Consumers hit by increased poultry prices

Consumers suffer as a result of market failure due to wrong market interventions, analysts said. Due to the increased chicken and egg prices in the market the poultry industry is facing a crisis.

Government enforced maximum price for processed chicken at Rs. 320/kg earlier and the farmers faced a loss due to the high cost of production. As a result the supply declined and recently the government increased the maximum price to Rs.350/kg.

However, according to the department of census and statistics (DCS) the average open market price of chicken was reported at Rs. 422.48/kg in February. In some markets prices increased up to Rs.500, kg.

Market analysts said that today there are no processed chicken in the market and chicken is sold under chicken parts and skinless chicken at a higher price which average consumers cannot afford.

There is a shortage of supply to the main supermarkets by large scale poultry farmers who do not supply processed chicken. They supply live chicken direct to the Pettah market.

Price division of the DCS which regularly monitor all major markets in Colombo confirmed that there is a shortage of processed chicken. The price control does not help protect the consumers but makes the situation worse, market analysts said. This happened when the government controlled the price of rice as well. The traders sold rice under various brands under different qualities evading price control, they said.

The main reason for the crisis in the poultry industry is the failure in the input market and high cost of poultry feed. According to the All Island Poultry Association (AIPA), poultry feed accounts for 80% of the cost of production of the poultry industry. Maize accounts for over 80% of the poultry feed and high maize prices is the main reason for the crisis in the industry, the chairman of the AIPA Dr. D. D. Wanasinghe said.

Import of maize has been restricted by the government to protect the local farmers. However, neither farmers nor the consumers enjoy the benefit of such government decisions. For instance the local maize market is a monopoly. The maize production in the Moneragala district is collected by a single trader and it is the same in other maize cultivating areas in the country.

The irony is that today, at the time the local maize harvest is being collected and the farm gate price of maize has dropped to Rs. 35-38, the farmers get poultry feed at the same price they paid when maize was at Rs.59.

As the maize monopoly is strong it influences the government to increase taxes and restrict imports.

Dr. Wanasinghe said that the feed millers have not reduced the feed prices. However, the high chicken price has given positive signals to the market and production will increase in the future. (GW)