Required Report - public distribution

**Date:** 9/17/2003

**GAIN Report Number:** MY3047

MY3047

**Malaysia**

**Poultry and Products**

**Annual**

**2003**

**Approved by:**

![](media/image1.wmf)Bonnie Borris

U.S. Embassy, Kuala Lumpur

**Prepared by:**

Jacelyn Chang

**Report Highlights:**

The best prospect for U.S. Exporters appear to be in supplying dat-old
chicks (DOC), broiler grandparent stock, frozen turkey/turkey parts and
frozen chicken parts. There are also limited opportunities for sales of
processed poultry meat. Joint-venture inverstments in the production of
higher quality processed/deli meat mat also be an area worth exploring
by U.S. business investors.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Annual Report

Kuala Lumpur \[MY1\]

\[MY\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 4](#production)

[Table 1: Imports of day-old chick:
5](#table-1-imports-of-day-old-chick)

[Consumption 7](#consumption)

[Trade 8](#trade)

[Marketing Infrastructure/Channels 9](#marketing-infrastructurechannels)

[PSD for Poultry, Meat, Broiler 10](#psd-for-poultry-meat-broiler)

[Exports Trade Matrix for Poultry, Meat, Broiler
11](#exports-trade-matrix-for-poultry-meat-broiler)

[Imports Trade Matrix for Poultry, Meat, Broiler
12](#imports-trade-matrix-for-poultry-meat-broiler)

[Price Table for Poultry, Meat, Broiler
13](#price-table-for-poultry-meat-broiler)

[PSD Table for Poultry, Meat Turkey
14](#psd-table-for-poultry-meat-turkey)

[Import Trade Matrix for Poultry, Meat, Turkey
15](#import-trade-matrix-for-poultry-meat-turkey)

# Executive Summary

Malaysia is self-sufficient in meeting the country's demand for broiler
meat. Malaysia has one of the highest per capita consumption rates in
the world for chicken at 28.5kg.

The best prospects for U.S. exporters appear to be in supplying day-old
chicks (DOC), broiler grandparent stock, frozen turkey/turkey parts and
frozen chicken parts. There are also limited opportunities for sales of
processed poultry meat. Joint-venture investments in the production of
higher quality processed/deli meat may also be an area worth exploring
by U.S. business investors.

Exchange rate: US1.00 = RM3.80 since 1998.

# Production

1\. Poultry meat - Broiler

\-- Breeding Stock (Broiler)

The Malaysian poultry sector relies solely on high quality exotic breeds
from the United States, Europe, Canada, and Australia. According to a
survey conducted by the Malaysian Department of Veterinary Services
(DVS), the standing broiler parent stock population was estimated at 4.8
million birds in 2002 . There are five fully integrated and twenty
non‑integrated parent stock breeder farms in the country. Over the
years, integrators have been increasing their market share, pushing out
the smaller non‑integrated breeding farms. The Arbor Acres and Cobb
account for 70 percent of the total parent stock. Other breeds are
Avian, Ross and Hubbard. The domestic industry is about 67 percent self-
sufficient in the production of parent stock. Since there are only two
grandparent farms (Avian and Arbor Acres), about 33 percent of the
day‑old parent stock were imported from Thailand, North America and the
EU.

The broiler production for the whole of Malaysia was about 436 million
birds in 2002. In the same year, the day-old chick production was about
467 million and the production is expected to reach 485 million in 2003.
Thailand is the largest supplier of day old chicks to Malaysia, with the
U.S. a distant second. Both have seen drastic reductions in exports to
Malaysia in 2002. About 4.1 million day-old chicks were imported from
Thailand in 2002, compared to 11.8 million in 2001. For the US, 2001
supply of 1.8 million of day-old chicks slipped to 0.8 million in 2002.
The contribution by integrators to the total day-old chicks production
was about 60%.

##  

## Table 1: Imports of day-old chick:

## 

+---------------------------------------+---------------+---------------+
| **Countries**                         | **Quantity**  |               |
|                                       |               |               |
|                                       | **(Unit)**    |               |
+---------------------------------------+---------------+---------------+
|                                       | **2001**      | **2002**      |
+---------------------------------------+---------------+---------------+
| Thailand                              | 11,761,181    | 4,184,347     |
+---------------------------------------+---------------+---------------+
| U.S.A.                                | 1,528,180     | 831,656       |
+---------------------------------------+---------------+---------------+
| United Kingdom                        | 665,167       | 754,935       |
+---------------------------------------+---------------+---------------+
| Netherlands                           | 1,430,696     | 688,316       |
+---------------------------------------+---------------+---------------+
| Germany F.R.                          | 493,714       | 443,210       |
+---------------------------------------+---------------+---------------+
| France                                | 527,033       | 395,899       |
+---------------------------------------+---------------+---------------+
| New Zealand                           | 168,195       | 212,050       |
+---------------------------------------+---------------+---------------+
| Korea, Rep. of                        | 101,420       | 165,307       |
+---------------------------------------+---------------+---------------+
| Singapore                             | 543,200       | 58,000        |
+---------------------------------------+---------------+---------------+
| Philippines                           | 0             | 22,950        |
+---------------------------------------+---------------+---------------+
| China                                 | 21,000        | 22,500        |
+---------------------------------------+---------------+---------------+
| Taiwan                                | 4,887         | 10,120        |
+---------------------------------------+---------------+---------------+
| Belgium                               | 85,769        | 1,680         |
+---------------------------------------+---------------+---------------+
| Australia                             | 0             | 1,572         |
+---------------------------------------+---------------+---------------+
| Indonesia                             | 394,829       | 0             |
+---------------------------------------+---------------+---------------+
| Denmark                               | 74,550        | 0             |
+---------------------------------------+---------------+---------------+
| Japan                                 | 18,000        | 0             |
+---------------------------------------+---------------+---------------+
| **\--Total**                          | *             | **7,792,542** |
|                                       | *17,817,821** |               |
+---------------------------------------+---------------+---------------+

## 

##  

\-- Broiler Meat

In 2002, ex-farm price of live broilers was fluctuating between
RM1.60/kg to RM3.50/kg. The average ex-farm price for the year was
RM2.65 /kg compared toRM2.80/kg the year before. Cost of production of
broilers was ranging between RM2.41/kg to RM 2.89 /kg. It was reported
that the lower ex-farm price and higher cost of production of broilers
are causing difficulties for producers to maintain operations. The surge
in imports of chicken meat was also affecting the local broiler
industry. The outlook for broiler producers in 2003 does not seem to be
positive as the supply of broilers is expected to be more than
sufficient and ex-farm prices are predicted to be weaker than 2002.

2\. Poultry meat - Turkey

There is no commercial production of turkey in Malaysia.

# Consumption

Malaysia has one of the highest per capita consumption rates in the
world for chicken. Per capita consumption of chicken is reported at 28.5
kg. Chicken meat is the most popular and cheapest source of meat protein
among Malaysians, largely because there are no dietary prohibitions or
religious restrictions against chicken consumption.

The surge of quick-service-restaurants (QSR) such as Kentucky Fried
Chicken (KFC), McDonald's, A&W, Nando's Chickenland (a South-African
based chain) have encouraged strong growth in chicken consumption. KFC,
through its subsidiary company, Ayamas Food Corporation, supplies
chicken to all its 277 restaurants throughout the country. Ayamas also
operates retail stores selling dressed and ready-to-serve chicken meals.
These take-away fares are very popular with working women who have
little time to prepare their family meals.

Home-grown fast food chains such as Marrybrown, Sugarbun, Nineteen O
One, Ball Fastfood, all with chicken menus similar to those of KFC, have
also expanded, particularly to smaller cities. These local chains
creatively incorporate local preparations in their menu. Business in
these local chains is reported to be doing well.

The demand for turkey is high during Thanksgiving and Christmas seasons.
Hotels feature roast turkey in their menu as part of the celebration
offering. High-end retail outlets offer cooked turkeys with stuffings to
consumers who wish to order turkey ready-to-eat. However, the trend in
turkey consumption is changing especially among Malaysian urban
dwellers. Hotel chefs are instrumental in introducing roast turkey:
Indian style turkey with curry rice stuffings, Malay-style turkey in
banana leaf and Chinese barbecued turkey have been included in the menus
of food and beverage outlets of 5-star hotels. Retail promotions
featuring turkey parts and cooking demonstrations using turkeys in
everyday cooking have helped Malaysian consumers appreciate the bigger
and meatier bird.

## 

# Trade

In 1983 the Government of Malaysia began to limit imports of frozen
chicken into Peninsular Malaysia by instituting import licensing. The
action was taken to protect domestic chicken producers. The states of
Sabah and Sarawak in East Malaysia implemented similar restrictions on
chicken imports in 1991.

Chicken parts are imported periodically depending on local supply
situations. Some are shipped through Singapore for East Malaysian states
of Sabah and Sarawak. In 2002, total imports of frozen chicken parts
were at 42,688 tons. The major suppliers were China (11,700 tons),
Netherlands (9,915 tons), Denmark (9214 tons) and Thailand (7489 tons).
These imports mainly cater to the further processing industry.

Malaysia has a robust further processing industry. Chicken frankfurters,
cocktail sausages, burgers and nuggets that were exclusively imported
before, are now locally produced. Major players, who are also
integrators, invest heavily on brand names for their further processed
products such as *Ayamas* (by Ayamas Food Corporation), *Ayam Dindings*
(Dindings Poultry), and *Farm's Best* (Sinmah Food Industries). Local
processed products command about 90% of the market and it is difficult
for imported processed products to compete on the basis of price.
However, there have been exceptions. Price surveys have shown that a
specific brand of US chicken frankfurters was retailed at RM2.99 in a
local hypermarket compared to a locally produced chicken frankfurters at
RM3.50 in the same outlet. Coupled with promotion and sampling, imported
further processed products such as frankfurters will do well.

Since there is no commercial production of turkey in Malaysia, all
turkey meat is imported. In 2001, imports of frozen whole turkey and
turkey parts were 1,826 metric tons. The United States was the only
significant supplier capturing more than 96% of the market.

There is a growing niche market for turkey/processed turkey products and
this should present opportunities for U.S. suppliers. U.S. exporters
should consider establishing a good relationship with a local
importer/distributor and conduct jointly funded promotions to increase
retailer and consumer awareness and acceptance of these products.
Generic market development activities funded by USA Poultry and Egg
Export Council, as well as branded promotions by U.S. companies, should
be stepped up at the consumer/retail level.

# Marketing Infrastructure/Channels

About 75% of chickens in the country are sold in the wet markets as most
Malaysian consumers still believe freshly slaughtered chickens are
fresher compared to frozen ones. Though local councils are enforcing
health laws to prohibit chicken slaughter in wet markets, wholesalers
arrange to slaughter the birds in selected areas and bring dressed
chicken to the marketplace. The remaining 25% of sales occur in modern
supermarkets and mini markets as well as numerous retail outlets
operated by some of the integrated poultry companies.

Further-processed products, both local and imported, are distributed to
wholesalers, supermarkets, hypermarkets, catering institutions,
restaurants and hotels. Integrators such as KFC Holdings, Dinding
Poultry and Sinmah Resources have their own marketing and distribution
arms. Since processed products are not subject to government price
controls, other integrators are moving into the business. Processed
products like nuggets and frankfurters come in colorful, attractive
packages to attract customers, especially children. Packages of one-kilo
and 340-grams are popular consumer sizes.

Some of the locally processed poultry products are exported to other
ASEAN markets such as Philippines, Brunei and Singapore. In view of the
implementation of AFTA (Asean Free Trade Area) next year, some
integrators are upgrading their processing facilities to compete with
major poultry players from the region. Some integrators also looked at
the implementation of AFTA as an opportunity to increase exports.

##   

## PSD for Poultry, Meat, Broiler 

+-------------------+-------+-------+-------+-------+-------+-------+
| ###### PSD Table  |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| Country           | Mal   |       |       |       |       |       |
|                   | aysia |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| Commodity         | Pou   |       |       |       | (1000 |       |
|                   | ltry, |       |       |       | MT    |       |
|                   | Meat, |       |       |       | )(MIL |       |
|                   | Br    |       |       |       | HEAD) |       |
|                   | oiler |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
|                   | 2002  | Re    | 2003  | Est   | 2004  | For   |
|                   |       | vised |       | imate |       | ecast |
+-------------------+-------+-------+-------+-------+-------+-------+
|                   | USDA  | Post  | USDA  | Post  | USDA  | Post  |
|                   | Off   | Est   | Off   | Est   | Off   | Est   |
|                   | icial | imate | icial | imate | icial | imate |
|                   | \[    | \[    | \[    | \[    | \[    | \[    |
|                   | Old\] | New\] | Old\] | New\] | Old\] | New\] |
+-------------------+-------+-------+-------+-------+-------+-------+
| Market Year Begin |       | 01    |       | 01    |       | 01    |
|                   |       | /2002 |       | /2003 |       | /2004 |
+-------------------+-------+-------+-------+-------+-------+-------+
| Inventory         | 5     | 5     | 6     | 6     | 0     | 6     |
| (Reference)       |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| Slaughter         | 462   | 436   | 470   | 450   | 0     | 463   |
| (Reference)       |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| Beginning Stocks  | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Production        | 832   | 784   | 846   | 810   | 0     | 833   |
+-------------------+-------+-------+-------+-------+-------+-------+
| Whole, Imports    | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Parts, Imports    | 40    | 43    | 40    | 46    | 0     | 48    |
+-------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Imports  | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Other Imports     | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Imports     | 40    | 43    | 40    | 46    | 0     | 48    |
+-------------------+-------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY      | 872   | 827   | 886   | 856   | 0     | 881   |
+-------------------+-------+-------+-------+-------+-------+-------+
| Whole, Exports    | 1     | 1     | 0     | 1     | 0     | 1     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Parts, Exports    | 5     | 5     | 5     | 5     | 0     | 6     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Intra EC Exports  | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Other Exports     | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Exports     | 6     | 6     | 5     | 6     | 0     | 7     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Human Consumption | 866   | 821   | 881   | 850   | 0     | 874   |
+-------------------+-------+-------+-------+-------+-------+-------+
| Other Use, Losses | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| Total Dom.        | 866   | 821   | 881   | 850   | 0     | 874   |
| Consumption       |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| TOTAL Use         | 872   | 827   | 886   | 856   | 0     | 881   |
+-------------------+-------+-------+-------+-------+-------+-------+
| Ending Stocks     | 0     | 0     | 0     | 0     | 0     | 0     |
+-------------------+-------+-------+-------+-------+-------+-------+
| TOTAL             | 872   | 827   | 886   | 856   | 0     | 881   |
| DISTRIBUTION      |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+
| Calendar Yr. Imp. | 3     | 3     | 3     | 3     | 0     | 3     |
| from U.S.         |       |       |       |       |       |       |
+-------------------+-------+-------+-------+-------+-------+-------+

##  Exports Trade Matrix for Poultry, Meat, Broiler 

  -------------------- --------------- ------------------- ---------------
  Export Trade Matrix                                      

  Country              Malaysia                            

  Commodity            Poultry, Meat,                      
                       Broiler                             

  Time period          2002 Jan‑Dec;   Units:              Metric Ton
                       2003 Jan‑Apr                        

  Exports for:         2002                                2003

  U.S.                                 U.S.                

  Others                               Others              

  Japan                1598            Singapore           807

  Singapore            1370            Japan               481

  Hong Kong            237             Hong Kong           244

  Indonesia            102             Brunei              177

  Brunei               53              Indonesia           24

  Netherlands          7               Nigeria             15

  Thailand             7                                   

  Switzerland          6                                   

                                                           

                                                           

  Total for Others     3380                                1748

  Others not Listed                                        

  Grand Total          3380                                1748
  -------------------- --------------- ------------------- ---------------

##  Imports Trade Matrix for Poultry, Meat, Broiler

## 

  -------------------- --------------- ------------------- ---------------
  Import Trade Matrix                                      

  Country              Malaysia                            

  Commodity            Poultry, Meat,                      
                       Broiler                             

  Time period          2002 Jan‑Dec;   Units:              Metric Ton
                       2003 Jan‑Apr                        

  Imports for:         2002                                2003

  U.S.                 1687            U.S.                696

  Others                               Others              

  China                11700           Denmark             4030

  Netherlands          9915            Netherlands         3265

  Denmark              9214            Thailand            3021

  Thailand             7489            China               3002

  France               1355            France              830

  Germany              1000            Vietnam             75

  India                129             Germany             26

  Belgium              78              Sri Lanka           26

  New Zealand          62              New Zealand         13

  Australia            32                                  

  Total for Others     40974                               14288

  Others not Listed    27                                  

  Grand Total          42688                               14984
  -------------------- --------------- ------------------- ---------------

##  Price Table for Poultry, Meat, Broiler

## 

  ------------------------ --------------- --------------- ----------------
  Prices Table                                             

  Country                  Malaysia                        

  Commodity                Poultry, Meat,                  
                           Broiler                         

  Prices in                2002            per uom         kilogram

                                                           

  Year                     2002            2003            \% Change

  Jan                      3.4             2.8             ‑17.65%

  Feb                      3.4             2.7             ‑20.59%

  Mar                      2.3             2.5             8.70%

  Apr                      1.9             2.4             26.32%

  May                      2.2             2.4             9.09%

  Jun                      2.8             2.5             ‑10.71%

  Jul                      2.7             2.6             ‑3.70%

  Aug                      2.5                             ‑100.00%

  Sep                      2.1                             ‑100.00%

  Oct                      2.4                             ‑100.00%

  Nov                      2.7                             ‑100.00%

  Dec                      2.8                             ‑100.00%

                                                           

  Exchange Rate            3.8             Local           
                                           currency/US \$  
  ------------------------ --------------- --------------- ----------------

##  PSD Table for Poultry, Meat Turkey

## 

  -------------------- ---------- ---------- ---------- ---------- ---------- ----------
  PSD Table                                                                   

  Country              Malaysia                                               

  Commodity            Poultry,                                    (1000      
                       Meat,                                       MT)(MIL    
                       Turkey                                      HEAD)      

                       2002       Revised    2003       Estimate   2004       Forecast

                       USDA       Post       USDA       Post       USDA       Post
                       Official   Estimate   Official   Estimate   Official   Estimate
                       \[Old\]    \[New\]    \[Old\]    \[New\]    \[Old\]    \[New\]

  Market Year Begin               01/2002               01/2003               01/2004

  Inventory            0          0          0          0          0          0
  (Reference)                                                                 

  Slaughter            0          0          0          0          0          0
  (Reference)                                                                 

  Beginning Stocks     0          0          0          0          0          0

  Production           0          0          0          0          0          0

  Whole, Imports       0          0          0          0          0          0

  Parts, Imports       1          1          0          1          0          1

  Intra EC Imports     0          0          0          0          0          0

  Other Imports        0          0          0          0          0          0

  TOTAL Imports        1          1          0          1          0          1

  TOTAL SUPPLY         1          1          0          1          0          1

  Whole, Exports       0          0          0          0          0          0

  Parts, Exports       0          0          0          0          0          0

  Intra EC Exports     0          0          0          0          0          0

  Other Exports        0          0          0          0          0          0

  TOTAL Exports        0          0          0          0          0          0

  Human Consumption    1          1          0          1          0          1

  Other Use, Losses    0          0          0          0          0          0

  Total Dom.           1          1          0          1          0          1
  Consumption                                                                 

  TOTAL Use            1          1          0          1          0          1

  Ending Stocks        0          0          0          0          0          0

  TOTAL DISTRIBUTION   1          1          0          1          0          1

  Calendar Yr. Imp.    1          1          0          0          0          0
  from U.S.                                                                   
  -------------------- ---------- ---------- ---------- ---------- ---------- ----------

##  Import Trade Matrix for Poultry, Meat, Turkey

## 

  -------------------- --------------- ------------------- ---------------
  Import Trade Matrix                                      

  Country              Malaysia                            

  Commodity            Poultry, Meat,                      
                       Turkey                              

  Time period          2002 Jan‑Dec;   Units:              Metric Ton
                       2003 Jan‑Apr                        

  Imports for:         2002                                2003

  U.S.                 1788            U.S.                129

  Others                               Others              

  France               20              China               26

  Japan                18                                  

                                                           

                                                           

                                                           

                                                           

                                                           

                                                           

                                                           

                                                           

  Total for Others     38                                  26

  Others not Listed                                        

  Grand Total          1826                                155
  -------------------- --------------- ------------------- ---------------

##