March 15, 2011

Sri Lanka may allow interim corn imports

Sri Lanka may remove for the time being a 35% corn import tax to stop prices from going higher and hurting the island's poultry sector after floods destroyed a part of the local crop, an official said.

Sri Lanka's agriculture ministry has requested approval from the cabinet of ministers to cut taxes on imported corn for "one or two months" to prevent further spikes in the price of corn.

Shantha Amitiyagoda, additional secretary of Sri Lanka's agricultural ministry said the domestic market price for corn was about LKR40 (US$0.36) a kilo now and with the 35% imported grain could cost about LKR48 (US$0.43).

Sri Lanka's chicken and egg prices are already at high levels due to the high price of domestically produced corn, which is the main feed ingredient for the poultry industry.

The island is estimated to need about 15,000 tonnes of corn a month for animal feed according to one report. The bulk of the domestic production comes during the main cultivation season which was caught in floods.

Sri Lanka put many poultry farmers out of business with a combination of high corn prices and price controls, later resulting in rocketing prices of eggs and chicken.

Sri Lanka has restricted food liberties of the people to achieve 'self sufficiency' and 'import substitution' resulting in the price of many carbohydrates, fats and protein prices being higher than the rest of the world.

The state is encouraging people to grow food in home gardens. The government also has price controls on several foods.