KUALA LUMPUR: Malaysia’s poultry industry is expected to remain resilient in the medium term, supported by steady demand for affordable protein and an established domestic production base, according to MBSB Investment Bank Bhd (MBSB IB).
In a note today, MBSB IB said chicken and eggs remained important staple proteins, with domestic demand expected to remain defensive.
However, it said the industry’s main challenge was its reliance on imported feed ingredients, particularly maize and soybean meal, which exposes producers to fluctuations in global grain prices, foreign exchange movements, freight costs, and climate conditions in major exporting countries.
The investment bank said integrated producers were better positioned than smaller operators to manage these risks through economies of scale, procurement capabilities, hedging strategies and greater control across the production chain.
"Integrated producers should remain better positioned than smaller operators through scale, procurement, hedging and control across the production chain.
"Over time, further investment in feed localisation, farming automation, breeder capacity and value-added products could improve industry resilience and reduce earnings volatility,” it said.
Among the sector’s strengths, MBSB IB said chicken self-sufficiency stood at around 91 per cent to 93 per cent, while egg production exceeded domestic requirements at approximately 107 per cent.
However, it said feed remained the industry’s biggest cost exposure, with Malaysia almost entirely dependent on imported maize and soybean meal; together, corn and soybean meal accounted for about 70 per cent of poultry feed costs, leaving producers vulnerable to margin pressure when feed prices rose faster than selling prices.
On opportunities, MBSB IB said the National Agrofood Policy 2.0 target of achieving 140 per cent poultry self-sufficiency by 2030 created room for investment in breeder farms, hatcheries, feed mills, processing facilities and cold-chain infrastructure.
It also highlighted opportunities in domestic feed production, farming technology and value-added halal food products to improve industry resilience and support export growth.
On government intervention, MBSB IB said poultry was more exposed to policy measures than many other consumer categories because chicken and eggs are staple foods.
"As food inflation accelerates, affordability takes precedence over normal cost pass-through.
"The Malaysian policy response through 2022-2023 combined retail price ceilings with producer subsidies, disconnecting domestic selling prices from globally determined input costs,” it said.
The bank also highlighted the risk of supply adjustments, as smaller farmers may reduce chick placements, defer expansion, or exit the sector, which could eventually tighten national supply, since poultry production cannot be increased immediately due to the time required for breeding, hatchery, and farming operations. - Bernama
