May 28, 2013

Pakistan's poultry product prices may rise by 20-25%

Pakistan's prices of chicken and eggs will likely to increase by 20-25% due to the possible levy of the general sales tax (GST) on poultry feed.

The price of a poultry feed bag will approximately increase by PKR300 (US$3.05) due to expected imposition of the GST which is likely to be announced in the federal budget. Chicken meat is feared to be dearer by PKR20-25 (US$0.20-0.25) per kilogramme due to taxation measures expected to be taken by the new government in a bid to enhance revenue base.

However, poultry industry firmly opposes any such move, terming it detrimental to the growth of this important sector of the economy. Ex-Chairman Pakistan Poultry Association (PPA) Abdul Basit said poultry industry was already passing through a critical phase, facing loss of about PKR1 billion (US$10.2 million) every month. The price of poultry nosedived recently, causing huge loss to poultry producers, he lamented.

Basit added that poultry was one of the most important sectors of the economy as it provided livelihood to millions of people across the country besides ensuring availability of cheap animal protein to the masses. He asked the authorities concerned not to tax the food sector, keeping in view its repercussion on the food security of the country.

Talking about impact of GST on the poultry sector, Basit said industry would have to mostly bear negative impact of the GST as it could not be passed over to the consumers owing to peculiar nature of the business. He was of the view that there were several ways of enhancing tax collection that should be implemented instead of putting burden on the already strained sector of economy.

Being an energy intensive industry, poultry units had already been at receiving end due to unending load-shedding and its high tariff, he said, demanding the government take tangible steps for eliminating energy shortage in the country.

Raza Mehmood Khursand, former Chairman PPA, said chicken and eggs would cost more on the back of the GST imposition on poultry feed. He added that such decision should not be taken in isolation and industry representatives should have been consulted before implementing any proposal.

Meanwhile, poultry feed manufacturers increase price of poultry feed well before the possible levy of the GST. Following increase in poultry feed rate, price of chicken meat and eggs is going to increase in the coming days. The owners of poultry feed manufacturing units have augmented price of poultry feed by PKR75 (US$0.76) per 50-kilogramme bag. They have blamed rise in prices of raw material. However, it is feared that price of poultry products would increase in a few weeks due to raise in poultry feed price.

On the other hand, poultry farmers condemned feed rate increase by the feed mill owners. They said there was no valid logic and reason to increase feed prices at the moment except to multiply profit by big players of poultry industry. Big feed manufacturing units should withdraw this decision as it was a matter of survival of small broiler farmers as well as small scale hatchery owners, they added.

The spokesman for the Pakistan's Poultry Feed Association (PPFA) warned of observing strike against hike in feed price, saying chicken farm production had become infeasible due to increase in feed prices.