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Malaysia - Lower feed costs augur well for poultry sector

Published on 23 February, 2006, Last updated at 04:51 GMT

Declining costs of raw material corn and soybean for poultry feed and bird-flu free status augur well for the industry's growth in Malaysia and overseas.

Analysts contacted by StarBiz said coupled with last month's ex farm chicken price hike of 20 sen per kg, the industry would pick up smoothly after being badly hit by the bird-flu scare in 2004.

“These good conditions will help poultry companies gain between RM2.5mil and RM10.8mil per annum, depending on their monthly production of live chickens,” an analyst said.

The ex farm chicken price is currently traded between RM3.60 and RM3.80 per kg. Chicken traders and distributors are not allowed to sell above the RM4kg ceiling price.

An analyst with MIDF Sisma Securities said poultry companies had shown improvement, with the declining prices of corn and soybean, which made up between 50% and 20% of the total feed mill costs.

The current raw material price trend (see price chart) is beneficial to poultry companies as “it keeps their feed mill costs low”.

The analyst said: “At least seven major poultry players will gain from the chicken price hike.”

The listed poultry companies include Leong Hup Holdings Bhd, CAB Cakaran Bhd, Farm's Best Bhd, LTKM Bhd, Lay Hong Bhd, Pinwee Group Bhd and D.B.E. Gurney Resources Bhd.

The analyst believed that Malaysia would remain bird-flu free because the industry used integrated free farming practices.

“We understand that Singapore will not ban the import of Malaysian poultry as long as bird flu is not declared in Johor and Malacca,” he added.

The USDA Foreign Agriculture Service's GAIN Report on Malaysia Poultry and Products Annual 2005 said the foray into new export markets for chilled, frozen and processed poultry-based products would help Malaysia's poultry industry strive for better growth this year.

Singapore is the largest export market for live poultry and poultry products.

Japan, which was previously a big importer, has yet to lift its ban on chicken from Malaysia, following the bird flu scare in August 2004.

According to the report, the industry has started to recover since last year following lower poultry feed prices and freight charges.

The de-pegging of the ringgit to the US dollar last July has reduced the costs of raw material imports for poultry feed.

However, Malaysia's plan to widen its export markets will be impacted when Thailand opens its own export market, now closed, due to the avian influenza.

The GAIN Report said Malaysia's poultry industry produced more than RM4bil worth of broilers and eggs at farm gate price annually.

The industry is regarded as the most successful segment of the livestock sector and probably the highest output value per worker in the agricultural industry.

“The best prospect for US exporters will be in supplying day-old chicks (DOC), broiler grandparent stock, frozen turkey, turkey parts and frozen chicken parts,” it added.

The Malaysian poultry sector relies solely on high quality exotic breeds from the United States, Europe, Canada and Australia.

The DOC production is estimated at 468 million chicks last year, compared with about 440 million in 2004. The report said there were about 2,500 broiler farms producing over 400 million birds in Malaysia.

The Federation of Livestock Farmers' Association president Datuk Francis Lau said the production of broiler this year was estimated at 450 million from last year's 430 million.

He said poultry companies could be assured of continuous demand for their products this year.

Malaysia's chicken consumption at 28 to 30kg per person a year or 36 million chickens per month is among the highest in the world. It also has a high per capita consumption level of 280 eggs per person per year.


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