Sri Lanka poultry industry squeezed by state controls

Mar 19, 2010 (LBO) – Sri Lanka’s poultry industry has been squeezed by taxes on imported maize which pushed feed costs up and price controls on processed chicken which worsened a downturn in the industry, a top agro firm has said. Ceylon Grain Elevators group, a unit of Singapore’s Prima, said an economic slump in early 2009 reduced demand for chicken as consumers ate out less and tourist arrivals also plummeted.

Demand Slump

“With the continued downturn of the economy during the early part of the year, we witnessed a strain on consumer purchasing power and reduced demand for processed chicken,” chairman Primus Cheng Chih Kwong told shareholders in the annual report.

“Lackluster demand brought about a drastic scaling back of capacity in the poultry industry as a whole during the first few months of 2009.”

The group produces day old chicks, does feed milling and also processes and markets chicken.

As demand for chicken fell, the industry was hit by a government decision to restrict the import of maize through high duties pushing up the cost of chicken feed.

“Though the Government™s aim was to assist the local maize grower, the policy has had a negative impact across the industry,” Primus sai