Pakistani farmers cut poultry output on higher VAT

 

 

Poultry farmers in Pakistan have cut production ahead of likely levy of value added tax (VAT) on poultry feed that will increase poultry rates by 20%, an official said.

 

Khalil Sattar, Chairman Punjab Chief Minister Task Force on Livestock, noted that poultry feed accounts for 70% of production cost on chicken, and that 98% of the 200,000 poultry farms are in un-organised sector.

 

Sattar, a former chairman Pakistan Poultry Association, said that the industry is in dark whether VAT would be slapped on day-old chicks too, adding that VAT on day-old chick will further increase poultry cost.

 

Inflationary trend in past two years has pushed up chicken cost, while poultry production has dropped by 40% during this period due to high input costs.

 

Three years ago, Pakistan was producing 800 million chickens a year that went down to around 550 million. Sattar said the industry had just started turning around when VAT threat dampened the spirit of the farmers.

 

Leading poultry exporter Abdul Basit said that in view of declining real incomes of the people it would not be possible to pass on the impact of VAT to the consumers.

 

Poultry was considered the cheapest meat and the most affordable source of animal protein in the country, but the proposed levy of VAT would force the poor to stop eating chicken.

 

Farmers would go bankrupt, production would nosedive, and poultry rates would rise to unprecedented level if VAT was levied, Basit said.

 

Sattar said that decline in poultry output would affect the entire agriculture chain.

 

He explained that poultry feed industry consumes five million tonnes of agricultural waste and by-products including wheat bran, corn and corn by-products, rice husk, molasses, rotten fish etc. Fall in consumption of these items would reduce their rates, and affect the prices of actual products like atta, rice and sugar. Shortage of poultry meat would trigger increase in mutton and beef rates, he added.