Poultry industry sees alarming writing on the wall
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Maize is an essential component of chicken feed. It is considered the most important coarse grain grown in around 30,000 hectares of land. It is second in extent to land cultivated in paddy. Maize is a major feed grain and a standard component of livestock diets. However, with the emergence of a stockist industry, maize farmers in Sri Lanka are facing a disturbing situation in purchasing maize from stockists and not farmers. In order to look deeply into the issue, the Daily Mirror spoke to people who were caught up in the issue.
The Amarathunga story
U.A. Amarathunga, a farmer from Bibiladeniya who maintains a poultry farm to supply eggs, told us his story.
“This industry includes both broilers and layers. Ten million chicks are produced every month for the broiler market while 6.5 lakhs of chicks are used to meet the demand for eggs. Layers start laying eggs after 18 weeks and broiler chickens are culled within 35-40 days. This industry solely depends on mixes of chicken feed. For example, one hen lays close to 290-300 eggs by the 80th day, and a broiler weighs 2 kgs by the second week. The weight of a broiler and the number of eggs laid by a hen depends on nutrition and maintenance. We always look into good nutrition with the help of veterinary officers. I have close to 4000 hens that lay around 3200 eggs everyday. However, we have a challenge with production costs, not market prices. For example, a brown egg costs Rs. 12.50 while a white egg costs Rs. 11.50. Ideally a brown egg would cost approximately Rs. 11.20 while a white egg could be produced at Rs. 10.65. The difference of a few in the costs of production (C.O.P.) is because hens laying brown eggs require more food. A meal for a broiler would cost Rs. 80 whilst a meal for a layer hens costs about Rs. 63.50 inclusive of VAT and other taxes.”
“50% of this meal consists of maize; the rest comprises soya bean meal imported from the US and India. Fish powder from Maldives, India, Seychelles and Brazil are also added to the meals to meet protein requirements. Today one kilo of maize cost about Rs. 43. The cost of maize feed greatly impacts the price of chicken feed. But maize is sold to us by middlemen and not by maize farmers. If a farmer grows one acre of maize at a cost of approximately Rs. 18,000, one kilo of maize would cost around Rs.18. Since maize farmers have no facilities to stock his produce they sell their maize to middlemen or stockists. Here the selling price depends on moisture in the grains. If it is close to 14% then a kilo can be sold at Rs. 32. So, a farmer who sells to a stockists earns a profit of around Rs. 12 but when we purchase maize from a stockist, one kilo of maize costs us Rs. 42.”
“Stockists have interfered with our [direct] dealings with farmers. They have money and storage facilities whilst farmers have only a financial capacity to produce maize.”
“According to the Department of Animal Production and Health, 60,000 to 62,000 metric tons of animal feed are being produced for a month to maintain broilers, layers and their parent stocks. During the principal cultivating (Maha) season, 90% of maize is produced. It takes around 120-130 days for maize to grow; harvesting begins on day 130. If it rains on day 130, maize pods rot and a possible two-ton harvest of maize from one acre will drop to under one ton. Now we are facing a problem with the emergence of maize stockists we have identified as a mafia. There are big players in the stockist industry that can walk to farmers and purchase maize at Rs 33 per kilo over the price of Rs 32 quoted by farmers.There starts the competition.”
“Now what has happened is that although they said their maximum price is Rs.38, today the price has jumped to Rs.42 resulting in an increase in C.O.P. for us. We will not be able to survive in this industry; the stockists have money, good storage facilities and political backing; they use these advantages to sell their stocks. There are also some farmers who are trying to support them to convince us. In the end we have run out of maize because the big players have purchased all the maize at higher prices.
They can easily come up with competitive prices that will benefit us; but they don’t; compelling us to buy maize at higher prices.”
Control of maize farmers: Dr. Rathnayake
In his comments, the Director General of the Department of Agriculture, Dr. D. R. T. G. Rathnayake said: “We have identified a shortage of maize and we wanted to import the grain. But some middlemen in the industry have convinced the authorities that they have enough stocks and have begun to sell maize at Rs 42 per kilo without approval. At the moment none of the farmers have enough stocks of maize; they are held with middlemen.
We monitor maize production and I take the responsibility to say that all maize farmers will be affected by this maize mafia that has motivated policy makers and started playing a big game.
Some people buy maize from cultivators and certain others from stockists. There is a huge competition with regard to pricing and farmers are facing that pressure.”
A large scale stockist is having ties with the minister : Mathalee Jayasekara
Speaking to the Daily Mirror, President of the All Island Poultry Association, Mathalee Jayasekara said, “We had four meetings with Minister Duminda Dissanayake. During the meeting in January it transpired that these stockists will be selling maize at Rs. 42 per kilo whereas the initial price was Rs. 32. We can be satisfied if the profit goes to the farmer but nothing of that sort is happening. Although estimates project the production of 400,000 metric tonnes of maize, in reality only 250,000 metric tonnes have been produced. When we investigated we found that 400,000 tonnes of maize had never been produced. These stockists now want to import maize.
This can be allowed only if they are registered importers. But they are now using political influences to dominate the industry. We are aware of one person involved in this business who has close ties with a minister.
This industry cannot survive if one kilo of maize is sold for more than Rs.40. Currently, we are seeing its repercussions.”
Several attempts to contact, Duminda Dissanayake, Minister of Irrigation and Agriculture, failed.
