Malaysia to fully remove egg subsidy from August

Move to boost govt finances, but may hurt consumers, say analysts 

KUALA LUMPUR, Malaysia (MNTV)  – The Malaysian government will fully remove subsidies for chicken eggs from August, a move that is expected to save it $363 million annually, but will hurt consumers already grappling with rising costs of living, reports The Straits Times. 

Malaysia now imposes ceiling prices for eggs, depending on their grade and quality. Analysts estimate that prices will rise when subsidies and price controls are removed.

The Agriculture and Food Security Ministry said the decision was made after careful consideration of market stability.

“This decision was made after taking into account the industry’s commitment to ensuring sufficient and stable egg production, as production costs have stabilized,” it said in a statement on April 30.

“This was evident during the recent Hari Raya Aidilfitri festive season, where supply remained sufficient and prices were competitive.”

The Anwar Ibrahim administration, which came to power in late 2022, has been slammed by its critics for being too slow in carrying out economic reforms. Such reforms, however, risk sparking public backlash and voter discontent.

“I can understand why they did it, but it is not a politically smart thing to do to remove the subsidies of eggs because Malaysians eat a lot of eggs,” Asian Studies professor James Chin of the University of Tasmania told The Straits Times.

“What I would have liked to see is that maybe they could have reduced it to 2.5 sen an egg. They should still subsidize eggs because a lot of poor people see eggs as a major source of protein.”

Malaysia implemented subsidies and price ceilings for chicken and eggs in February 2022, in a bid to stabilize prices, which had surged owing to supply shortages. This was partly due to the Ukraine war, which interrupted global shipments of wheat and corn, which are vital ingredients for chicken feed. 

Subsidies and price controls for chicken were lifted in November 2023.

“The markets will celebrate this as (Anwar’s) commitment to subsidy reform, but this is a move that is politically very bad. They should go after big subsidies. The egg subsidy is not that much in the overall scheme of things,” Prof Chin said, adding that the price of eggs is rising in other countries such as Australia and the US.

Some analysts anticipate that the removal of subsidies will lead to a small price increase. Nevertheless, the price increase will affect low- to middle-income households more, with eggs typically being the cheapest source of protein available.