Poultry sector revival lifts Three Acre Farms’ earnings in 1Q

Sri Lanka’s poultry sector is showing early signs of recovery, with the small and medium-scale farmers returning to production, amid the improving chicken demand and firmer festive season pricing, helping the listed poultry producer Three Acre Farms PLC post stronger first-quarter (1Q) earnings.

The company said the renewed participation from the smaller growers boosted the demand for the broiler day-old chicks (DOCs) during the quarter ended March 31, indicating the improving sentiment across a sector that had struggled in the recent years, with the weak consumer spending, volatile feed costs and unstable market pricing.

Three Acre Farms reported revenue of Rs.1.66 billion for the March quarter, up 13 percent from a year earlier, while the profit rose 18 percent to Rs.414.1 million.

“The company reported a notable growth in revenue during the quarter under review, primarily driven by the improved demand for broiler DOCs, backed by the increased demand for the end product, chicken meat,” the company said in its interim financial review.

The company added that the growth was “further underpinned by the increased inputs from the small and medium-scale farmers, reflecting the expectations of a demand rebound and attractive pricing during the festive season”.

The return of the smaller poultry operators is being closely watched by the industry as a broader indicator of improving confidence within Sri Lanka’s agriculture and food production chain, particularly after many farmers cut the output or exited the market during the country’s economic crisis and subsequent cost pressures. The quarter also reflected the shifting dynamics within the poultry industry, where a stronger broiler demand contrasted with the continued weakness in the egg market.

Three Acre Farms said the revenue from the layer DOCs declined during the quarter, due to the volatility in the table egg prices, caused by the market oversupply, highlighting the persistent imbalances in parts of the food supply chain, despite the improving demand conditions elsewhere.

The company also noted that the introduction of the vaccinated DOCs contributed positively to the revenue growth during the period, while the improved farm management practices and favourable broiler DOC pricing supported the profitability.