Malaysians suddenly cannot find Farm Fresh milk easily – and it has nothing to do with cows

KUALA LUMPUR – When media executive Angie Ng went grocery shopping in Kuala Lumpur in early April, she was surprised to find her usual brand of milk missing.

The 51-year-old, who regularly buys 2-litre bottles of Farm Fresh milk for her family of three, was met with empty shelves where the product is usually stocked.

“I was shocked,” she told The Straits Times, relating how she left the store empty-handed.

Her experience, echoed in some social media posts, offers a stark look at how the Middle East conflict is rattling Malaysian supply chains at the consumer level. The shortage stems not from a lack of milk, but from disruptions far upstream.

In response, local dairy brand Farm Fresh – which also exports to Singapore – has been quick to clarify that it is not running out of milk.

Instead, the issue lies in packaging: specifically, a shortage of polyethylene terephthalate (PET) resin that is widely used for beverage bottles, food containers, packaging and other household-related items.

The ongoing conflict in the Middle East has throttled global oil and gas flows, triggering a shortage of PET resin that is primarily derived from petrochemicals, specifically crude oil and natural gas.

For Farm Fresh, which manufactures a range of dairy products from fresh milk to ice cream, the resin is essential for producing its signature 1- and 2-litre plastic milk bottles.

Farm Fresh’s chief operating officer Azmi Zainal said the impact is already being felt across operations.

“There is indeed a real impact from this Iran war. The most obvious is, of course, petroleum, especially diesel for industry, for example, for boilers. (Diesel) now has to be purchased at current market prices,” Mr Azmi told ST.

Fuel costs have more than doubled in slightly over a month – surging from RM3.04 (S$0.97) per litre to RM6.72 on April 9 – following the US-Israeli strike on Iran in late February.

Resin for plastic packaging materials is also affected, Mr Azmi said.

“When a crisis like this happens, prices go up and supply becomes hard to obtain. Thankfully, we are getting support from several suppliers,” he added.

In response, the company has also begun shifting more of its products into paper cartons and ultra-high temperature (UHT) packaging.

“We are switching to paper carton and UHT formats,” he said, adding that so far, there is no surplus milk waiting to be packed.

Farm Fresh has flagged rising costs across packaging, logistics and electricity, components that together make up about 10 per cent of its total costs, but Mr Azmi said the company is “working hard to maintain its prices”.

Wider industry ripple

The plastic squeeze is unlikely to stop at the dairy aisle. Industry players warn that the shortage could affect other products, not just Farm Fresh milk.

Mr Mike Tan, chairman of the Malaysian Plastics Manufacturers Association’s Johor branch, said that while Malaysia still has sufficient production capacity, access to raw materials is becoming increasingly uncertain.

“Some manufacturers are starting to sell at higher prices and with longer lead times,” he said.

This is because of concerns that existing stockpiles, typically sufficient for two to three months, may not last if supply disruptions continue, he added.

Plastic production relies heavily on petrochemical feedstocks, including polyethylene and PET. Disruptions in oil supply tend to push up global energy and feedstock costs, Mr Tan explained.

Resin prices in Asia have reportedly risen between 15 per cent and 40 per cent, depending on the material, increasing production costs for plastic bottles by up to 30 per cent, he added.

Lead times for raw materials have also stretched by two to eight weeks, with order backlogs growing.

Plastic packaging is an essential component to provide a reasonable shelf life to products at the lowest cost, he said. While he does not have exact figures, he estimates Malaysia’s plastic demand at two million to three million tonnes annually.

The implications are far-reaching.

From cooking oil and shampoo to cleaning products and packaged beverages and food, many everyday items rely on plastic packaging to ensure shelf life and enable distribution.

“Without sufficient packaging, manufacturers cannot guarantee the freshness of a product, or distribute them, even if the product itself (like milk or detergent) is available. Packaging becomes a bottleneck in the supply chain,” he said.

Malaysia is not alone in facing such pressures.

In Taiwan, fears of a plastic shortage have already affected daily commerce. Prices for some plastic goods have surged by as much as 40 per cent. Similarly, in South Korea, a shortage of naphtha has prompted residents to hoard garbage bags and smaller restaurants to stockpile food delivery containers.

“For decades, plastic has been so affordable and widely available that most people hardly gave it a second thought. The Middle East tensions and supply disruptions have exposed just how important plastic packaging can be,” said Mr Tan.

“Hopefully, consumers are starting to realise the importance of reducing, reusing and recycling,” he added.

Mr Azmi said: “As long as this war continues, its impact will keep growing.”