Poultry farmers call for two-year tax holiday

by Elmo Leonard

Poultry farmers have called upon the authorities to grant a two-year tax holiday from the 15 percent, four-tiered Value Added Tax binding the trade of chicken, with the forthcoming budget. "It will give a breather to the stagnant poultry industry, hit by the recent bird flu scare and other negative constraints, the industry faces," chairman, All Island Poultry Association (AIPA) Dr. D. D. Wanasinghe said.

The 15 percent tax is paid each time, on the trade of day-old-chicks, on feed, the trade of live poultry and on the sale of chicken meat. But it is estimated that government gets Rs. 32 per kilo on such trade practices, AIPA has told the secretary to the Treasury Dr. P. B. Jayasundera and two Treasury commissioners, at a meeting.

Today's average chicken meat price is Rs. 220 per kilo and an average dressed chicken weighs 1 kilo 700 grammes. When chicken is sold in parts, another 15 percent VAT is charged. "This is not value addition, but it provides a means for the poor customer who cannot purchase a full chicken, to yet have chicken on his table, Dr Wanasinghe said.

Chicken is also imported, and a large part of it known to go into the making of sausages and other processed chicken products. From October 1, a tax of 15 percent or Rs 50 per chicken imported, whichever is higher is charged. This is one in a list of 1,400 marked produce and products, as part of a new import structure. Dr Wanasinghe said that the import levy on poultry is good for the local poultry industry, whose COP is high, due to too many taxes and lack of facilities.

AIPA argues that the Rs. 32 per bird paid to government will remain with the industry and part or all of it could be passed on to the consumer. When chicken costs less, consumption will go up, more poultry farmers will come into the industry, which will grow, giving more employment.

Sri Lanka's poultry industry is now enjoying a no-bird flu scare, the trade said. Fear in the minds of some consumers, paralysed the industry when consumption plummeted by 50 percent from August 2005 to February this year.

The most hit were smalltimers and some farmers who could not repay bank loans. Such people have lost the land they mortgaged to banks as collateral to obtain loans, Dr Wanasinghe said.

Sri Lanka's poultry industry is credited with an investment of Rs. 180 billion including poultry farms, freezing plants, transport lorries and the like. The local industry employs 75,000 farmer families and 100,000 input suppliers. Also the industry pays annual taxes of Rs. 80 million to government, Dr Wanasinghe said.

The industry also plays an important economic role, with a large part of those in the industry being rural women, while it keeps rural people employed and prevents country migration into the metropolises.

Poultry droppings are considered a good fertiliser for upcountry vegetables, substituting imports of inorganic fertiliser.

Sri Lanka's per capita consumption of chicken is the highest in South Asia, being 55 eggs and 4.5 kilos of chicken, per person per year according to WHO and FAO statistics. But, this falls far below the world average of 110 eggs and 10 kilos of chicken per person per year, according to WHO.