Price hike for noodles, baked goods on the cards as Malaysia manufacturers grapple with costlier flour
JOHOR BAHRU: The recent increase in the price of flour in Malaysia will likely trigger a chain effect, resulting in everyday items such as noodles, biscuits and bread being more costly, according to industry players.
Those interviewed by CNA noted that the price hike for flour in Malaysia can be attributed to the ongoing war between Russia and Ukraine as well as disruptions in the global wheat supply chain.
Mr Chink Poh Cheng, president for the Johor Bakery, Biscuit, Confectionery and Noodles Merchants Association, told CNA that the price of flour has been increasing since March and will likely rise further in the near future.
“From early this year, flour manufacturers have been informing association leaders that the price of flour will increase,” said Mr Chink.
He said that in March, the price of a 25kg bag of wheat flour increased from RM47 (US$10.69) to RM52. In the following month, the price went up again to RM57.50.
“They (the suppliers) have confirmed there will be another round of increase either in mid-June or early July,” he added.
According to Mr Chink, Malaysia has seven flour mills which manufacture and supply wheat flour to the whole country. As the price of flour is controlled in Malaysia, the flour manufacturers would have to obtain approval from the government before increasing prices.
“This means that all the food manufacturers, retailers using flour will also have no choice but to increase their prices,” he said.
“This affects hawkers, especially those who use noodles, bakeries as well as biscuit manufacturers who receive their supply from these flour manufacturers. Their costs of production will increase, and definitely so will the prices of their products,” said Mr Chink.
Mr Lai Yee Kein, president of the Malaysia Bakery, Biscuit, Confectionery, Mee and Kuey Teow Merchants’ Association, concurred that the increase in the price of flour would ultimately lead to increase in prices of various goods.
He noted that nationally, the price of flour increased by around 7 per cent in March and another 11 per cent in April. Mr Lai added that he has heard from wheat flour manufacturers that there will likely be a further increase of 3.5 per cent in June.
“I think on the whole, many food items that use flour will soon be more expensive,” said Mr Lai.
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INDIA’S WHEAT EXPORT BAN HAS INDIRECT IMPACT ON MALAYSIA
Both Mr Chink and Mr Lai told CNA that the flour manufacturers have attributed the increase in price of wheat flour to the war in Ukraine as well as shortages in the global supply chain.
Ukraine is one of the countries that supplies flour directly to Malaysia, and the Russian invasion has disrupted supply since the beginning of this year, said Mr Lai.
The industry players also stressed that India’s decision to ban the export of wheat in May due to a heat wave disrupting domestic supplies, has impacted Malaysia. India is the world's second largest wheat producer behind China.
Last month, the Malaysian government said that the supply of wheat flour in the country is not expected to be affected by India’s wheat ban.
The Domestic Trade and Consumer Affairs Ministry (KPDNHEP) outlined that Malaysia imports 80 per cent of its wheat from Australia with the balance being from the United States, Canada and Ukraine.
“Therefore, India’s wheat export ban following the heatwave is not affecting the supply of wheat flour in the country,” KPDNHEP wrote in a tweet at that time.
However, local industry players highlighted that a shortage in the global wheat supply chain would have an indirect impact on Malaysia.
Mr Chink said: “The world’s wheat supply is interconnected and globalised, so Malaysia is not immune to major changes in the supply chain.
“Supply disruptions from the likes of India, Russia and Ukraine over the last three months have impacted us and we cannot escape. These countries are major suppliers of wheat,” he added.
Mr Lai added that the weaker Malaysia Ringgit against the US dollar has increased production costs for the flour manufacturers.
“The weaker Malaysia ringgit and the shortage in the global wheat supply chain have made it more expensive for our flour manufacturers to import wheat. Hence, there will be a chain effect, flour prices will increase and retailers will have to increase prices,” Mr Lai explained.
Data from the Malaysia Investment Development Authority shows that the food-processing sector accounts for about 10 per cent of Malaysia’s manufacturing output. Processed food, which includes flour-based products like biscuits and noodles, are exported to more than 200 countries.
According to the Malaysia External Trade Development Corporation, the top five destinations of processed food are Singapore, China, Indonesia, Australia and Thailand.
SOME RETAILERS HAVE ALREADY RAISED PRICES
Some Malaysian retailers and businesses that are dependent on flour told CNA that they have already been forced to increase prices.
Mr Lim Toh Shian, co-owner of Hiap Joo Bakery & Biscuit Factory in Johor Bahru, told CNA that the eatery has increased the price of its banana cakes and buns by around 20 per cent recently, due to more expensive flour and various other factors.
The bakery is popular among locals and visitors from neighbouring Singapore as it uses a traditional wood-fired oven.
“The cost of flour has gone up in total by around 20 per cent as compared to earlier this year. It has been like that since the Russian invasion of Ukraine,” said Mr Lim.
“But that’s not all. The costs of oil, sugar, eggs have all gone up as well. We have increased our prices by 20 per cent. We apologise but there's no choice. We hope customers understand the situation,” he added.
He also said: “So far there has been no complaints, our store still has long queues and the cakes are sold out everyday. We have increased our prices, but our revenue, the salaries of our workers have remained the same.”
Meanwhile, Mr Shameer Ayub, who owns a roti canai stall in Johor Bahru, also said that rising wheat flour prices have forced him to increase his prices.
He said that the price for plain roti canai has increased from RM1.20 to RM1.50 a piece while his egg roti canai has increased from RM2.80 to RM3.00.
“It’s unfortunate but I cannot be selling at old prices. I would not have enough to cover my rent and business expenses,” he said.
“If the price of flour increases further, I don’t really know what to do. Perhaps take a break until the situation improves.”
