Poultry firm, Bairaha Farms, said it is building a 360 million rupee modern broiler farm in the north-western Puttalam district to increase its production by 15 per cent over the next three years, reports Lanka Business.

Bairaha Farms will build the farm through a subsidiary, Nature's Best Industry Ltd, the company that has got a 10-year tax holiday from the state investment promotion agency.

Chief executive, Yakooth Naleem, told shareholders: "This farm will be constructed in line with the prevailing norms and standards of other reputable poultry companies in the world.

"The size of each poultry house will be much bigger, and the specifications of these buildings will be technically more advanced."

Mr Naleem said it will help the firm maintain higher levels of hygiene than other farms in the island.

Bairaha will spend LKR120 million in the first year, and LKR240 million in the next two years on expanding capacity. The farm is expected to produce the first birds by August or September 2011, Mr Naleem said.

The firm was also expanding its capacity to produce day-old chicks. Last year, the price of day-old chicks surged after demand for poultry rose sharply.

In 2009, the industry collapsed amid an economic downturn, falling tourist arrivals and state controls on feed imports and retail prices squeezed farmers putting them out of business but in 2010, prices surged.

Company chairman, M.T.A. Furkhan, said: "Being of a cyclical nature, the poultry business is characterised by the ebbs and flows of demand, where a flat market can experience sudden surges in demand.

"The local poultry industry was unable to meet the surge in demand in the short-term, which resulted in an increase in the price of both chicken and broiler day-old chicks (DOC)."

However Mr Naleem said day-old chick prices were now falling.

"This situation is expected to continue in the short term until the industry corrects this imbalance," he said.

Lanka Business reports that Bairaha also has a stake in a Fortune G-P Farms (Lanka) Ltd, grand parent farm. Naleem said the firm earned 10 million rupees from exports of parent stock in 2010.