Bairaha Farms enters export market

Fortune G-P Farms Lanka Ltd., which is an associate company of Bairaha Farms PLC, entered the export market, with the export of two consignments of Parent Breeder Chicks to Nepal. The consignments consisted of 6,000 Parent Chicks valued at Rs 2.5 million.

A single Parent bird has the ability to breed about 130 broiler chicks during its life span. Local breeding companies require a total estimated 812,000 birds annually.

Until recently, 85 percent of this requirement was imported, but now Fortune G-P Farms (Lanka) Ltd. (FGPFL), has the capacity to supply nearly 50 percent of the local requirement.

The cost of an imported Parent Breeder Chick is around US$4. Valuable foreign exchange has been saved as a result of Fortune G-P Farms (Lanka) Ltd., producing and supplying these breeding chicks to the local market in addition to bringing in foreign exchange through its exports.

Local breeding companies have an edge in buying these breeding chicks from Sri Lanka since there are cost savings and there is no hassle of clearing chicks from Customs, in addition to being able to get the supplies locally with minimum stress for chicks from transportation.

Bairaha is a vertically integrated poultry producer, engaged in all the aspects of breeding, production and processing with the exception of feed milling.

An average 1.8 kg broiler in live weight would consume around 3.3 kg of feed and of this generally around 50 percent is Maize.

The fact that the Government has imposed a 35 percent tax (CESS) on imported Maize, along with other levies, has made the cost of imported Maize to increase by nearly Rs. 15/= per kg and this is a heavy burden on this industry, which is producing an essential food under the Government controlled price.

Currently, purchasing the locally produced Maize is not a viable option as the Maize is substandard at times due to poor storage and harvesting facilities.

The high tax and levies on the imported product have prompted the middleman to hoard the local produce, which has led to a substantial increase in the price of locally grown Maize.

Bairaha Group pays nearly Rs.300 million in VAT, NBT and Income Tax excluding other duties and indirect taxes, in particular tax (CESS) on Maize and other consumables, which are also substantial in amount.

Bairaha is placed as it were, between a rock and a hard place. On one hand, although the price of chicken is controlled in Sri Lanka as it is classified as an essential food due to the meat’s nutritional value, Maize is not price controlled, so the middlemen distributing the local Maize have a free hand to dictate prices to feed millers.