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Tuesday February 7th, 2023

Sri Lanka chicken farmers eye exports as domestic prices drop

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)

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Sri Lanka Railways to seek PPPs to boost revenue streams

CURFEW RUSH: Commuters scrambling to get home after curfew was declared in Sri Lanka on March 20, 2020.

ECONOMYNEXT – Sri Lanka Railway department hopes to expand Public Private Partnerships and earn more non-passenger revenues to offset recurring operational costs, an official said.

“For the past 10 years, except the last few years, the Railway operational income only covers around 50 percent of the operational expense of the Department,” the General Manager of the Railway, D.S. Gunasinghe told EconomyNext.

“Our plan is to increase the non-passenger revenue of the Railway department.

“And we cannot expect and do not hope for money from the government.”

Sri Lanka Railways already has agreements with Prima, a food firm, and Insee Cement, which is bringing in additional income, Gunasinghe said.

“We had agreements for material transportation such as sand in the past, however it was canceled but we hope to start it again” he said.

The department will rent out its storage facilities and circuit bungalows for the tourism sector to create additional revenue streams.

Sri Lanka Railways recorded an operating loss of 10.3 billion rupees during 2021, compared to a loss of 10.1 billion rupees in 2020, the Central Bank 2021 annual report showed.

The total revenue of the SLR stood at 2.7 billion rupees, a 41.3 percent drop from a year ago.

(Colombo/ Feb 06/2023)

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Sri Lanka’s doctors distribute anti-tax hike leaflets to train commuters

ECONOMYNEXT – Doctors representing Sri Lanka’s Government Medical Officers Association (GMOA) distributed leaflets outside the Colombo Fort railway station against a progressive tax hike, threatening to address the government in a “language it speaks”.

GMOA Secretary Haritha Aluthge told reporters outside the busy Fort railway station Monday February 06 afternoon that all professional associations have collectively agreed to oppose the personal income tax hike.

“The government is taking a lethargic approach. They cannot keep doing this. They have a responsibility towards the citizens, the country and society,” said Aluthge.

The medical officer claimed that the government was acting arbitrarily (අත්තනෝමතික).

“If it cannot understand the language they’ve been speaking, if the government’s plan is to put all professionals out on the street, if it doesn’t present a solution, all professional unions have decided unanimously to address the government in a language it speaks, ,” he said.

Aluthge and other GMOA members were seen distributing leaflets to commuters leaving the railway station. Doctors in Sri Lanka in general are likely to earn higher salaries than the average train commuter, and a vast majority of Sri Lanka’s population, most of whom take public transport, don’t fall into the government’s new tax bracket. Many doctors, though certainly not all, collect substantial sums of money at the end of every month as doctor’s fees in private consultations.

About two miles away from the doctors, the Ceylon Blank Employees’ Union, too, engaged in a similar distribution leaflet campaign on Monday at the Maradana railway station. A spokesman promised “tough trade union” action if there was no solution offered by next week.

Sri Lanka’s cash-strapped government has imposed a Pay As You Earn (PAYE) tax on all Sri Lankans who earn an income above 100,000 rupees monthly, with the tax rate progressively increasing for higher earners, from 6 percent to 36 percent.

A person who paid a tax of 9,000 rupees on a 400,000 rupee monthly income will now have to pay 70,500 rupees as income tax, the latest data showed. This has triggered a growing wave of anti-government protests mostly organised by public sector trade unions and professional associations.

Even employees of Sri Lanka’s Central Bank recently joined a week-long “black protest” campaign organised by state sector unions against the sharp hike in personal income tax, even as Central Bank Governor Nandalal Weerasinghe said painful measures were needed for the country to recover from its worst currency crisis in decades.

The government, however, defends the tax hike arguing that it is starved for cash as Sri Lanka, still far from a complete recovery, is struggling to make even the most basic payments, to say nothing of the billions needed for public sector salaries.

Economists say Sri Lanka’s bloated public service is a burden for taxpayers in the best of times, and under the present circumstances, it is getting harder and harder to pay salaries and benefits.

Sri Lanka’s new tax regime has both its defenders and detractors. Critics who are opposed to progressive taxation say it serves as a disincentive to industry and capital which can otherwise be invested in growth and employment-generating business ventures. Instead, they call for a flat rate of taxation where everyone is taxed at the same rate, irrespective of income.

Others, however, contend that the new taxes only affect some 10-12 percent of the population and, given the country’s economic situation, is necessary, if not vital, at least for a year or two.

Critics of the protesting workers argue that most of the workers earn high salaries that most ordinary people can only dream of, and, they argue, though there may be some cases where breadwinners could be taxed more equitably, overall, Sri Lanka’s tax rates remain low and are not unfair.  (Colombo/Feb06/2023)

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Sri Lanka bond Yields end steady

ECONOMYNEXT – Sri Lanka’s bond yields closed steady on Monday, dealers said while a guidance peg for interbank transactions remained unchanged.

A bond maturing on 01.07.2025 closed at 32.15/30 percent, steady from Friday’s 32.05/10 percent.

A bond maturing on 01.05.2027 closed at 28.90/29.10, steady from Friday’s 28.90/20.05 percent.

The Central Bank’s guidance peg for interbank US dollar transactions appreciated by one cent to 361.96 rupees against the US dollar.

Commercial banks offered dollars for telegraphic transfers at 370.35 rupees on Monday, data showed. (Colombo/Feb 06/2023)

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