24 June 2016 10:49 am Views - 3505
By Shabiya Ali Ahlam
Sri Lanka’s poultry industry that has been left to bleed will soon receive a further blow if relevant authorities continue to turn a deaf ear to their pleas for an urgent increase in chicken prices, industry stakeholders cautioned.
Top industry representatives yesterday told Mirror business that if the government did not intervene immediately and increase the price of chicken, which is currently slapped with a price control, by at least Rs. 60 per kilo, it would create an “impeding shortage” in the market.
“We have spoken to the authorities but they continue to do nothing. With the cost of production escalating due to changes in the economic environment, our margins are continuing to shrink and we cannot increase the prices due to the price controls,” Sri Lanka Poultry Producers Forum Senior Representative Sanjeewa Perera said. “A drop in supply is already witnessed in the market, and there will be a further shortage if the government does not come out with corrective measures,” he added. The last price revision for poultry was made in 2012, after which no changes were made or accommodated despite an increase in taxes, wages, and other elements which directly impact pricing.
In addition to the industry having to absorb a 2.5 percent increase to the Ports Development Levy, which now stands at 7.5 percent (previously 5 percent) when importing raw material for poultry feed, it has been further slapped with the recent 4 percent VAT increase, which it cannot pass on to the consumer.
The wage increase of Rs. 2,500 as announced in the 2016 budget has also added to the troubles of the already distressed industry. The changes in the operating environment have increased the cost of production of a whole chicken to Rs. 440, while previously it hovered around Rs. 350 to Rs. 380. The stakeholders asserted that industry players, mainly the smaller producers, would have to shut down as it is becoming increasingly difficult to sustain the operations in the current scenario.
It was shared that the industry had met with Minister of Development Strategies and International Trade Malik Samarawickrama and Prime Minister Ranil Wickremesinghe to communicate their grievances but to-date have not received any response.
As the country is currently witnessing an acute shortage of maize, the poultry industry urged the government to allow importing of the raw material which is the key ingredient for chicken feed.
While the poultry industry alone requires 400,000 metric tonnes of maize a year, the local production of 200,000 metric tonnes spells out the obviously insufficiency. The controls on imports further increases production costs of the troubled industry.
According to the All Island Poultry Association (AIPA) Chairman Matalai Jayasekere, the industry faces this situation every year and the government not having the “right formula” results in costs to soar.
The industry has no space to increase prices due to controls imposed by the government. Furthermore, the crop that should be sold at Rs. 40 per kilo is currently sold at Rs. 60, resulting in the industry to bleed money. The AIPA charged that the unfair increase in price is due to few individuals with influence manipulating the market holding the entire industry to ransom. “During harvest season these individuals purchase from farmers the entire lot and hold it. Once the season is over they sell it to us keeping a 20 percent margin. This is unfair, and we have brought this to the notice of the relevant authorities, but are yet to see any measures taken in this regard,” said Jayasekere. “There are no checks and balances as the government has banned imports. If there is a shortage, we must be allowed to import as purchasing locally is costly,” stated Jayasekere
