June 03, 2014 (LBO) - Sri Lanka has seen weak demand for chicken in 2013 a top poultry firm while costs were elevated, a poultry firm said, as the country emerged from a balance of payments crisis and steep currency depreciation.
Bairaha Farms, which sells processed meat, branded chicken, day old chicks and parent breeder chicks said revenues rose just 4.6 percent 3.0 billion rupees in 2013 while direct costs rose 5.6 percent to 2.61 billion rupees.
In 2012 when Sri Lanka's currency depreciated from 110 towards 130 to the US dollars following credit taken to subsidized energy, Bairaha's revenues rose 3.1 percent to 2.9 billion rupees and costs jumped 19.3 percent to 2.4 billion rupees.
The company said there was a "noticeable dip demand" by low and middle income consumers while demand was stable among high income segments, while raw material costs were high.
"The industry was characterized by many months of glut and excess production, as result of depressed demand for chicken meat," Bairaha Chairman M T A Furkhan told shareholders in the annual report.
"The quality of poultry feed available in the market deteriorated due to high prices that prevailed in the market for raw materials.
"These factors heavily impacted the financial performance of industry players with the prices of both broiler and lay day-old-chicks declining steeply, stemming from an industry oversupply coupled with a decline in sales volumes."
However the price of eggs had now risen from 11 rupees to 15 rupees reflecting the cost of raw materials.
In February 2014 there had been a sudden demand for chicken amid a breakout of foot and mouth disease in cattle and pigs, the company said.
Sri Lanka now exported parent breeder chicks, table eggs and hatching eggs. Furkhan said there was room to export chicken meat as current production capacity exceeded demand. There was demand for chicken in the Middle East.
Bairaha said the government had also announced incentives for exporting chicken.
But Sri Lanka's feed prices were high and volatile, making cost of production high and uncompetitive.
The firm said maize which was the main ingredient in feed was subject to import restrictions.
Bairaha said Sri Lankan farmers now produced 60 percent of the maize requirement for feed and there was a plan to produce the entire requirement of soya bean meal as well with a guaranteed price for farmers.
But because corn was a seasonal crop prices tended to spike. The firm claimed that prices were 'manipulated by intermediary traders'.
"The ideal situation would be to achieve self-sufficiency in raw material required to produce animal feeds while making them available at competitive prices," the company said.
Bairaha also praised what it called an "unprecedented bold step in April 2014" to import maize at a "concessionary 10 percent duty" and said the "action of the government must be commended".
But economists have said that import restrictions gave an incentive for all domestic producers including farmers to be inefficient and cost of production to be high.
Other analysts have said that Sri Lanka is a textbook case of German-nationalist style autarky policies at work which were keeping maize prices high, allowing rents to be earned by producers and collectors while keeping feed prices and therefore chicken prices high.
The high overall protein prices, which also tended to push up prices of substitutes like fish and meat may also be helping in malnutrition of small children in poor families critics have said.
Analysts say export competitive of exports and big business could be improved by restoring the economic freedoms of the poor.
Bairaha Farms, which sells processed meat, branded chicken, day old chicks and parent breeder chicks said revenues rose just 4.6 percent 3.0 billion rupees in 2013 while direct costs rose 5.6 percent to 2.61 billion rupees.
In 2012 when Sri Lanka's currency depreciated from 110 towards 130 to the US dollars following credit taken to subsidized energy, Bairaha's revenues rose 3.1 percent to 2.9 billion rupees and costs jumped 19.3 percent to 2.4 billion rupees.
The company said there was a "noticeable dip demand" by low and middle income consumers while demand was stable among high income segments, while raw material costs were high.
"The industry was characterized by many months of glut and excess production, as result of depressed demand for chicken meat," Bairaha Chairman M T A Furkhan told shareholders in the annual report.
"The quality of poultry feed available in the market deteriorated due to high prices that prevailed in the market for raw materials.
"These factors heavily impacted the financial performance of industry players with the prices of both broiler and lay day-old-chicks declining steeply, stemming from an industry oversupply coupled with a decline in sales volumes."
However the price of eggs had now risen from 11 rupees to 15 rupees reflecting the cost of raw materials.
In February 2014 there had been a sudden demand for chicken amid a breakout of foot and mouth disease in cattle and pigs, the company said.
Sri Lanka now exported parent breeder chicks, table eggs and hatching eggs. Furkhan said there was room to export chicken meat as current production capacity exceeded demand. There was demand for chicken in the Middle East.
Bairaha said the government had also announced incentives for exporting chicken.
But Sri Lanka's feed prices were high and volatile, making cost of production high and uncompetitive.
The firm said maize which was the main ingredient in feed was subject to import restrictions.
Bairaha said Sri Lankan farmers now produced 60 percent of the maize requirement for feed and there was a plan to produce the entire requirement of soya bean meal as well with a guaranteed price for farmers.
But because corn was a seasonal crop prices tended to spike. The firm claimed that prices were 'manipulated by intermediary traders'.
"The ideal situation would be to achieve self-sufficiency in raw material required to produce animal feeds while making them available at competitive prices," the company said.
Bairaha also praised what it called an "unprecedented bold step in April 2014" to import maize at a "concessionary 10 percent duty" and said the "action of the government must be commended".
But economists have said that import restrictions gave an incentive for all domestic producers including farmers to be inefficient and cost of production to be high.
Other analysts have said that Sri Lanka is a textbook case of German-nationalist style autarky policies at work which were keeping maize prices high, allowing rents to be earned by producers and collectors while keeping feed prices and therefore chicken prices high.
The high overall protein prices, which also tended to push up prices of substitutes like fish and meat may also be helping in malnutrition of small children in poor families critics have said.
Analysts say export competitive of exports and big business could be improved by restoring the economic freedoms of the poor.
No comments:
Post a Comment