anti-Profiteering Act 2011 and Competition Act 2010. These legislations are powerful instruments to detect price manipulation practices and profiteering, and more importantly, be used to take stern action against manipulators and profiteers.