By Chandeepa Wettasinghe
Supply of poultry in the local market has fallen below demand, leading to higher prices, due to the big corporations’ motivation to export day-old chicks to regional markets in South Asia and the Middle East instead of supplying farms.
Since 2013, despite a long period of slowdown in global production, Sri Lanka’s production of chicks and chicken meat had continued to increase, reaching up to 6.2 kilogrammes per capita availability of produce.
However, people’s purchasing power had kept demand below 5.9 kilogrammes per capita, leading to an oversupply in the local market.
Bairaha Farms PLC, Three Acre Farms PLC and Pusella Meat Producer (Pvt.) Ltd, which control an estimated 65 percent of the market, had hiked up production in financial years ending in 2014 and 2015.
Therefore, they were forced to export their produce to maintain margins, according to annual reports.
However, with the interim budget, which had increased the purchasing power of the people—especially in the lower income segments—consumption had increased substantially, according to research agencies.
Despite the increased demand, prices of a kilogramme of fresh chicken had risen from Rs.452.69 in the first week of February to Rs.518.2 in the third week of April, according to the Census and Statistics Department.
According to poultry sector stakeholder, the corporations continue to export and are also receiving concessions from the government for such activities.
“They are keeping the small farmers at bay. The farmers have to depend on the companies for chicks and the market prices and the end result is that the consumers suffer.”
Bairaha Farms CEO Yakooth Naleem last year said that the government had announced incentives for export of poultry in the budget for 2014 but had not implemented them, while Three Acre Farms CEO Cheng Chih Kwong too called for more incentives last week.
“As a solution to the present glut in the market, the industry will welcome a rebate on exports whereby processors can compete in the export market and that in turn will help to expand the industry as well as improve the inflow of foreign exchange to the country,” he said.
However, Kwong added that the boom in tourism provides a great opportunity for the industry, which also calls to question for the need for further concessions.