Budget proposes to relax maximum retail price on chicken

The 2017 budget proposed to relax the Maximum Retail Prices (MRP) of chicken, and allow the importation of maize for chicken feed, signifying a win for poultry manufacturers.

“During my consultations with poultry industrialists, I was informed that a major impediment for further investments is the MRP. While relaxing such applicable MRP, I urge the producers to ensure that the whole chicken price be maintained at Rs.420 per kilogramme,” Finance Minister Ravi Karunanayake said.

He warned that using the new freedom to charge higher prices would result in a pushback from the state.
“However, if the prices are raised to unreasonable levels, (the) government will not hesitate to import chicken to stabilize the prices,” he said.
He added that 40 percent of the supply to the market should be whole chicken.
Due to an MRP of Rs. 410 per kilogramme being levied on whole chicken, the large scale poultry manufacturers had resorted to value-addition, such as skinning and cutting chicken into parts in order to charge higher prices. The MRP had been Rs.395 per kilogramme several months ago.
The poultry demand is fast overtaking the supply due to growth of the economy, and poultry companies have posted strong profits this year.
Karunanayake further said that the current 225,000 metric tonnes (MT) of local maize production is inadequate compared to a demand of 400,000 MT. Therefore, he said that the animal feed industry is suffering.

“Whenever the animal feed industry is faced with a shortage of domestically-produced maize, millers could import the deficit subject to payment of a cess. This cess will be reimbursed as an export rebate on the export of chicken,” he said.
He also added that 20,000 acres will be provided to investors to grow maize as an out-grower model employing 10,000 farmers, and called on poultry producers to provide refrigerators to small traders through government-subsidized loans.