logo
Subsidy removal: Slight increase in egg prices expected, but not drastic for companies

Subsidy removal: Slight increase in egg prices expected, but not drastic for companies

Borneo Post02-05-2025

Given the stabilisation in production costs and the adequate supply of eggs, the decision to allow egg prices to float and to gradually reduce subsidies was widely anticipated. — Bernama photo
KUCHING (May 2): The federal government's decision to end the egg subsidy and ceiling price did not come as a surprise to analysts as the move aligns with stabilised domestic egg production and a decline in key input costs.
In a media statement, the Ministry of Agriculture and Food Security announced the removal of egg price controls, along with a reduction in the egg subsidy from 10 sen to 5 sen per egg effective May 1.
The ministry said the subsidy will then be fully phased out by Aug 1, 2025.
The statement said nearly RM2.5 billion was spent on egg subsidies between February 2022 and December 2024.
Following the removal of the subsidy, the government is expected to save approximately RM1 billion annually.
To recap, the previous subsidy was set at 10 sen per egg, with ceiling prices capped at 42 sen, 40 sen, and 38 sen for Grade A, B, and C eggs respectively.
This translated into retail prices of RM12.60, RM12, and RM11.40 per tray (30 eggs).
Given the stabilisation in production costs and the adequate supply of eggs, the decision to allow egg prices to float and gradually reduce subsidies was widely anticipated.
Researchers with TA Securities Holdings Bhd (TA Research) noted that chicken feed remains the largest cost component for poultry producers, accounting for approximately 70 per cent of total production costs.
'Corn constitutes about 75 per cent of chicken feed, while the remainder is primarily soybean meal. We believe current commodity prices remain supportive for poultry companies, with corn, the primary feed component, continuing to trade at relatively low levels,' it commented in an analysis.
'Should commodity prices increase in the future, poultry producers are expected to leverage their improved pricing flexibility to pass on higher costs to consumers. As such, we anticipate that the impact of the full removal of the egg subsidy and ceiling price in August will be manageable for the sector.'
With the current 5 sen subsidy set to continue until July 2025, TA Research does not anticipate a drastic increase in egg prices in the near term.
Looking ahead, it said any significant rise in feed costs would likely necessitate upward adjustments in ex-farm prices to preserve producer margins.
'For context, a study by the Department of Statistics Malaysia (DoSM) in 2022 indicated that the production cost was 48 sen per egg, during a period when soybean meal and corn prices had soared to their peak.
'Ultimately, we believe the floating egg price mechanism is a step in the right direction, as it allows for more accurate price discovery driven by market fundamentals. Over time, this should support a more sustainable and balanced supply-demand dynamic within the poultry sector,' said the research house.
According to data from the Department of Veterinary Services, retail egg prices ranged from 42 sen to 46 sen per egg between July and October 2022, when subsidies were not in place. Since eggs continue to be the most affordable source of protein, the research firm expect the price impact from the subsidy removal, effective August 2025, to be modest.
'We estimate an increase of only 2 sen to 4 sen per egg, mainly driven by cost pass-throughs rather than fundamental changes in supply or demand. As such, we forecast retail egg prices to remain rangebound around 41sen to 45 sen per egg in the near term, similar to 2022 levels when the 5 sen subsidy was still in effect,' it said.
Meanwhile, Malaysia's annual egg consumption averages 11.6 billion units, translating to approximately 968 million eggs per month. On the supply side, production reached 16.7 billion eggs in 2023, reflecting a 15.8 per cent year on year increase.
This indicates a healthy oversupply in the market. Furthermore, the country's poultry egg self-sufficiency ratio has consistently exceeded 100 per cent.
TA Research expects supply to remain resilient despite the subsidy withdrawal, with demand continuing to hold firm as eggs remain the most cost-effective protein source for consumers. ceiling price egg subsidy TA Research TA Securities Holdings Bhd

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Over 150,000 Visitors Expected At TVET Day, 5,000 Jobs On Offer
Over 150,000 Visitors Expected At TVET Day, 5,000 Jobs On Offer

Barnama

time3 hours ago

  • Barnama

Over 150,000 Visitors Expected At TVET Day, 5,000 Jobs On Offer

10/06/2025 05:24 PM PUTRAJAYA, June 10 (Bernama) -- The National Technical and Vocational Education and Training (TVET) Day 2025 celebration is expected to attract over 150,000 visitors, with more than 5,000 job opportunities offered through career matching with employers from various strategic sectors, said Datuk Seri Dr Ahmad Zahid Hamidi. In a statement issued today after chairing the Special Coordination Meeting for National TVET Day 2025, the Deputy Prime Minister said the celebration brings together broad participation from various government agencies, TVET institutions, industries and the general public, aiming for a direct impact on human capital development and employment opportunities. The three-day event will begin tomorrow at the Melaka International Trade Centre (MITC) in Ayer Keroh, and Prime Minister Datuk Seri Anwar Ibrahim is scheduled to officially launch it on Thursday. 'The official launch on June 12 is expected to include several strategic announcements related to the agenda of strengthening national TVET. Key focus areas will include efforts to encourage wider participation of TVET graduates in high-impact entrepreneurship sectors, in line with current economic needs. 'This step is hoped to further strengthen TVET's role as a driver of growth in high-potential sectors,' said Ahmad Zahid, who is also the Minister of Rural and Regional Development. With the theme "TVET: The Career of Choice", he said the celebration symbolises the MADANI government's commitment to making TVET a core pillar of national development and reinforces its dedication to mainstreaming the skills pathway as part of the country's progressive, inclusive and sustainable Malaysia MADANI aspirations. He said the event will be implemented comprehensively and with high impact, featuring various inclusive, interactive and strategic activities aimed at bringing the public closer to the world of TVET. According to him, the National TVET Day 2025 celebration will consist of four main segments, including the TVET Convention Hub, TVET Job Fair, and TVET Challenge. 'The celebration is expected to take place in a positive atmosphere, with growing public interest in the skills pathway,' he said.

Syndicate using courier services to transport subsidised cooking oil busted
Syndicate using courier services to transport subsidised cooking oil busted

New Straits Times

time7 hours ago

  • New Straits Times

Syndicate using courier services to transport subsidised cooking oil busted

BUTTERWORTH: The Domestic Trade and Cost of Living Ministry has exposed a new tactic in misappropriating subsidised cooking oil packs using courier services following a raid on a warehouse in Kampung Sungai Puyu here today. Its Penang branch director S. Jegan said 14,380 packets of 1kg subsidised cooking oil packs were seized from the warehouse, along with a lorry and other documents, with a total value of RM204,500. "Preliminary investigations found that the wholesaler used courier services to send the packs in large quantities to an address in Perlis while the packs were brought to the courier warehouse in a lorry in deliveries of twice a month," he told reporters at a media conference at the location of the raid. A man, 60, who was the driver of the lorry was arrested after he failed to provide any license, permit or documents to conduct business, to store or use the controlled item. The case is being investigated under the Control of Supplies Act 1961, he added. – Bernama

Zambry urges scholarship providers to diversify student placements beyond US
Zambry urges scholarship providers to diversify student placements beyond US

New Straits Times

time8 hours ago

  • New Straits Times

Zambry urges scholarship providers to diversify student placements beyond US

PUTRAJAYA: Local scholarship providers have been urged to make immediate decisions regarding placing their sponsored students in countries other than the United States (US), following the impact of new tariff policies introduced by the country. Higher Education Minister Datuk Seri Dr Zambry Abdul Kadir said Malaysia had many high-achieving students qualified to pursue studies in the world's best universities, not exclusively in the US. "We can no longer be trapped by policies that are too regressive in nature, to the extent of jeopardising opportunities for students from all over the world, including Malaysia, to study. "For me, the best universities are also available in other countries," he said when met at the 'Luncheon Talk With Editors' session in conjunction with the Asean-Malaysia Chairmanship 2025 Programme, organised by the Higher Education Ministry, here today. He was commenting on the impact of new US tariff policies on Malaysian students pursuing studies there. Previously, the Trump administration issued directives to halt the processing of visas for all foreign students and considered measures to screen new applicants based on their social media posts. Mara chairman Datuk Asyraf Wajdi Dusuki was reportedly quoted as saying that Mara would stop sending its sponsored students to the US starting this year, following the introduction of President Donald Trump's new policies. – BERNAMA

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store