July 5, 2012

Due to rapid growth of key players in the market, the poultry industry of Sri Lanka is expected to surpass capacity in the years ahead.

According to Sri Lanka's Daily News, as a result of this, margins are expected to be affected in the coming years. However, the demand for chicken has increased in 2011 with the rising tourism industry and the expanding markets in the Northern and Eastern provinces.

"In 2011, the per capita consumption of chicken among Sri Lankans has increased to 5.7 kilogrammes as against five kilogrammes in 2010. It is predicted that the poultry industry's contribution to the local economy will double in coming years and the consumption of chicken will increase to about eight kilogrammes per capita by 2016, which is highly favourable for the poultry industry in general," a report said.

With a heightened emphasis on infrastructure development by the government, it is expected that this year will see new markets emerging with the essential framework for new farms to be established throughout the country. However, 2011 brought on new challenges for the entire industry and industry saw a marginal growth. Excess supply and surge in demand at varying points of the year caused reverberations and industry players saw decrease in their companies' profits due to high operational cost attributable to external factors, which had a negative impact to the entire industry.

In 2011, agriculture sector of the country grew by 2% in 2011, contributing US$7 billion to the economy. The livestock sub sector contribution to the national GDP was 1.2%. About 70% of the contribution to the livestock sub-sector in Sri Lanka comes from chicken and eggs, which remains as the cheapest source of animal protein. With the growing market trends, industry key players are in the process of refurbishing facilities to improve productivity in the coming years, and at the same time expand capacities in line with market demand.