Imprudent policies will hit poultry industry

By Gamini Warushamana

[email protected]

Chairman of the All Island Poultry Association (AIPA) Dr. D. D. Wanasinghe said that the poultry industry in Sri Lanka is in a serious crisis due to lack of government support and imprudent policies.

The industry has been on the decline since 2005 and as a result 25% of small farmers have closed their ventures. Around one million people depend on the industry and the authorities do not listen to the voice of the industry, Dr. Wanasinghe said. The AIPA will institute legal action against the Ministry of Consumer Affairs for setting a fixed maximum retail price for chicken.

The Ministry has gazetted chicken as an essential food item and set the maximum retail price at Rs. 280 per kg. The Association said that this price is below the cost of production and the farmers are running at a loss.

The Ministry called upon the Association in April 2007 to sign an agreement to set the retail price of chicken at Rs. 260 kg for two months. In January this year it proposed Rs. 280 kg but the Association did not comply. However, the ministry set the maximum retail price of chicken at Rs. 280 per kg without a time frame, Dr. Wanasinghe said.

During the period, the poultry feed prices had gone up by 49.9%. In addition electricity and labour costs too increased. If the poultry feed price alone is taken into account the retail price today should be Rs. 328.

The AIPA said that gazetting chicken, as an essential consumer food item is a joke. Today even rice is not considered an essential consumer item.

The argument of the Ministry is that chicken is a food rich in protein and nutritional value. However, this yardstick does not apply to fish, beef, mutton or other products.

Dr. Wanasinghe said that certain corrupt officials are behind this move. Fixing the maximum retail price for a perishable product such as chicken cannot be accepted. This market is driven by the supply and the best way is to let the market forces function. Farmers cannot hold stocks for more than two days and the new government policy will seriously affect the industry, he said.

Today chicken prices in the market have gone up as a result of high cost of production. The main cost component is poultry feed.

As maize is used to produce bio fuel ethanol internationally the price of maize has gone up. In addition the 20% cess enforced by the government on maize imports has caused the local price to go up pushing poultry feed prices up further.

The AIPA has appealed to the government to remove the 20% cess on maize imports immediately as relief to farmers. This cess was introduced to encourage the maize farmers but today it serves a few intermediaries in Polonnaruwa. As farmers sell the entire harvest immediately after collection, the intermediaries buy them at a very low price (around Rs. 20) and later sell them at Rs. 39-40.

In February, the AIPA convinced the Treasury officials on the issues faced by the poultry industry and issues related to cess. As a result, the cess was removed. But the intermediaries were powerful and the cess was enforced within two weeks, Dr. Wanasinghe said.

The poultry industry in Sri Lanka needs 200,000 tonnes of maize per year and the country produces only 40,000 tonnes. We import 160,000 tonnes per year and with all tariffs imported maize costs around Rs. 40 kg.

The AIPA has also appealed to the government to remove the cess immediately and enforce it only during the maize harvesting seasons.

The Association said that it would ensure the purchase of the total maize harvest in the country at a price fixed by the government and support the government’s effort to increase maize production.