ECONOMYNEXT – Sri Lanka’s egg production has been hit with a maize import ban and a powerful collector oligopoly driving up maize prices forcing poultry farmers to underfeed chicken, an industry official said, in sector that is cornered by a bewildering array of state controls and interventions.
Sri Lanka produces about 300,000 metric tonnes of maize but the poultry industry says it needs about 600,000 tonnes a year, a collector oligopoly which has pushed for import duties usually corner the harvest and sells to poultry farmers and feed millers at higher prices.
The poultry industry then goes behind bureaucrats and politicians to get temporary import licenses.
But this year imports of maize had been completely banned, after money printing in March and April triggered foreign exchange shortages. Private credit has since collapsed and imports and economic activities have slowed.
Collectors have driven up the price of maize to 86 rupees a kilogram, industry officials said making feed unaffordable to farmers.
“Farmers who used to give one kilogram of feed are now giving 750 grams,” Ajith Gunerasekera, President of Sri Lanka’s All Island Poultry Association said.
“A chicken will usually lay about 300 eggs a year on average but now they are laying 260 or less.”
Worldwide maize is the most suitable and cost effective material for poultry feed, which has calories as well as protein.
Sri Lanka’s dairy industry is also hit and unable to boost yields due to state controls on maize.
The poultry industry is trying to innovate and survive as new state interventions blocks their attempts to feed chicken.
Authorities then banned the use of broken rice in chicken feed.
Feed mixers are now using fishmeal to get the protein stock. But the farmers are stumped for the calorie or energy content.
Gunesekera said the government has agreed to allow wheat to be imported instead of maize for poultry feed.
Wheat to the Rescue?
Ukraine wheat is available for around 245 dollars a tonne, he said.
State controls on maize and feed has driven up the cost of production and is losing the country an opportunity to export poultry products and build up export buyers, Gunesekera said.
With Brazil hit by Coronavirus, supplies of poultry have been disrupted and many retailers are looking to diversity their sources.
“Our cost of production is already 1.65 dollars a kilo, in the export markets they want it at 1.45 dollars a kilo,” Gunasekera said.
With a 40 day growth cycle broiler chicken output can recover quickly.
However there is a bigger problem with layers where it takes about 5 months for a chick to reach maturity.
During the Coronavirus lockdown period, some farmers had culled birds as feed supplies were broken and they were also unable to sell eggs.
Now with demand coming back, total monthly egg production is estimated to be down 30 percent, due to combination of starving chicken and a depleted flock from culling.
With egg prices rising farmers have been given the correct price signal to grow more layers and layer chick prices have soared.
“Now day old chicks are hard to come by,” Gunasekera said. “Chicks that went for 150 rupees are now at 325 rupees. Still they are not available and famers have to wait in line.”
The industry is always at the threat of price controls from the state which can disrupt market signals and kill margin and incentives to produce more at different levels of the value chain.
Unlike in the case of broilers where hatcheries operated by the top poultry groups have grand parent stock, the layer sector imports parent stock.
Amid the Coronavirus crisis layer parent stock imports have been disrupted leading to the insufficient day old chicks. (Colombo/Aug24/2020)