Poultry Association Proposes Plan to Reduce Malnutrition in Line With PM’s Vision

Patron-in-Chief Pakistan Poultry Association, Khalil Sattar, has proposed a comprehensive plan to combat malnutrition, under-nourishment, and stunting in children in line with the Prime Minister’s vision and opined that the proposed taxes on the poultry sector would be counterproductive.

The World Food Program estimates that approximately 43 percent of Pakistan’s population is facing food insecurity and the main reason for malnutrition is an acute shortage of protein consumption.

“In order to fill in the protein gap and to provide additional poultry products, there is a definite need to expand the poultry sector. The production of poultry should be rapidly increased at low input cost,” said Khalil.

He, however, opined that the proposed budget makes it impossible to achieve this.

The poultry industry was growing 8 to 10 percent annually for the last few years, contributing significantly to the GDP, however, the proposed taxes on the poultry products will undo all the efforts put in by the industry to support the PM’s vision to reduce malnutrition, Khalil opined.

Ironically, the steps taken to increase revenue collection will result in negative growth of a steadily growing poultry industry, resulting in less revenue generation from the industry, he added.

Before the proposed Mini Budget, a Grandparent Day Old Chick, which costs $54 Cost and Freight (C&F), attracted 3 percent customs duty and 2 percent additional customs duty, amounting to a tax impact of Rs. 486.

“In the proposed budget, the proposed levy of 17 percent sales tax would cost an additional Rs. 1735 and the total tax impact of sales tax and customs duties would be Rs. 2,221 per Grandparent Chick,” he informed.

“It is emphasized that without grandparents, no poultry production can take place. The increase in levy will definitely increase the cost of day-old Parent Stock Chicks as well,” reasoned Khalil.

Furthermore, he added that the poultry feed currently costs Rs. 86,200 per ton and 60 percent of the input cost is sales tax and import duties on micro and macro raw materials, which amounts to approximately Rs. 8000 per ton, which varies on different lines of feed and formulations.

In the proposed budget, sales tax has been increased from zero and 10 percent to 17 percent on some of the aforesaid raw materials, which would further increase the input tax on feed cost by approximately Rs. 900 per ton.

“In the proposed budget, the sales tax exemption on vaccines has also been withdrawn. The average cost of medicines and vaccines in Grandparent and Parent Stock production is approximately Rs. 475, and 17 percent sales tax would increase the cost of vaccines and medicines by Rs. 80-90. This would also add to inflation,” said Khalil.

The patron-in-chief further remarked that levying a 17 percent sales tax on incubators would deter the expansion plans of the poultry industry as taxing inputs of poultry feed, vaccines, and poultry machinery is no different than levying a sales tax on all forms of poultry farming, i.e., Grandparent, Parent Stock, Broiler Farming and final poultry product, which results in inflation in poultry product prices.

“It is proposed in the budget that processed chicken meat, packed and branded be subject to 17 percent sales tax. This would only further benefit the unorganized sector at the cost of the organized and documented sector. The processed milk sector has been zero-rated, enabling it to compete with the undocumented, unbranded, and unpacked milk in the larger interest of consumers. This principle should be applied on processed poultry as well,” said Khalil.

Also, he added, the process industry bears heavy labor costs, including contribution to social security, EOBI Workers Profit Participation Fund, payment to apprentices and handicaps, etc. The cost to the unorganized live bird and street-side slaughter wet market is negligible. The unorganized sector pays no taxes at all, whereas the organized sector pays all kinds of taxes and produces safe and healthy products.

“The proposed imposition and increase in levy of sales tax is inflationary. The snowball effect of the increase of sales tax on grandparents, poultry feed ingredients, poultry vaccines, poultry, feed milling machinery and equipment, processed, packed, and branded chicken meat, would result in a supply shortage, which would lead to an increase in prices of poultry products, including eggs, live birds, meat sold at wet market, along with branded and packed meat, defeating the Prime Minister’s vision and adding further to the inflation. Poultry production should be treated at par with milk production, which is zero-rated, as poultry is the quickest and most economical way of filling in the protein gap,” said Khalil.