Chicken price likely to go up

OUR STAFF REPORTER KARACHI - The Pakistan Poultry Association (PPA) has opposed the imposition of Reformed General Sales Tax (RGST) on poultry sector and withdrawal of exemption/zero rating on processed chicken. Chairman Pakistan Poultry Association Khalil Sattar, while addressing a press conference in Karachi on Tuesday, said that the government is contemplating to levy 15 per cent RGST on poultry feed while exempting chicken and eggs and withdrawing zero-rating on processed branded chicken which would result in a levy of 15 per cent GST on the sector. He urged the govt not to change the current GST taxation status of the entire poultry sector as the sector is making tremendous contributions in providing protein to fight malnutrition and under-nutrition in a nation where one out of every five children dies before attaining the age of 5 years because of malnutrition and under-nutrition at ever-decreasing real prices. He said, Today the real price of chicken is 9.75 per cent cheaper than it was in the year 1998-99 whereas, during the same period, mutton and beef prices have increased by 130 per cent and 153pc respectively. He stated that poultry product prices based on truly demand and supply mechanism, as such the increase cannot be passed on to the consumers at will. He indicated that a large number of farms will close down and the prices of chicken meat could, in the face of short supply, increase by 100pc from Rs175/Kg to Rs350/Kg. He emphasised that this phenomena of short supply and high prices was amply demonstrated as an aftermath of bird flu when the prices had soared more than 150pc. In such a case, chicken will be produced only for the upper class of consumers, he said. The Chairman further emphasised that withdrawal of zero-rating on processed, branded, value added chicken attracting 15 per cent GST, would result in defeating the governments own policy of 2006 when the Ministry of Food, Agriculture and Livestock and Ministry of Commerce had launched a policy of encouraging value addition to attain qualitative and quantitative objectives. and more importantly bringing about stabilisation in poultry product prices to expand the production base for ultimate objective of exports. Chairman also said that presently day-old chicks are being sold at less than 1/3 the price and broilers are being sold at 20 per cent below the cost, while eggs at 32 per cent below the cost. RGST will be the final nail in the coffin. The levy of GST on poultry feed is against all norms, principles and philosophy of the GST. He said that in order to keep the input cost low, the Government of India, Bangladesh, Thailand, Iran, China and even the very affluent countries in the EU, Australia, New Zealand and many states in the USA have either exempted or zero-rated poultry feed. He further informed that during 1976-2009, eight out of nine processing plants had closed down in the face of challenges from the unorganised street side slaughter. Thus, to provide a level playing field, the Government in 2008 announced zero-rating of poultry processing, which encouraged setting up of two more processing plants. The levy will increase the price of skinless whole chicken by Rs 31/Kg and boneless chicken by Rs 51/Kg increasing the gap between the organized and unorganized sector, he added. The Chairman said in UK and rest of the EU even though the per capita income is above $30,000 per annum and the need for revenue is extremely high, yet all food items including branded, processed, frozen, ready to cook, fully cooked, etc are zero-rated for VAT/sales tax. Even in the USA, many governments have exempted prepared food from the levy of VAT/sales tax. He emphasised that processing plants were an essential requirement for food safety and security. The greatest danger in transporting of live birds to the markets and household was transmission and spread of viral and bacterial diseases endangering not only the poultry but human population as well. In the recent outbreaks of Avian Influenza, number of countries had banned the sale of live birds and gave incentives and patronage to processing sector so that live birds gradually disappear from the markets. Since we currently process only 0.5 per cent of the live birds the policy of encouragement needs to be continued. The Chairman declared poultry sector provides more than 1.5 million predominantly rural jobs for the socio-economic uplift of the downtrodden rural populous. The result of GST imposition will spell out unemployment and bankruptcy of scores of medium and small farms.

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