Sri Lanka’s chicken industry is gearing to meet growing demand already up by 15% since last year but uncertainty prevails as to whether any surge in demand is expected with income levels seen rising.
Sri Lanka’s per capita is projected to increase contributing to a relative increase in chicken consumption set to go up from the current 5.5 kgs per person annually.
However, consumption levels are being reviewed by the industry to ascertain whether local companies will be able to meet the growing demand. Manufacturers in Colombo state it is possible to do so irrespective of the recently imported chicken by the government. Currently there is an excess stock of chicken in the market following imports by the government last year, due to the sudden surge in demand that went up by 15% locally and in addition to increased tourist arrivals in the country.
Animal Production and Health Department Director General Kumara de Silva said they did not expect any drastic increase in demand.
The main objective of the government is to become self sufficient in chicken production by 2016 with the demand set to go up to 10 kg per person per year.
This was the first-time, post-war that the industry had seen a boom in demand for essential foods, chicken included, Bairaha Managing Director Yakouth Naleem said during an interview with the Business Times.
He noted that this surge was mainly due to the price hike in fish due to which consumers turned to increased chicken consumption.
Other contributory factors to increased consumption were the seasonal demand for December as well and elections that created a hype in the market of increased disposable income.
In this regard, the industry “has taken note of that demand and are producing more than the demand,” Mr Naleem said.
In 2010, anticipated demand was 7.5 million kg per month but government projections were at 9 million kg per month based on the April figures.
Today, approximately 8.5-9 million kg is being produced per month that is sufficient to satisfy demand, he said.
Being the top producer of broiler chicks and still expanding its business it was pointed out that chicken is being considered today as an essential food item as classified by the government.
However, Mr Naleem observed that with demand correlated with disposable income, this year production has increased well above 6 kg per person per year.
Government anticipates per capita income to increase up to $5000 by 2016 with the current figure at $2500.
In this respect, the producers are looking at increasing their production although wary of the real disposable income among the people.
Sri Lanka at 5.5 kg per person per year is still far behind the global average consumption of 13 kg per month per person. Developing countries are at 9.8 kg per person in a year.
An increase in production is expected up to 15% or more, he said adding that if they feel there is a huge surge in demand it could increase up to 20% which would be decided by end May.
Nelna Farm AGM Dr. Mangala Amarasinghe said they have increased capacity by 18% and breeding stocks by 25% to meet the growing demand. Today there is sufficient stocks, he said adding on total average an excess stock of 3000-4000MT were in storage.
All Island Poultry Association of Sri Lanka Chairman Dr. D. Wanasinghe told the Business Times that demand is around 8500-9500 MT per month. He pointed out that within a short period should the demand increase it was possible to increase production by 10% and remained confident.
Despite the maximum retail price stipulated by the government at Rs.350 per kg, in Kandy, Matale, Ja-ela, Wattala and Kandana areas it is even sold at Rs.320 and Rs.310 by small-scale suppliers due to lack of storage facilities.
Other manufacturers store it at minus 80 degrees in cold rooms for several months, he said.
Dr. Wanasinghe expects a marginal increase by about 5% during the New Year season.. Similarly in the future any increase in demand is based on projections and targets set out by the government.
Indian chicken imports add to buffer stocks
The government imported chicken from India last year in a bid to overcome the shortage in the local market.
However, this has proved to be a problem today as most of this stock is right now in storages and it was initially to be marketed at CWE outlets.
The market fixed price of Rs.350 as stated by the government is now being changed with the excess stock today sold at Sathosa outlets at Rs.325.
In this respect, currently there is an excess stock of 5000 MT in cold storage that has resulted following the imports, it was stated.
With demand expected to increase such buffer stocks could move out. At the commencement of the year the industry was building an excess stock.
Bairaha is said to be having buffer stocks of 250, 000 kg and in this respect, it was pointed out that the government need not import in the future. Right now, the government needs to sell off the excess stock.
The ingredient used in chicken feed, maize is today in short supply and government claims of importing it are unfounded. Of the poultry ration, 50% is maize..
Floods destroyed the vital maize cultivation in the country resulting in a shortage while hoarders are allegedly not releasing stocks until prices rise.
At this point the industry believes the government must step in to reduce the current imbalance in the market.
The industry has already approached the Finance Ministry requesting a waiver on taxing imports of maize. A cess of 35% is being charged on maize today.
It is perceived that should maize prices rise correspondingly chicken prices will also shoot up.
It has been estimated that currently 125, 000 MT of maize is required to provide as poultry feed till August.
The industry notes, that reports stating the government’s intention to waive off tax on maize imports were said prior to obtaining any approval from authorities.
As a result permits held by those importing maize were withdrawn while others were simply refused any permits.