RGST to push up poultry feed price in Pakistan

16-11-2010 | | |
RGST to push up poultry feed price in Pakistan

If Pakistan were to impose Reformed General Sale Tax (RGST) on poultry feed as proposed it would increase its price by Rs 5600/tonne, pushing up farmers’ cost of production and consumer price by a minimum of Rs 31.50/kg, according to Khalil Sattar, Chairman Pakistan Poultry Association (PPA).

Increased consumer price
“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 Sattar. He said that the modernisation and value addition to poultry was meant to bring about stability in prices of poultry and foreign exchange earning 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 flour, sugar, rice, oil, etc, because of the chain reaction due to reduction in consumption of the 5 million metric tonne 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.

Poultry feed on credit
He further said that 100 percent poultry feed is supplied on credit. The additional cost of Rs 5600 per ton 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 ton of agricultural residues or by-products.