Govt’s subsidised cooking oil affects sales, says FFM
05/09/2023 (The Edge Malaysia), Kuala Lumpur - The government’s subsidy for the vast amount of repackaged cooking oil in the market have affected sales, said FFM Bhd chief executive officer Jeremy Goon.
“One of the products that has been contributing to that (lower sales) was the cooking oil segment. It is challenging to manage because there is a cooking oil subsidy scheme which affects not just our brands but also cooking oil brands across the board,” he said at the group’s press and analysts briefing session for the first half of 2023 (1HFY2023) on Tuesday (Sept 5).
The government’s cooking oil subsidy which began in June 2007, was provided only for 1kg cooking oil packed in polybags priced at RM2.50 each, compared to the market price of RM9 each meant for consumption of Malaysian families from the B40 (bottom 40% income) group.
The Domestic Trade and Cost of Living Ministry said it will introduce a subsidy programme targeting packet cooking oil in stages next year, to benefit the B40 group, M40 (middle 40% income group) and the micro-entrepreneurs.
“We along with all the other cooking oil brands will be affected by large volumes of subsidised oil, especially in the pouch bags in the market. It will continue to be challenging for all the cooking oil brands out there if the subsidy continues,” he added.
He added that despite the competition, the company had not experienced a large volume decline in cooking oil in the first half of the year, as it lowered the prices to not more than 10% in order to compete with the subsidised cooking oil in the market.
It is understood that the government is maintaining the distribution quota of 60,000 tonnes of the repackaged cooking oil monthly — a subsidy that has been in place since 2016 after the Domestic Trade and Cost of Living Ministry took over the supply of the daily necessity from the Malaysian Palm Oil Board.
Separately, Goon said the group will not respond with a price increase in its consumer products ranging from bakery and other fast-moving consumer goods under its own brands, as well as other international and local brands.
FFM is 80%-owned by PPB Group. The company is the largest flour miller in Malaysia and has interests in flour milling operations in Vietnam, Indonesia, Thailand and China.
PPB’s shares were unchanged at RM15.70 at market close on Tuesday, valuing the diversified group at RM22.3 billion.