Sri Lanka’s new price controls on eggs could lead to shortages: poultry association
Source：The EconomyNext
From：Taipei World Trade Center Liaison Office In Colombo
Update Time：2022/10/12
Newly imposed maximum retail prices on eggs sold in crisis-hit Sri Lanka may demotivate producers resulting in further shortages in poultry products in the market, the All-Island Poultry Association said.
The association said on Saturday August 19 that farmers may stop raising new chicks for egg production due to higher costs.
On August 19, the Consumer Affairs Authority introduced new maximum retail prices for eggs effective immediately.
The maximum retail price for a white egg is now 43 rupees while for a brown/red egg it’s 45.00 rupees.
The demand for poultry products increased in the last two weeks with the country’s gas and fuel shortages being brought under control by the state-owned suppliers and business picked up for restaurants and hotels.
With the increased demand and lack of supply, some customers have directly contacted farmers offering higher prices to secure supplies, resulting in further price hikes in the market.
However, with Sri Lanka’s forex shortage affecting animal feed importation, the production of eggs and meat has also dropped due to lack of nutrition packs given to animals in farms, Association President Ajith Gunasekera said speaking to EconomyNext on Saturday.
“We as an association are not involved in price controls of products. However, this is a situation where farmers are also at a disadvantage due to the higher production costs incurred by them,” he said.
Around 50 percent of the small and medium farm owners have left the industry due to high production costs and low income, he added.
Gunasekara said due to insufficient nutrition combined with the inability to import animal feed, the production of eggs per week has gone down while the weight of a chicken that is produced for meat has also gone down.
“In my opinion, imposing a maximum retail price is not a positive solution at the moment,” he said.
The price ceiling came five days after Sri Lanka’s bakers and confectionery makers demanded government intervention to impose price controls on their suppliers such as egg farmers along with other raw materials needed for bakery products claiming that the price of bread and a bun could be brought down by at least 25 to 50 rupees if the government intervened.
However, egg prices continued to rise throughout the month due to lack of supply and high demand in the market.
“We thought even though production decreased, the situation can be controlled with substitutes coming into the market. Fish products were the best substitute, but due to production being hit by the fuel issue, fish products are too expensive and compared to that, poultry products still look cheaper,” said Gunasekara.
He said the association intervened and motivated farmers with the hope of getting the necessary poultry food to start production and asked parent farms to start raising chicks needed for egg and meat production two weeks ago.
Under normal circumstances, he said, it takes 21 days to hatch a chick, 35 days to produce chicken to the market and around five months to start egg production.
Gunasekara said, under the current circumstances, the production cost per egg is 49 rupees which is above the published retail prices.
“But with the price revisions we are informed that the farmers who placed orders for chicks are now rejecting it, due to higher cost,” he said.
“Now the parent farms are complaining that the chicks are here but no one wants to buy them and they’re forced to kill the chicks. With the demand expected to increase in the coming months with tourism and festival season coming in, there will bea need for chicks again. It will take 21 days to hatch a chick, and around five months till it matures enough to lay eggs. So there will be another shortage going forward,” he said.
Gunasekara said the sudden decision by the authorities may have disrupted the system, which in turn may result in a severe shortage.
By securing just the required amount of animal feed and with the current stock of hens, the production of eggs can be improved by 10-15 percent, he said the authorities have been asked for a meeting to discuss and rethink the price controls.
The government has also focused on locally producing the raw materials needed for poultry food, he said.
A natural price control should come into play after increasing animal feed supply to improve production without resorting to sudden decisions to control prices, said Gunasekara.
“We as an association are asking to get the necessary poultry food for the farmers and come up with a system to safeguard the producers and the consumers and secure a quality product for the consumers,” he added.
Source: https://economynext.com/sri-lankas-new-price-controls-on-eggs-could-lead-to-shortages-poultry-association-98817/