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Sri Lanka has kept maize prices high in the past with import taxes with few collectors controlling the maize market which had prevented the growth on an export business of poultry products.
Taxes may add up to 85 rupees to a cost of kilogram of chicken, according to industry estimates.
Sri Lanka’s chicken meat prices which fell during Coronavirus curfews in March and April have bounced back, but import controls on maize which was hitting feed availability may hit supplies in the future.
President of the Sri Lankan Poultry Association Ajith Gunesekara told EconomyNext with the COVID 19 pandemic the chicken batch which was produced targeting the April new year season was sold with losses farmers in the country did not produced the next batch for the year.
Poultry farmers grew extra chicken for the April holiday season, but could not sell them after Covid-19 curfews closed retail shops, forcing them to sell at a loss in some cases.
“By March our farms were filled with chicken in order to supply in April season,” President of the Sri Lankan Poultry Association Ajith Gunesekara told EconomyNext
“But with the COVID 19 government imposed curfew law island-wide. So we couldn’t sell our chicken and egg as we expected because we were banned from traveling to other districts. Shops and markets were closed.”
Gunesekara said after the curfew law was implemented the chicken farms which were able to process chicken started storing in cold stores while small and medium sector farmers struggled to sell their product.
Fortunately the larger poultry firms had cold rooms to stockpile some of it.
survey by Sparkwinn, a Colombo-based market research firm showed taht meat and seafood was the top products that consumers deliberately avoided during the Coronavirus lockdown.
Millions of chicks culled
“Normally there is a standard price for frozen chicken,” he said. “It is 430 rupees. But we couldn’t even sell for that price. Therefore, our farmers got scared. They can’t keep them in the cold rooms. ”
“However big suppliers processed the chicken and stored it in their big cold rooms.”
“After that farmers did not started the next batch of chicken. Because they were scared. All the chicks were destroyed because farmers did not buy them for the next batch.
About 7 million day old chicks were estimated to have been destroyed by hatcheries as there was no demand, he said.
“And we can see the results of that now,” Gunesekera said. “If we had sold the April batch next batch should be here after 35 days. But there is no next batch because many farmers didn’t start the next batch.”
The chicken that is coming to the market is now from cold rooms of the larger poultry firms.
If not for the cold rooms of the larger processors prices would have collapsed further and stocks may have gone down further and there may be big shortages of chicken now.
The industry expects demand to ease in the coming weeks and big firms to release stocks of frozen chicken.
“Big suppliers will process and store them in a cold room and will deliver it methodically,” Gunesekara said.
“Actually it is a big strength to us at this time because we are able to supply chicken to the market continuously due to that.”
Gunesekara said frozen chicken will be available island wide for the standard price of 430 rupees. He said suppliers have agreed to keep the standard price for the frozen chicken without demanding to increase it.
In the wholesale market fresh chicken and live bird prices have picked up from the curfew days from around 300 to 400 rupees now, he said.
“Normally live birds should be at least 240 rupees per kilogram from the farmers,” he said. “But in the curfew period we couldn’t get it for at least 160 rupees because all the shops that sells fresh meat was closed”
“People who bought it from the farmers had to sell it for 300 rupees. Now the fresh meat prices havegone up to 350-400 rupees in the market.”
Maize Import Controls
But the bigger problem facing poultry farmers is import controls on maize, which had hit feed supply.
A so-called ‘mafia’ of maize collectors and a farming lobby had kept maize prices artificially high for many years.
Sri Lanka to probe domestic maize collector racket
Sri Lanka facing ‘biggest forex crisis in history’ triggering import controls: Minister
Sri Lanka has to reform soft-peg to avoid monetary instability, default
But in 2020 the central had printed large volumes of money from March, creating foreign exchange shortages forcing even tighter import controls.
There have been calls to reform the central bank so that the existing powers of its domestic operations department trigger monetary instability and foreign exchange shortages is prohibited by law.
Egg supplies are also tightening due to import controls.
Gunesekara said the next batch is running late due to the shortage of animal food in Sri Lanka.
“If we get the permission to import maize the production cost will be decreased and we will be able to encourage farmers to start the next batch.” Gunesekara said.
“We have already purchase full stock of maize in Sri Lanka. We have no more to buy.”
Sri Lanka also does not allow the import of chicken. In addition to export opportunities that could be developed demand tourists could also come back after the country is re-opened;
In August tourists are expected to be allowed to come back.
“We can survive during this time because all the hotels and other travel destinations are closed,” he said.
“But after august when the travel industry rebooted we will have a big demand for chicken. So we are trying to prepare for that.”
At the moment with Brazil, a top chicken exporter being hit by Coronavirus, export opportunities were also developing.
But import control on feed was keeping the sector down.
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