November 17, 2010
Reformed General Sale Tax to push up Pakistani poultry feed price
If Pakistan were to impose Reformed General Sale Tax (RGST) on poultry feed as proposed, it would increase its price by PKR5,600/tonne (US$65.44), according to Pakistan Poultry Association''s (PPA) chairman.
Moreover, farmers'' production cost and consumer price will also rise by a minimum of PKR31.50/kg (US$0.37).
"Proposed withdrawal of zero rating on processed branded chicken will increase the consumer price by minimum 15% and inflation will increase price by almost 35%-40% resulting in closure of processing plants," said Chairman Khalil Sattar. He said that the modernisation and value addition to poultry was meant to bring about stability in prices of poultry and foreign exchange earnings by way of exports would be defeated by imposition of RGST.
Sattar further said that imposition of RGST on poultry feed would result in reduction of poultry production which would further result in increase in prices of not only mutton and beef but also other agricultural products, because of the chain reaction due to reduction in consumption of the five million tonnes of agro by-products.
He asked all the parliamentarians to not approve the levy of RGST on poultry feed and processed branded chicken to save the consumers from the burden of already escalating food prices. In the RGST Bill 2010, presented by the government in the National Assembly the amendments made therein in the Sales Tax Act would result in the withdrawal of exemption of sales tax on poultry feed and its raw materials and also all other inputs of poultry feed like vitamins, minerals, amino acids, etc.
He further said that 100% poultry feed is supplied on credit. The additional cost of PKR5,600 (US$65.44) per tonne would create serious liquidity problems for the feed mill adversely affecting supplies and availability of feed for the farmers, which ultimately will add to the reduction in production of poultry products.
A levy of Sales Tax on poultry feed in 1996, resulted in a drop of 45% in production of poultry products triggering a spiral in prices of not only chicken and eggs, but also all other meats, Sattar added. He further said that the entire agriculture chain would be impacted by decline in poultry production. Poultry feed industry currently consumes five million tonne of agricultural residues or by-products.