Poultry Industry Not Passing RGST Exemption

PAKISTAN - The poultry industry is not passing on the exemption of RGST on feed to consumers and making extremely high margins, as the stakeholders pushed up rates of eggs to a new record of Rs. 120 per dozen, from Rs. 90 in a couple of weeks.
calendar icon 16 January 2012
clock icon 5 minute read

Sensing abrupt increase in demand after the arrival of cold weather, the poultry industry, who had forced the government to withdraw RGST on poultry feed to avoid raise in poultry products rates, is now fully cashing the situation and selling chicken at as high as Rs. 225 per kg. Knowing the fact that no action would be taken, stakeholders in the poultry industry have pushed up rates of eggs to a new record of Rs. 120 per dozen which was being sold at Rs. 90 per dozen a couple of weeks ago, an increase of over Rs. 40 per dozen. While they have also raised the price of chicken to Rs. 225 per kg from Rs. 180 in early Jan, a steep jump of Rs. 45 per kg. The white meat demand has improved due to sharp increase in mutton and beef prices and many people switched over to chicken, according to Pakistan's The Nation.

Regarding egg, market sources said that its rate may hit Rs. 130 per dozen in view of further rise in demand. They added that the white product price would fall after change in climate. Like past practice the government is least bothered to control the steep increase in egg as well as the chicken prices, giving a free hand to the poultry industry to fix the prices on their own. Aware of the fact that no government agency will take any action, majority of the retail selleRs. are charging Rs. 11 for an egg instead of Rs. 10 in view of per dozen price of Rs. 120.

It is to be noted that the Pakistan Poultry Association (PPA), during the budget 2011-12 season, have demanded the government to exempt poultry products from taxes, and also held demonstrations against plan to impose RGST on poultry feed. The PPA claimed that prices of all food items, especially chicken meat, will increase if the Reformed General Sales Tax (RGST) was imposed on the poultry sector.

PPA used to say that by imposing RGST the government would bring back the 1996 situation when GST was imposed on poultry sector which led to the closure of about 45 per cent poultry farms. They said that the RGST would increase the cost of chicken feed which would lead to an increase of chicken price by around Rs. 31.5 per kg. The price of eggs would also go up by Rs. 12 to Rs. 15 per dozen.

Convinced by the demands of the industry the government withdrew the decision to impose RGST on poultry feed and other products just in the interest of consumers. But the profiteeRs. are now cashing the situation and instead of providing relief to the consumers they have increased the margins manifold after the arrival of chilly season. They had warned the government that imposition of RGST would raise the rates of eggs by Rs. 12 per dozen but now without any imposition of tax, the mafia has escalated the white product prices to record level of Rs. 120 per dozen, a historic jump by Rs. 40.

Pakistan Poultry Association former president and LCCI ex-SVP Dr Abdul Basit while talking to The Nation, linked price hike to drop in production as against rising demand.

Poultry prices fall as per demand and supply gap, as compared to other edible items whose prices do not drop after any increase, he said.

He said that the extremely cold weather has multiplied the demand of eggs and chicken as a result prices of these two products have registered a sharp increase. Normally in winter season, the use of poultry products especially eggs increases which ultimately result in escalating prices.

He held costly feed, rise in petroleum and electricity prices responsible for increasing prices of poultry products. He said that poultry industry is hit the most by energy shortage in the country, as the sector has to spend over Rs. 30 per unit electricity. Contrary to the other sectors, the poultry industry cannot stop its work on halt in power supply. Rather we have to generate power through fuel, besides keeping other generators as standby to keep the process continue, he observed.

Former LCCI SVP reiterated that with the increase in cost of doing business and unavailability of electricity the poultry farmers would eventually leave the field and this would result in shortage of poultry products.

PPA General Secretary Major retired Javed Bukhari attributed the price hike in egg to lower production during winter as against the rising consumption. “Egg price usually remains under Rs. 100 per dozen in country’s history, but high energy cost has escalated the rate to record high,” he recalled while going through the statistics.

In live bird, he said the price has now come to its original position which had dropped due to weakening demand owing to enough stocks of red meat held by consumers. He said around 3 million tons birds are consumed in the country while in Lahore around 0.8-0.9 million chickens are being slaughtered daily, he added.

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