The Sri Lankan poultry industry is on the verge of collapse due to 30 percent drop in production this year as high feed costs hit farms.
Local Consultant Athula Mahagamage noted that the layer industry is feeling the most impact, with many farms shutting. “Feed costs are up 300-400 percent year-on-year making it difficult to maintain chicken farms countrywide,” he added.
Sri Lanka’s chicken meat production has collapsed 30 percent and egg output 40 percent as a currency collapse pushed up costs and feed imports were blocked by foreign exchange shortages, an industry official said.
The country is now going through the worst currency crises triggered by the island’s Latin America style intermediate regime central bank set up by a US money doctor in 1950.
“Small and medium farmers are leaving the business due to feed shortages and because big poultry companies are stopping buy back schemes,” Ajith Gunasekera, President of the All Island Poultry Association said.
Broiler meat output has fallen 30 percent to 12,000 metric tonnes a month from 18,000 metric and prices have shot up, he said.
A kilo of chicken is around 1,200 rupees from 460 rupee levels before economists started to print money to target an output gap by mis-targeting interest rates, and official inflation rose 39 percent in the year to May 2022.
The Central Bank printed money for over two years to mis-target interest rates and collapsed the currency to Rs. 360 to the US dollar from Rs200, in a failed attempt to float the currency with a surrender requirement (forced sale of dollars to the central bank).
The current economic problems come from applying floating rate monetary policy (liquidity injections or printing money from open market operations for stimulus) to a reserve collecting peg (flexible exchange rate).
Inflation and currency depreciation created by the central bank have put protein in particular out of reach of the less affluent pushing up malnutrition as had happened when the country’s economists who favour collapsing soft-pegs printed money in earlier occasions.
Eggs which were around 18 to 25 rupees before the latest money printing bout have now shot up to 43 to 50 rupees.Egg production has collapsed 40 percent, amid feed shortages.
Gunasekera said daily egg production which was around 700,000 to 800,000 and now fallen to around 400,000.
“Chicken are also laying fewer legs due to nutrition problems,” Gunasekera said “A chicken will usually lay about one egg a day but without proper feed they will lay fewer eggs.”
Egg prices are up partly due to high transport costs from Kuliyapititya where most of the large egg farms are located to Colombo, he said. About 73 percent of the cost of raising broilers was feed.
Maize which was 40 to 45rupees a kilogram has now gone up to 80 to 90 rupees a kilogram but there was no supply with the domestic Maha season harvest having failed due to a fertilizer ban.
Due to reduced paddy milling, rice polish is also not available.Forex shortages from the non-credible peg has made it difficult to import maize or soya meal.The industry is hoping to get some inputs from the Indian credit line.
