WHILE the Government has set the ceiling price of chicken at RM9.40/kg in Peninsular Malaysia effective July 1 for a two-month period, it seems that Sabahans and Sarawakians will have to fork out more for their meat staple.
As revealed by CCK Consolidated Bhd which is deemed the largest producer of poultry products in Sarawak, ceiling prices for standard chicken in Sabah is the highest in Malaysia at circa RM11-RM11.30/kg (depending on the region) while that for standard chicken in Sarawak has been fixed depending on the district with a price range of RM9.80/kg to RM12.90/kg.
“At the same time, CCK disclosed that the Government is still providing subsidies for chicken breeders until end-August,” CGS-CIMB Research analyst Walter Aw pointed out in a consumer sector update following a recent site tour to Sabah-based listed food producers.
“This is expected to alleviate cost pressures faced by poultry farmers which cannot fully pass on the cost increases due to price caps. We understand that the Government is subsidising poultry players at 60 sen/kg of broiler (chicken) and 5 sen per egg.”
While it could increase the supply of its chicken parts to be sold in the market as this promises higher profit margin (not subject to the chicken ceiling prices), CCK said the demand for whole standard (whole) chicken is stronger, especially being backed by large purchases from the HORECA (hotel, restaurant, catering) segment.
Currently, CCK runs an abattoir in Kota Kinabalu which has a slaughter capacity of 10,000 chickens per day (maximum capacity: 15,000 chickens). Its current lower slaughter capacity is mainly due to the acute shortage of day-old chicks and live birds in Sabah and Sarawak.
“We gather that the chicken shortage is mainly due to recent poultry-related diseases, and weak supply from contract poultry farmers due to their inability to continue operations with the elevated feed costs (eg soybean and corn),” noted CGS-CIMB Research.
“This impacted CCK’s operations as external contract farming accounts for 40% of its chicken supply while the remaining 60% is from its in-house poultry farms.”
More broadly, CCK is also operating 72 retail stores in East Malaysia which sell a full range of poultry products (eggs, whole chickens and various chicken cuts) as well as is involved in prawn farming and food services.
Out of the 72 outlets that it operates, 68 outlets are its standard retail format – CCK Fresh Mart – whose key sales are mainly driven by CCK’s in-house products which make up an estimated 60% of each store’s revenue.
Since 2020, CCK has also made its foray into the supermarket/grocery industry with CCK Local, a farm-to-plate grocery store concept offering a wide selection of fresh products delivered directly from farms. It currently has three of these grocers; one each in Kuching, Kota Kinabalu and Sibu.
In terms of FY2021 revenue, CCK’s operations can be divided into four segments: poultry (12.8%); prawn (2.8%); food services (0.8%) and retail (83.5%). – July 19, 2022
