Friday November 10, 2023
12:18 am
Friday November 10, 2023
12:18 am
ECONOMYNEXT – Sri Lanka’s Trade Minister Nalin Fernando threatened egg producers to reduce the egg prices or face stiff competition in the market with imported eggs, as controls on maize imports that drive up feed costs.
Sri Lanka imports 30 million eggs monthly after the prices hit 65-70 rupees per egg after the government slappped price controls on eggs, amid maize import controls, leading to culling of the layer chick population and parent birds in hatcheries.
Minister Fernando said the egg prices have come down to as low as 35 rupees in government-owned Sathosa super markets.
“We will be importing until December 31. If we haven’t imported eggs, they have estimated the price to hit 90-100 rupees,” Fernando told reporters in Colombo at a media briefing.
“So, we were compelled to import eggs and that has enabled the consumers to buy eggs at a controlled price.”
Sri Lanka’s eggs were around 20 to 25 rupees before the rupee collapsed in April last year from 200 to 360 to the US dollar .
Sri Lanka’s chicken meat and egg prices are generally higher than the world due to import licensing on maize which has pushed up production costs.
Maize taxes are only cut to make triposha, a supplement for children facing malnutrition which was started during severe import controls and money printing by macro-economists running government and central bank policy in the 1970s.
In August 2023 Sri Lanka lowered the so-called maize mafia tax, which allows politically connected collectors and farmers to make large profits to 25 rupees from 75 rupees a kilogram.
RELATEDSri Lanka lowers ‘maize mafia’ tax
The maize tax, among the worst reggressive protectionist food taxes on the island that used to drive self-sufficiency (autarky) as well as the linked import licenses have been blamed for firing corruption and childhood malnutrition by some critics.
Sri Lanka’s daily egg output is estimated to have dropped to about 4 million a day from the normal 7 million after farmers killed layer chicken for meat in the wake of price controls imposed by the Consumer Affairs Authority last year.
NO HUGE “PRICE INCREASE IN EGGS
Sri Lanka needs around 80,000 parent birds to produce the required layer chicks but there were only around 42,000 in the first quarter of this, at the main hatcheries according to the All Island Poultry Association. It takes about 5.5 months to grow both layer parent birds and birds.
“There is a huge demand for eggs next month,” he said referring to the festive season.
“Most egg-based manufacturers have already bought eggs for their products. For instance, large scale cake and biscuit manufacturing producers have already purchased eggs for the next month. So, the demand could come from those who buy eggs for daily use.”
“So I don’t think there will be a huge price increase in eggs. If the egg prices are increased, either we have to increase the egg imports or we will have to extend the time duration of imports (beyond December 31).
“The decision depends on the hands of egg producers. Not me. What I have in my hand is to respond if they increase the prices.”
Analysts say individual egg producers have no control over egg prices except some branded producers who have some pricing power. The price of eggs are decided in the free market and meat prices in the live bird market.
“Everything will depend on if the egg price could be borne by consumers,” Minister Fernando said. “Egg is the least cost nutritious source. Chicken is expensive, fish is expensive, and other meats are also expensive. So we have a huge responsibility to provide it at a lower price.”
“So, the decision on how many eggs we should import and for how long we should import is depending on the egg producers of this country. The price they have fixed is not on par with the cost of egg production in the recent past. They are making an exorbitant profit. So the egg prices must come down in the future.”
“We have been talking about this issue for the last 8-10 months. That time period is more than enough to establish a proper layer flock. Usually it takes four-and-a-half months to lay eggs for the first time.
“In six months, they are very good at laying eggs. And from there to one-and-half-year, the producers can get eggs with 75-78 percent efficiency. So now the layer flocks are at a good stage . So we need to end this issue. I hope this issue will end with December 31. If not, the trade minister will have to intervene.”
While free trade in eggs are a check on domestic farmers and can help reduce childhood malnutrition, without free trade in maize and other inputs, final products cannot compete with countries like India that export maize and has global prices for feed.
Poultry farmers have said they could export meat if there is free trade in inputs. (Colombo/Nov 9/2023 – Update II)
