Sri Lanka feed mill profits soar amid strong demand for chicken

ECONOMYNEXT – Strong demand for chicken and eggs and farmers shifting from self-mixed to  feed helped boost profits 300 percent to 387 million rupees in the December 2015 quarter from a year earlier, Ceylon Grain Elevators, a poultry and feed milling group said.

The group, a unit of Singapore based Prima, said earnings were 6.47 rupees for the quarter. In the year to December earnings were 15.72 rupees per share on total profits of 1,178 million rupees, up from 71 million rupees.

In December revenues rose 21 percent to 3.8 billion rupees and costs rose at a slower 11 percent to 3.2 billion rupees, allowing gross profits to go up 142 percent to 598 million rupees.

"During the quarter under review, the Group was able to post the outstanding results consequent to the increased demand for chicken meat and eggs," the firm told shareholders in a statement.

"Shortage of local raw materials compelled the farmers to move from self-mixing to compound feed also led to an increase in the demand for feed. The Group continued to maintain its market share in all segments during the year 2015."

Sri Lanka taxes imported raw material like maize to keep prices high, making chicken, usually a cheap source of protein, expensive to the poor and children of the poor, in Sri Lanka due to nationalist ideology of self-sufficiency, critics have said.

As a result raw material may run out for chicken farmers causing ‘shortages’, unlike in countries with free trade.

Chicken meat is also price-controlled by the rulers in Sri Lanka after keeping maize prices up.

As a result there is wide fluctuations and demand in poultry products from year to year.

Sri Lanka saw a strong demand for chicken meat and eggs in 2015, after excess production and low demand in 2014, Three Acre Farms, a CGE unit said.

During the year under review, the Group performance improved significantly with higher demand and stable market prices for Broiler, Layer and Parent Stock Day Old Chicks.

"The glut in Broiler Chicken and Broiler Day Old Chicks in year 2014 caused farmers to curtail their production which limited supply into year 2015," TAFL told shareholders.

"The Group was able to leverage on this with better pricing supported by the increased purchasing power of the consumers." (Colombo/Feb29/2016)