As inflation targets slip and deflationary policy takes hold, one of Sri Lanka’s top poultry producers turns to innovation and cost-cutting to stay competitive.
In a shifting economic landscape marked by missed inflation targets and stable exchange rates, Sri Lanka’s leading poultry producer, Three Acre Farms, is focusing on innovation and operational efficiency to weather declining prices in chicken and eggs.
The firm, known for its extensive hatchery and poultry processing operations, reported improved productivity even as profits took a hit from falling market prices. “The decrease in Group profitability was attributable to lower market prices, although this was partly mitigated by improved efficiency in broiler farm operations,” the company stated.
A key development includes the upgrade of its hatchery in Kosgama, which now features a machine-operated immunization system for day-old chicks. This move, the company says, significantly reduces labor costs, eliminates manual handling, and strengthens its drive for innovation and streamlined productivity.
Three Acre Farms is part of the Ceylon Grain Elevators (CGE) Group, which also responded to the changing market conditions by reducing the price of chicken feed. The feed cost adjustment was enabled by a stable exchange rate but tempered by the challenges of import restrictions and rising costs of locally sourced, lower-quality maize.
To support cold chain operations, CGE invested 270 million rupees in retrofitting its chicken processing plant with an ammonia refrigeration system—a step described as essential for maintaining product quality and operational efficiency.
These efficiency-driven adaptations come against the backdrop of Sri Lanka’s Central Bank missing its annual 5% inflation target. Broadly deflationary monetary policies, implemented for most of the year, kept the exchange rate and prices stable or declining. Only in the final quarter was a slight inflationary shift observed.
Analysts note that in the absence of inflationary money-printing, businesses are compelled to become leaner and more productive to survive. Unlike periods of artificially stimulated demand—where profits can be propped up by eroding real wages—this environment forces real innovation and cost optimization.
The global backdrop provides a telling context. From 1980 to 2000, during the so-called “Great Moderation,” the U.S. Federal Reserve suppressed inflation and burst asset bubbles, leading to a productivity boom. However, with subsequent policy shifts—particularly under Ben Bernanke—the Fed’s aggressive rate cuts reignited housing and commodity bubbles, contributing to today’s volatile global inflation landscape.
Sri Lanka’s poultry sector is now navigating similar waters. In a world where inflationary policies often lead to commodity surges and eventual crises, firms like Three Acre Farms show that disciplined, efficiency-first approaches remain the surest path to sustainable growth.