ECONOMYNEXT – Sri Lanka’s chicken farmers are looking for export opportunities as chicken prices fall steeply after monetary tightening and a supply response to earlier higher prices.
A kilogram of chicken now retails between 950 rupees and 1,200 rupees compared to 1500 – 1750 rupees a month ago.
Dressed freshly killed chicken in small shops are now selling around 1,000 a kilogram while value added tax and a cascading social security levy is adding close to 200 rupees to the price of frozen chicken in supermarkets.
Surging chicken meat prices earlier had incentivized farmers to grow more chicken and now there is more supply, Ajith Gunasekera Chairman of the All Island Poultry Association said.
Sri Lanka’s egg supplies are still tight after the Consumer Affairs Authority slapped price controls on eggs and incentives farmers to kill layers instead of farming new ones as feed prices surged during the height of the currency crisis, Gunasekera said.
Sri Lanka’s central bank hiked rates in March as the rupee collapsed after two years of money printing and galloping inflation threatened to turn into hyperinflation.
Chicken meat was around 450 to 500 rupees a kilogram before the central bank printed money to mis-target rates and collapsed the rupee to around 360 to the US dollar.
Though food supplies are improving, real salaries are half of what they were and income earners in particular do not have enough money for food, leading to malnutrition among poorer children. Salaries have to almost double to make up for the currency collapse.
Chicken feed supply has improved with forex shortages easing after monetary tightening, but import taxes are making Sri Lanka un-competitive in export markets, industry officials say.
Sri Lanka’s poultry farmers are now eyeing export markets. Sri Lanka began exports to the Middle East during the Coronavirus crisis.
“We are hoping to export chicken because of a viral bird flu, but the only constraints are taxes and 80 percent of our production cost is on animal feed,” said Gunasekera said.
“We are not competitive because of the animal feed issue and the taxes placed, which makes us to be underthrown by other competitors,”
An Port and Airport Levy as well as other duties artificially pushes up cost of production. President Ranil Wickremesinghe has promised to remove para tariffs that make exports un-competitive.
Minister of Livestock DV Herath said in Parliament that, Sri Lanka had 249,063 chicken farms, but the crisis had led to the closure of 16,500 farms.
Minister Herath however was on a North Korean style ‘self-sufficiency’ track and not concerned about being export competitive.
“Specialists have said that Sri Lanka will be able to achieve sufficiency if we had consistent supplies of food and water,” he told parliament. (Colombo/Dec08/2022)