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Sri Lankan Industry Hit by India's Maize Export Ban

by 5m Editor
28 July 2008, at 5:30am

SRI LANKA - After India banned maize exports, the Sri Lankan poultry industry was faced with a crisis, reported the All Island Poultry Association (AIPA). AIPA Chairman, Dr D.D. Wanasinghe, predicted that if the authorities fail to come up with a solution to the problem, the industry will collapse.

The Sri Lankan poultry industry depends largely on Indian maize imports and now, due to the ban, feed producers only have stocks for about ten days, reports the Sunday Observer.

After a meeting with Ministry officials, Dr Wanasinghe said that the Ministry will discuss the matter with the Indian authorities and try to get some relief. The total demand for maize in the country is around 200,000 metric tons a year and the local production is limited to 25,000-30,000 tons per year.

As maize is used to produce ethanol, the price of maize in the world market has increased sharply.

Although the domestic market is huge, there has been no attempt to increase production. The Government charges 20% less on maize imports but this money has never been used to assist farmers to increase production. The tax was only beneficial to the intermediaries.

Dr Wanasinghe said that the market has just begun to recover from the crisis created after the Consumer Protection Authority (CPA) enforced the maximum retail price for chicken.

In January, the CPA set a maximum retail price of 300 rupees (LKR) per kilogram for chicken, which is below the cost of production, Dr Wanasinghe said.

The Sunday Times reports that after the price control, most small farmers abandoned production while large-scale farmers limited output. Also, there has been a shortage of chicken in the market since January.

After lengthy discussions with the CPA, it was agreed that the maximum price of chicken would be increased to LKR320 per kg from 1 July.

However, the price is still at break-even and for the business to be profitable, the price should be LKR350 per kg. The price of maize increased by 12% since 1 July, and the industry is again getting deeper into the crisis. However, after the CPA revised the price, there has been progress in the market as farmers resumed chicken production.

5m Editor