Sri Lanka is grappling with high poultry feed costs due to import duties and trade controls on maize, a key ingredient in animal feed. These measures are contributing to elevated prices of eggs and meat in a country already battling high levels of child malnutrition.
The government has imposed a 25-rupee-per-kilo tax on maize imports (around $86 per tonne) along with quantity restrictions through a licensing system. This has led to a monopoly, often referred to as the ‘maize mafia,’ allowing license holders to manipulate prices, even when imports are permitted.
In an attempt to address the shortage, the government recently issued licenses to import 300,000 tonnes of maize to supplement the low Yala season harvest. However, the licensing system has only exacerbated price hikes, with maize being sold at around 160 rupees per kilo ($547 per tonne) despite the potential for imports at a lower cost.
Minister Vijitha Herath acknowledged the strain on small and medium-sized poultry producers, who are disproportionately affected by the high feed costs. “Many are saying maize can be imported for around 110 rupees per kilo ($376 per tonne), but it is being sold at much higher prices. This significantly raises the cost of production for poultry farmers,” he noted.
One of the main challenges is that when Sri Lanka issues import licenses, demand increases, driving up maize prices in neighboring countries like Pakistan, typically the most affordable and closest supplier.
In Pakistan, the current free-on-board price of maize is around $255 per tonne (about 75 rupees per kilo), which, when combined with Sri Lanka’s import taxes, makes the cost nearly 30% higher.
Minister Herath further explained that efforts are being made to link small and medium poultry farmers with importers to provide them with more affordable maize and wheat. “Small producers cannot import maize directly, but we are working on reducing the price to support them.”
Sri Lanka’s focus on self-sufficiency, or import substitution, has kept the country out of global supply chains, limiting export opportunities and driving up domestic food costs, which has adversely affected child nutrition.
In contrast, Vietnam, once a self-sufficient nation, abandoned this strategy in the 1980s under its Doi Moi economic reforms. By embracing global trade, Vietnam has become one of the world’s largest food exporters, leading to significant improvements in child nutrition and average height.
Vietnam imports around 10 million tonnes of maize annually, primarily from Brazil, Argentina, and India. It has also become a key exporter of eggs and seafood, exporting to markets like Singapore, Hong Kong, and the Maldives.
Sri Lanka’s current policies, such as the special commodity levy on maize, are aimed at protecting farmers but have made poultry exports less competitive due to unrecoverable taxes on exports.
As Sri Lanka continues to struggle with the rising cost of maize and poultry feed, the government will need to reconsider its trade policies to stabilize domestic prices while ensuring food security for its population.