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Saturday May 25th, 2024

Sri Lanka egg output, export opportunity hit by maize import ban, collector oligopoly

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.

Trade Controls

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.

Layers

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)

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Sri Lanka power outages from falling trees worsened by unfilled vacancies: CEB union

HEAVY WINDS: Heavy rains and gusting winds have brought down trees on many location in Sri Lanka.

ECONOMYNEXT – Sri Lanka’s power grid has been hit by 300,000 outages as heavy winds brought down trees, restoring supply has been delayed by unfilled vacancies of breakdown staff, a union statement said.

Despite electricity being declared an essential service, vacancies have not been filled, the CEB Engineers Union said.

“In this already challenging situation, the Acting General Manager of CEB issued a circular on May 21, 2024, abolishing several essential service positions, including the Maintenance Electrical Engineer in the Area Engineer Offices, Construction Units, and Distribution Maintenance Units,” the Union said.

“This decision, made without any scientific basis, significantly reduces our capacity to provide adequate services to the public during this emergency.

“On behalf of all the staff of CEB, we express our deep regret for the inconvenience caused to our valued customers.”

High winds had rains have brought down trees across power lines and transformers, the statement said.

In the past few day over 300,000 power outages have been reported nationwide, with some areas experiencing over 30,000 outages within an hour.

“Our limited technical staff at the Ceylon Electricity Board (CEB) are making extraordinary efforts to restore power as quickly as possible,” the union said.

“We deeply regret that due to the high volume of calls, there are times when we are unable to respond to all customer inquiries.

“We kindly ask consumers to support our restoration teams and to report any fallen live electrical wires or devices to the Electricity Board immediately without attempting to handle them.

The union said there were not enough workers to restore power quickly when such a large volume of breakdowns happens.

“We want to clarify that the additional groups mentioned by the minister have not yet been received by the CEB,” the union said.

“Despite the government’s designation of electricity as an essential service, neither the government, the minister in charge, nor the CEB board of directors have taken adequate steps to fill the relevant vacancies or retain current employees.

“We believe they should be held directly responsible for the delays in addressing the power outages due to the shortage of staff.”

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Melco’s Nuwa hotel to open in Sri Lanka in mid-2025

ECONOMYNEXT – A Nuwa branded hotel run by Melco Resorts and Entertainment linked to their gaming operation in Colombo will open in mid 2025, its Sri Lanka partner John Keells Holdings said.

The group’s integrated resort is being re-branded as a ‘City of Dreams’, a brand of Melco.

The resort will have a 687-room Cinnamon Life hotel and the Nuwa hotel described as “ultra-high end”.

“The 113-key exclusive hotel, situated on the top five floors of the integrated resort, will be managed by Melco under its ultra high-end luxury-standard hotel brand ‘Nuwa’, which has presence in Macau and the Philippines,” JKH told shareholders in the annual report.

“Melco’s ultra high-end luxury-standard hotel and casino, together with its global brand and footprint, will strongly complement the MICE, entertainment, shopping, dining and leisure offerings in the ‘City of Dreams Sri Lanka’ integrated resort, establishing it as a one-of-a-kind destination in South Asia and the region.”

Melco is investing 125 million dollars in fitting out its casino.

“The collaboration with Melco, including access to the technical, marketing, branding and loyalty programmes, expertise and governance structures, will be a boost for not only the integrated resort of the Group but a strong show of confidence in the tourism potential of the country,” JKH said.

The Cinnamon Life hotel has already started marketing.

Related Sri Lanka’s Cinnamon Life begins marketing, accepts bookings

(Colombo/May25/2024)

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Sri Lanka to find investors by ‘competitive system’ after revoking plantations privatizations

ECONOMYNEXT – Sri Lanka will revoke the privatization of plantation companies that do not pay government dictated wages, by cancelling land leases and find new investors under a ‘competitive system’, State Minister for Finance Ranjith Siyambalapitiya has said.

Sri Lanka privatized the ownership of 22 plantations companies in the 1990s through long term leases after initially giving only management to private firms.

Management companies that made profits (mostly those with more rubber) were given the firms under a valuation and those that made losses (mostly ones with more tea) were sold on the stock market.

The privatized firms then made annual lease payments and paid taxes when profits were made.

In 2024 the government decreed a wage hike announced a mandated wage after President Ranil Wickremesinghe made the announcement in the presence of several politicians representing plantations workers.

The land leases of privatized plantations, which do not pay the mandated wages would be cancelled, Minister Siyambalapitiya was quoted as saying at a ceremony in Deraniyagala.

The re-expropriated plantations would be given to new investors through “special transparency”

The new ‘privatization’ will be done in a ‘competitive process’ taking into account export orientation, worker welfare, infrastructure, new technology, Minister Siyambalapitiya said.

It is not clear whether paying government-dictated wages was a clause in the privatization agreement.

Then President J R Jayewardene put constitutional guarantee against expropriation as the original nationalization of foreign and domestic owned companies were blamed for Sri Lanka becoming a backward nation after getting independence with indicators ‘only behind Japan’ according to many commentators.

However, in 2011 a series of companies were expropriation without recourse to judicial review, again delivering a blow to the country’s investment framework.

Ironically plantations that were privatized in the 1990s were in the original wave of nationalizations.

Minister Bandula Gunawardana said the cabinet approval had been given to set up a committee to examine wage and cancel the leases of plantations that were unable to pay the dictated wages.

Related

Sri Lanka state interference in plantation wages escalates into land grab threat

From the time the firms were privatized unions and the companies had bargained through collective agreements, striking in some cases as macro-economists printed money and triggered high inflation.

Under President Gotabaya, mandating wages through gazettes began in January 2020, and the wage bargaining process was put aside.

Sri Lanka’s macro-economists advising President Rajapaksa the printed money and triggered a collapse of the rupee from 184 to 370 to the US dollar from 2020 to 2020 in the course of targeting ‘potential output’ which was taught by the International Monetary Fund.

In 2024, the current central bank governor had allowed the exchange rate to appreciate to 300 to the US dollar, amid deflationary policy, recouping some of the lost wages of plantations workers.

The plantations have not given an official increase to account for what macro-economists did to the unit of account of their wages. With salaries under ‘wages boards’ from the 2020 through gazettes, neither employees not workers have engaged in the traditional wage negotiations.

The threat to re-exproriate plantations is coming as the government is trying to privatize several state enterprises, including SriLankan Airlines.

It is not clear now the impending reversal of plantations privatization will affect the prices of bids by investors for upcoming privatizations.

The firms were privatized to stop monthly transfers from the Treasury to pay salaries under state ownership. (Colombo/May25/2024)

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