High prices due to manipulation in supply chain


IT is indeed disheartening for consumers to learn that the prices of basic food items such as chicken and eggs are likely to increase after Feb 4 especially since they are already forking out more now for fruits, vegetables and fish.

The Federation of Consumers Associations Malaysia (Fomca) has been and will continue to raise the issue of high prices of food and other basic essentials and how they affect consumers, particularly those in the low income category. These consumers are especially impacted by high food prices because a substantial part of their household income is spent on food. We have consistently stressed on the fact that high food prices are caused by price manipulation and the abuse of the Approved Permit (AP) system.

We have pointed out that monopolistic practices along the various sectors of the food supply chain result in high prices for consumers. This point was validated by the Malaysia Competition Commission (MyCC) in its 2019 report on the market review of key food items.

Take the price of ikan kembong, one of the most consumed fish by households in Malaysia, as an example. According to the MyCC report, “multiple layers of intermediaries in the fisheries supply chain are one of the key factors that drive up the prices of ikan kembung.

“As the fish reach the market, their price would have increased by almost six different times.”

There is also opaqueness in price determination along the supply chain, leading to situations where prices of goods and services do not accurately reflect their true value.

MyCC has suggested the establishment of new wholesale markets to promote competition through greater transparency as one of the ways to solve this problem.

The MyCC Report also raised the manipulation of the AP system as a key issue in the high prices of food and other basic essentials.

While Fomca has continuously spoken against the use of APs for food, we have often been told that this system doesn’t exist.

Yet, two days ago, it was reported that the head of a local hypermarket chain has urged the government to be transparent in the awarding of approved permits to import whole chickens.

The person concerned was quoted as saying, “We have no idea who is getting the APs to import whole chickens. If retailers can get the AP, then we can bring in the chickens directly and sell them at a lower price rather than having to go through third parties.”

Fomca therefore urges the government to be transparent in the issuance of APs for food and other essential consumer items.

If retailers or other sellers can directly import these products, it is certain that their market price would be lower. If the government is serious about keeping prices down, then it should seriously take action against those who are manipulating them. These offenders were identified in the 2019 MyCC report.

The government has two powerful legislation to act against price manipulators and profiteers – the Price Control and Anti-Profiteering Act, 2011 and the Competition Act, 2010. The awarding of APs also needs to be reviewed. Profiting by AP holders should be terminated.

DR PAUL SELVA RAJ

Secretary general

Federation of Consumers Associations Malaysia

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