MALAYSIANS take food prices seriously and concern about the price of cooking oil going up and the mad rush to stock up on the item, following the announcement of the government’s plan to remove the subsidy, underscores this perfectly. Consumers subsequently complained that retailers were hoarding the item in anticipation of the rise in the price of cooking oil. And that left several supermarkets in the Klang Valley with no choice but to restrict each family to two bottles per day to prevent a supply shortage. This phenomenon happens whenever Malaysians are about to celebrate major festivals. There are so many speculators in the market that when something happens to affect supply, there is an immediate reaction, which is often negative, as this episode demonstrates.
Yesterday, the government announced that cooking oil, except those sold in the 1kg polybag, would no longer be subsidised starting next month. This news should put to rest misconceptions about the issue. The price of the 1kg polybag would remain at the subsidised price of RM2.50. But, bottled cooking oil would be sold at the open market price. The decision was made under the structure of the Cooking Oil Price Stabilisation Scheme. Without the rationalisation move, the government would be forced to fork out RM100 million more for the cooking oil subsidy monthly in November and December.
What does this mean? Will the price of cooking oil now be subject to “uncontrolled” increases? Retailers out to make a quick profit will certainly jump at the chance to raise the price unless there is a mechanism to keep the retail price fair and reasonable. It is likely that the drama will continue in light of the latest developments. Unscrupulous traders may resort to covert action and dirty tricks to raise the price of this essential ingredient in most recipes. Consumers will end up losing, as always. But, subsidy rationalisation must be carried out to prevent the product from being smuggled to neighbouring countries and sold at a higher price, creating a shortfall in supply. This has resulted in millions of ringgit in losses.
Consumers can help enforcement agencies by exposing crooked retailers whenever they chance upon them. While traders maintain that food prices are determined by supply and demand, the authorities should intervene to protect the most vulnerable. For the poor, who spend between 60 and 80 per cent of their income on food, small increases in prices have big repercussions. Of particular importance is for law enforcers to step up surveillance of food markets before prices spiral out of control. Those who hoard foodstuff to cause scarcity and benefit from the higher prices must be punished severely. The onus is on enforcement agencies to monitor their activities and discourage traders and middlemen from hoarding food staples, including cooking oil.