Sri Lanka's Three Acre Farms, a poultry firm, which is part of the Ceylon Grain Elevators group, said profits fell 88 per cent to 3.0 million rupees (LKR) in the June 2011 quarter from a year earlier, on rising costs and weaker chick prices.

Lanka Business Online reports that the group's revenues rose 13 per cent to LKR304 million but costs rose 18 per cent to LKR278 million.

The firm reported earnings of 13 cents per share of the quarter. The stock closed up 1.20 at LKR127 on Friday (12 August) despite the erosion of gross margins and profits.

The firm sells day-old-chicks and also broiler chicken. Rising maize prices, however, have eroded profits.

Sri Lanka's maize prices go up when global prices are rise but also rise due to domestic factors because imports are restricted due to state controls imposed to support a maize autocracy, making the industry doubly vulnerable.

In a statement, the firm said: "The profit from broiler operation has reduced during the second quarter of 2011 as compared to the same period of 2010, mainly due to the high cost of feed.

"The demand for broiler day-old chicks has dropped during the period under review due to excess DOC in the market.

"The performance of breeder operation has, however, improved during the period under review."

Bairaha Farms another poultry firm also reported lower profits, adds Lanka Business Online.

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