Center for Market Education CEO Carmelo Ferlito said price controls would essentially discourage industry players from producing goods and services and this could lead to shortages.
Shortages of supply could cause price rises, leading to inflation, he told FMT.
His comments came after an organisation of poultry farmers spoke out against the government’s extension of price controls.
A spokesman for the Federation of Livestock Farmers’ Associations of Malaysia recently said farmers were suffering losses and facing rising costs, particularly of animal feed, and the situation could cause small and medium-size farms to cease operations in the coming months.
Ferlito, who has written a report on the poultry industry and its supply chain in Malaysia, said feed accounted for about 62% of costs and production was highly affected by volatility in feed prices.
“Malaysia imports around 85% of feed ingredients. While the main feed ingredients such as cereal grains, protein meals, fats and oils, minerals and vitamins, feed additives and miscellaneous raw materials such as roots and tubers are mainly imported, the locally manufactured components are mainly made from rice bran.”
He said Malaysia was third in the world for per capita consumption of chicken, after Israel and the US.
“A feasible short-term solution would be to remove all obstacles to supply at different points in the value chain to meet demand and cool down prices,” he said.
Another economist, Barjoyai Bardai of Universiti Tun Abdul Razak, said the country’s dependence on imported feed was the reason for the high cost of local poultry production.
“Malaysia has poor food security. Food security means that we want to have food generated internally and we want to promote our local produce, but the reality is that we rely too much on imported goods,” he said.
Barjoyai told FMT, Malaysia needed to be more self-sufficient and that this could be achieved if the government had a good handle on the nation’s own food supply.
The government could, for instance, encourage Felda settlers and farmers to rear free-range chickens that rely on natural feed such as food waste and insects.
“In this way, we may have enough chickens for the whole nation,” he said.