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Friday August 19th, 2022

Sri Lanka poultry farmers hit back at maize license raj, call for liberalization

ECONOMYNEXT – Sri Lanka’s poultry farmers who have been producing protein for the population despite government import duties taxes on inputs have called for an end to a license raj that has kept maize prices artificially high.

Sri Lanka’s All Island Poultry Association has called for the government to liberalize the import regime which has pushed up the imported cost of maize to 52 rupees a kilo, though after paying freight the actual cost is only 37 rupees a kilo.

Up to 60 percent of the production cost of chicken meat is maize, the association says.

Ajith Gunasekara, President of All Island Poultry Association (AIPA) said "intermediary trader dominance" in the maize sector.

Sri Lanka has imposed high taxes on imports to promote domestic maize production, but in the process higher up the value chain sectors such as chicken meat and processed foods uncompetitive n export markets and more expensive domestically, a problem of so-called ‘effective taxation’.

Chicken meat itself is under import protection.

Chicken consumption has been going up and the association says this year 400,000 metric tonnes of maize is needed.

The department of agriculture has upped 2018 Maha (main) cultivation season maize production to 273,000 metric tonnes as rains returned after output collapsed to 163,000 tonnes in 2017 amid a drought.

“Since local production of maize ends in May, traders tend to hike up prices on local stocks to capitalise on high demand," Gunasekara said in a statement.

"Ultimately this hits our local, poultry farmers hardest when they attempt to purchase maize for poultry feed."

He says total taxes on a one kilo of chicken meat is estimated at 85 rupees, though the workings were not elaborated. He said the poultry industry had generated 16.5 billion rupees in taxes for the government.

Gunasekara says while protectionism has boosted domestic production it has not brought down costs and it was "extremely harsh on domestic poultry farmers."

Economic analysts say this is a standard outcome of protectionism. Maize farmers are under no requirement to produce at globally competitive prices as competition has been eliminated by import duties.

In Sri Lanka on top of an import duty, a permit system also exists, fostering further corruption and abuse.

A permit or licensing system gives privileges to a few importers, who in turn are free to sell at whatever price they want, because it is not possible for any state to accurately predict demand and the incentive is always to restrict the supply.

The farmers say they should be given import permits at the beginning of each year. At the moment there are delays in the current process of issuing permits.

"When the quota permits are not issued on time, the traders swell the CIF price knowing the local farmers are desperate to meet the demand," he said.

The poultry association says it is willing to buy local maize at 45 rupees a kilogram, which is above the 37 rupee import price.

The poultry farmers say despite the regulations from the government which is blocking progress, poultry farmers have been providing protein nutrition to the people, with latest estimates of per capital consumption estimated to have improved to 12 kilos per person from 10 kilos.

Expensive protein, and agricultural sector protectionism in general is one of the key reasons for early childhood stunting, economic analysts say.

Elimination of license and permits could also reduce corruption analysts say.

Licenses and permits usually lead to corruption and mis-use and politicians or officials in any country are unwilling to give up a permit raj once it has been set up, analysts say. (Colombo/May21/2018)

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Sri Lanka schedules 3-hour power cuts for Aug 20, 21: regulator

ECONOMYNEXT – Sri Lanka will impose power cuts of up to three hours on Saturday August 20 and Sunday August 21, Public Utilities Commission (PUCSL) Chairman Janaka Ratnayake said.

All areas (A, B, C, D, E, F, G, H, I, J, K, L, P, Q, R, S, T, U, V and W) will have power cuts of 1 hours and 40 minutes between 10.30 am and 06.00 pm and 1 hour 20 minutes from 06.00pm to 10.00 pm.

Click here for a detailed schedule.

The state-run Ceylon Electricity Board (CEB) said supply interruption time and restoration time will vary within 30 minutes as indicated above.

Sri Lanka’s daily scheduled power cuts that were reduced to one hour in July with power generation from hydro power plants contributing more than 50 percent to the main grid reducing thermal power plant use was extended to three hours last week due to a breakdown at the Norochcholai coal power plant.

According to officials, the breakdown happened in Unit 1 of Norochcholai which will take around two weeks to repair.

The Minister of Power & Energy said Unit 2 is undergoing scheduled maintenance work while Unit 3 will continue to operate. West Coast and other fuel power pPlants will be used to manage the supply, the ministry said. (Colombo/Aug02/2022)

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Sri Lanka guidance peg edges T-bond yield edge down

ECONOMYNEXT – Sri Lanka Central Bank’s guidance peg for interbank transactions edged down on Friday (19), while yields in Treasury bonds picked up slightly and in T-bill remain unquoted in dull trade, a day after the Central Bank announced the policy rates will remain stable, dealers said.

A bond maturing on 01. 06. 2025 closed at 27.95/28.05 percent on Friday, slightly up from 27.90/28.00 percent on Thursday.

No T-bills were quoted on Friday, dealers said.

Meanwhile Sri Lanka’s central bank announced a guidance peg for interbank transactions further weakened by three cents to 361.00 rupees against the US dollar on Friday from 360.97 rupees.

Data showed that commercial banks offered dollars for telegraphic transfers between 368.00 and 370.00 for small transactions.  (Colombo/ Aug 19/2022)

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Sri Lanka records 10 new COVID-19 deaths in 48 hours as case numbers rise

ECONOMYNEXT –  Sri Lanka recorded 10 COVID-19 deaths in the 48 hours from August 17 to 19 taking the country’s pandemic death toll to 16,640, health ministry data showed.

Sri Lanka is experiencing a slight increase in COVID-19 cases with the relaxation of public health restrictions relating to face masks and public gatherings.

Health authorities said the situation will be monitored constantly and have asked the general public to continue to follow basic hygiene measures in order to control the spread of the virus again in the community.

In August alone 2,924 new cases were recorded in Sri Lanka, with 84 deaths attributed to the disease.

So far in 2022, from January onward, health authorities have identified 81,157 patients to date.

Epidemiology unit data showed that 874 patients are currently receiving treatment, out of which 716 are receiving home based care.

The spread of the virus has increased with the use of public transport rising after an easing of a fuel crisis.

Sri Lanka is also facing difficulties in securing essential medicine supplies for the health sector due to a forex shortage.

Health officials said if the number of COVID-19 patients rise to a level the health sector cannot manage,  with the added issues of fuel and medical shortages, the health system might collapse.

“It is the responsibility of us all. There is no use trying to forcibly control people. We all have the responsibility to reduce or stop the spread of the virus before it gets out of control. We have been living with it for the past two years,” Deputy Director General of Health Services Dr Hemantha Herath said. (Colombo/Aug19/2022)

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