ECONOMYNEXT – Sri Lanka’s Three Acre Farms, a breeder farm and poultry processing firm said exports of parent stocks rose in 2017, while domestic demand fell as inflation and taxes rose after a currency collapse killing demand for eggs and meat amid a drought.
Sri Lanka being a country without avian flu had helped exports of parent stock chicks, the firm said. Its breeder farms unit had earned revenues of 1.84 billion rupees.
"…[G]rowth was upheld by exports of broiler Parent Stock Day Old Chicks (PS DOCs) to regional countries, which increased by a commendable 28 percent over exports in 2016, but a further increase in revenue was forestalled by a lower demand for layer DOCs due to an unstable egg market," the firm told shareholders.
"However, the Group maintained its revenue from Broiler Day Old Chicks (DOC) despite the glut in the chicken market by ensuring supplies of quality DOC and trust and confidence of our brand."
The company said a drought and floods had also affected. Meanwhile the currency had also depreciated. Higher inflation and a hike in sales taxes was also negative.
Sri Lanka’s rupee collapsed from 131 to 150 levels from late 2015 to 2016 and continued to be pushed down by the central bank as it was targeting a real effective exchange rate index.
A currency collapse and the inflation that comes in its wake kills disposable incomes of people, and recouping of forex reserves after slowing credit also hits demand.
However poultry firms get demand support from the tourism sector.
TAFL said in 2017 it earned revenues of 2,401 rupees down 6 percent from 2,543 million a year earlier. Profits fell to 656 million from 814 million rupees.
After the 2011/2012 balance payments crisis and currency collapse, Three Acre Farms killed day old chicks as demand suddenly fell. Profits shrank to 36 million rupees from 170 million. (Colombo/Mar19/2018)