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

TNB Evaluating Legal Options After Receiving RM840 Mln Tax Notice
TNB Evaluating Legal Options After Receiving RM840 Mln Tax Notice

Barnama

time4 hours ago

  • Barnama

TNB Evaluating Legal Options After Receiving RM840 Mln Tax Notice

TNB Evaluating Legal Options After Receiving RM840 Mln Tax Notice KUALA LUMPUR, July 25 (Bernama) -- Tenaga Nasional Bhd (TNB) has received a Notice of Additional Assessment for the Year of Assessment (YA) 2022 amounting to RM840.12 million, dated July 24, 2025, from the Inland Revenue Board. In a filing with Bursa Malaysia today, TNB said that in light of the Federal Court's decision relating to a similar Notice of Additional Assessment issued for YA 2018, it is currently evaluating its available legal options to address the matter. "This evaluation takes into consideration that TNB has already submitted an application for Investment Allowance under Schedule 7B of the Income Tax Act 1967 (including those for YA 2022) to the Minister of Finance," it added. -- BERNAMA

Gov't Committed To Expanding 5G Coverage To Rural Areas
Gov't Committed To Expanding 5G Coverage To Rural Areas

Barnama

time6 hours ago

  • Barnama

Gov't Committed To Expanding 5G Coverage To Rural Areas

GENERAL ALOR SETAR, July 25 (Bernama) – Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi has reaffirmed the government's commitment to expanding 5G coverage to rural areas, as part of efforts to ensure local leaders are empowered to use social media for communication with residents. Ahmad Zahid, who is also Minister of Rural and Regional Development, said his ministry will work alongside the Ministry of Digital and the Ministry of Communications to realise the effort. '... 5G coverage must not be limited to densely populated areas, but extended to KEDA (Kedah Regional Development Authority) zones, FELCRA settlements and other villages. the Ministry of Rural and Regional Development (KKDW), in collaboration with the Digital Ministry and the Communications Ministry, is determined to bring 5G to rural areas,' he said. He was speaking at the opening of the 2025 KEDA Rural Youth and Programme Implementation Planning Committee (4P) Convention here tonight. Also present was KEDA Chairman Datuk Seri Mahdzir Khalid. Ahmad Zahid added that rural leaders must embrace and be proficient in technology, especially in using social media as a tool to connect and engage with their communities. He also urged them to enhance their leadership knowledge in today's modern era by balancing traditional and contemporary telecommunications systems. He noted that grassroots leaders should engage directly with the people instead of relying solely on reports, stressing that true leadership requires integrity. 'A leader without integrity is like a house without pillars — it will collapse when tested,' he said. Meanwhile, he announced that RM40.7 million has been allocated to KEDA this year to benefit targeted groups, including rural youth throughout Kedah.

Citadel Trustee, Chester Group Tie Up To Transform Malaysia's Real Estate Management
Citadel Trustee, Chester Group Tie Up To Transform Malaysia's Real Estate Management

Barnama

time7 hours ago

  • Barnama

Citadel Trustee, Chester Group Tie Up To Transform Malaysia's Real Estate Management

BUSINESS KUALA LUMPUR, July 25 (Bernama) -- Citadel Trustee Bhd and Chester Group are set to introduce a pioneering real estate management platform to deliver robust growth, capital preservation, and multi-generational wealth planning, following a strategic partnership that was inked today. In a joint statement, both parties said that the platform uniquely combines diversified asset deployment with sophisticated risk assessment to meet the evolving needs of discerning clients in Malaysia's dynamic property market. According to the statement, the new product stands out by integrating equity stakes in undervalued real estate, development projects, select equities, and income-generating assets within an advanced asset protection framework. 'It is designed to deliver stable annual returns of 10 per cent to 12 per cent, with regular quarterly payouts, while safeguarding against legal and financial risks. 'Tailored legacy planning solutions are also available for high-net-worth participants, ensuring a smooth transfer of wealth across generations. We aim to grow our portfolio to RM500 million by 2026,' the statement read. Both companies said that the platform enters the market at a time of significant transformation within Malaysia's property landscape. They said that with economic growth gaining momentum in late 2024 and government efforts enhancing infrastructure and connectivity, demand is rising for suburban and transit-oriented developments. Homebuyers are increasingly drawn to affordability, space, and quality, particularly in emerging townships, boosted by supportive financing and housing incentives, they said. 'In this evolving environment, there is growing interest in solutions that offer a more structured and adaptable approach to real estate.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store