case study ECO415

Global Hike in Cost of Raw Goods Led To Chicken Price Surge in Malaysia PUTRAJAYA: The global price surge in raw materials to produce chicken feed was among the reasons behind the recent skyrocketing price of chicken in the country. This was compounded by Malaysia's inability to produce enough com and soybean, which are key components of chicken feed, said Agriculture and Food Industry Minister Datuk Seri Dr Ronald Kiandee. He said Malaysia's chicken farmers still largely rely on imported raw materials to produce chicken feed. "This (global rise in price of raw materials for food) is beyond our control. The reality is that we still depend on other countries (to supply components to produce animal feed). For example, we are still importing com in large quantities since we do not produce enough com here," he said. Earlier today, the Federation of Livestock Farmers' Association of Malaysia had said that the surge in prices of raw materials to produce feed, coupled with increase in labour cost due to the Covid-19 pandernic, had affected the operating cost of chicken farms. These factors, it said, subsequently led to increased poultry prices in the market. The price of imported soya bean meal had increased by 57.6 per cent from RM1,650 in January last year to RM2,600 last month. During the same period, the price of crude palm oil experienced a 43.3 per cent increase from RM3,000 to RM4,300 while the price of imported corn rose by 41.3 per cent from RM920 to RMI,300. Kiandee said the government via the Domestic Trade and Consumer Affairs Ministry has taken necessary measures to control the price of poultry and protect consumers. He was referring to the Festive Season Maximum Price Control Scheme (SHMMP), which would be enforced from April 21 until May 20, as announced by Domestic Trade and Consumer Affairs Minister Datuk Seri Alexander Nanta Linggi on Monday. Both ministries, he said, had also conducted engagement session with industry players to address the issue. Asked on the proposal by Deputy Domestic Trade and Consumer Affairs Minister Datuk Rosol Wahid for more approved permits (APs) be issued for the import of chicken to control the price increase, Kiandec said the matter must be discussed at policy level. "Having that said, whatever measures adopted by the ministry must be done with the objective of benefiting the industry at large," he said, without committing if the ministry would adopt the proposal or otherwise. New Strait Times, April 20, 2021 Based on case study above, answer the following questions: a. With the aid of diagram, explain thoroughly two (2) factors that lead to increase in the price of chicken. (6 marks) a. "Kiandee said the government via the Domestic Trade and Consumer Affairs Ministry has taken necessary measures to control the price of poultry and protect consumers" Based on the statement above, explain the impacts of government action toward both seller and buyers respectively. (4 marks)