Malaysia’s restrictions on poultry exports are entering their fourth week. Singapore is a big customer and buys around 98% of direct shipments. While certain types of chicken are now allowed to travel to the country’s southern neighbour, commercial broiler chickens which make up the bulk of sales remain blocked.
Yani Hardinata, who leads marketing and branding at Safina Food Sdn. Bhd, recognizes some of the same problems as its global peers: a surge in inflation that is driving up fertilizer costs, exacerbated by Russia’s invasion of Ukraine, and a chronic labor shortage. Then there are the longstanding and failed domestic price caps imposed by the Malaysian government, which discouraged production because the higher cost squeeze could not be offset by higher prices.
But there is another element that has emerged from recent vulnerabilities. Yani makes no apologies for championing a version of what might be called “Malaysia First” nutrition. The dismembered, wrapped and chilled chickens at Safina proudly bear the logo of a waving flag with a Malay phrase that translates to ‘Towards Malaysian Food Sovereignty’. “Everything we can produce here, the raw materials, the supply chain, should be local instead of depending on uncertain situations outside our country,” he told me. “If it can be secured here, bought here, it should be part of the sovereignty of our food supply chain.”
Similar sentiments were expressed by people across Malaysia’s food supply chain on a trip last week – from vegetable wholesalers in Kuala Lumpur to farmers in the lush Cameron Highlands and Penang fisheries on the northwest coast of the country. While the chicken saga has unique characteristics, not the least of which is Singapore’s extreme dependence, the country is not the first to engage in food protectionism. India decided to restrict sugar exports after banning wheat sales. Indonesia halted and then restarted palm oil exports.
The proximity of a national election, due early next year, has made local politicians more nervous about disgruntled chicken curry and satay devotees. (As in Singapore, chicken is a meat protein that can be enjoyed by all three major communities: Malays, ethnic Chinese and South Indians. Muslims, the dominant religious group in Malaysia, cannot eat chicken. pork.) But such food nationalism is likely to be a feature of the political and economic landscape for some time to come — with potentially disastrous consequences. According to Capital Economics, rising food prices explain about a third of the rise in inflation in emerging markets. In advanced economies, the figure is closer to a quarter.
The consequences go beyond rising interest rates and stretched paychecks. “The war in Ukraine has also raised questions about food and energy security that may ultimately cause governments to diversify supplies, as well as mean that food export bans are rolled out more frequently as countries struggle ‘self-sufficiency,’ Neil Shearing, group chief economist at Capital Economics, wrote in a recent note. “The legacy of the latest commodity shock will play out over years, not months.”
Politics and politics are likely to react to rising food prices. In Malaysia, putting concerns from the kitchen table on Singaporeans’ demand for chicken rice will no doubt play well with voters. In addition to pushing up borrowing costs, governments across Asia will be tempted to use fiscal policy to cushion the blow to household budgets from accelerating food inflation. Singapore, Hong Kong, the Philippines and South Korea will be the hardest hit as they are big food importers, according to a report by Nomura Holdings Plc.
A trip to the basement Cold Storage supermarket in downtown Kuala Lumpur, the sprawling development that houses the iconic spiers of the Petronas Towers, was instructive. The racks of fresh poultry were full one morning last week. Plastic signs placed on the chicken breasts and thighs clearly indicated that they were Malaysian products. I’m preparing for bigger signs, with flags, in a wider variety of foods on my next visit.
More from this writer and others on Bloomberg Opinion:
• In Singapore, a chicken ban is a serious threat: Daniel Moss
• The world’s food baskets need a better safety net: David Fickling
• The world can stave off Putin’s food battle: Clara F. Marques
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously, he was Bloomberg News’ economics editor.
More stories like this are available at bloomberg.com/opinion