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| Sunday, 19 May 2002 |
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Poultry industry seeks tax relief by Elmo Leonard Poultry farmers have appealed to the government to scrap the Goods and Services Tax (12.5 per cent) and National Security Levy (6.5 per cent), imposed on the industry. The trade anticipates that the government would take this step by June. "In the past four years, the government collected much revenue by way of taxes from the poultry industry, unconcerned that the industry is dying," a shareholder said at the 19th Annual General Meeting of Ceylon Grain Elevators Ltd (CGE) last week. CGE is the largest player in Sri Lanka's poultry industry, with its principals in Singapore. Its operations include the lion's share of the local animal feed industry and a large slice of the production of day-old chicks, frozen chicken, live birds, poultry equipment and drugs and vaccines for poultry. CGE, a high value share in the past, last week traded at Rs 14.25 per share. CGE Chairman, Cheng Chih Kwong Primus refers to 2001 as "Annus horribilis". "It would be no exaggeration to say that a large majority of poultry farmers today are either in a state of bankruptcy or facing financial destitution," he said. The company achieved Rs 4.512 billion in group sales for 2001, which was 16 per cent over last year's figures. But, after tax group loss and minority interest were sustained at Rs 303.5 million, a drop of 1,558 per cent from last year. The year 2000 profits plummeted by 90 per cent. Chairman Primus cites several causes which led to this situation in the poultry industry: the attack on the Katunayake international airport, the consequent drop in tourist arrivals, and power cuts due to "the worst drought in five years". CGE was faced with a glut of chicken. Over two million day-old chicks were destroyed during the year ended 2001 with no takers, in spite of being given away free. Chairman Primus said that the poultry industry was beset with the Customs levy on imports of maize, from February 2002, first by five per cent, and then 10 per cent. From February 2001, a duty of 40 per cent was imposed. Maize could make up to 60 per cent of chicken feed, CGE's Executive Director, Tan Hong Tjioe Henry said. At the AGM it was explained that Sri Lanka's poultry industry paid the highest taxes among SAARC nations. Animal feed produced in Sri Lanka was among the highest priced in the world. Henry recalled that GST and NSL were imposed on the sale of animal feed from April 1998. From April 2000 GST was applied to the sale of processed chicken, while the live market was exempt from the tax. These measures had an immediate and highly negative effect on the sale of branded frozen chicken produced by the bigger players in the market, as they had to compete with smaller suppliers who found it easy to evade paying taxes. Primus said: "The company has paid over Rs 402 million as GST, Rs 232 million as NSL and Rs 109 million in Customs duties on imports of maize, a total of Rs 743 million." In the year under review, CGE paid Rs 174 million as interest on loans from local banks. Foreign exchange losses amounted to Rs 75 million. CGE is now looking at exports and have made a shipment of animal feed to Bangladesh. The company is also trying to sell frozen chicken to the Maldives and the Middle East. |
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