As certain parts of the country face the stubbornly persistent problem of egg shortages, Malaysians are left to ponder if this issue will continue moving into 2023. Deputy president Lee Yoon Year tells StarBizWeek that the cost to produce a chicken egg is about 43 to 44 sen. The latest price controls by the government has fixed the maximum selling price for eggs at 39 sen, 37 sen, and 35 sen for eggs of Grades A, B, and C respectively. The government first announced a subsidy program for egg producers in February 2022 at five sen per egg. In October 2022, the subsidy was raised to eight sen per egg.“As such, livestock farmers are barely breaking even, despite the subsidy increase earlier this month from three sen to eight sen per egg,” says Lee. Analysts and industry experts alike maintain the view that with the ever-increasing operational costs, owing to several factors, and the implementation of price ceilings, the stock of eggs will continue dwindling.“If we remove the price ceiling and let the market forces of supply-demand play out, this would encourage poultry and egg farmers to increase the production of eggs, because at present, their profitability is being squeezed,” Rakuten Trade Sdn Bhd head of equity salesVincent Lau said. Source: https://www.thestar.com.my/business/business-news/2022/10/22/egg-shortage-removal-of-price-ceiling-the-solutionDo more research and apply what we have learned in “Price Control”, “Production Cost” and “Perfect Competition” to answer the following questions.
1. Do your own research to find out what factors lead to the rising operational costs for poultry farmers? How do such higher operational costs affect the profit of poultry farmers in the egg market in the short run and in the long run, with the existing subsidy and price ceiling?
2. How does price ceiling contribute to the egg shortage? Will removing the price ceiling help the situation?
3. Do you have any other recommendations to relieve the shortage of eggs?