Uzbek President Shavkat Mirziyoyev has approved a bailout package for the domestic poultry industry, subjecting broiler meat and egg producers to new subsidies and tax breaks aimed at curbing the upward price rally on the domestic market.
From June 2021, poultry farms are eligible for a subsidy of 500 soums (US$0.047) per 10 eggs and 1,000 soums (US$0.095) per kilogram of poultry meat sold on the domestic market, Mirziyoyev said in a decree released on June 18.
The decree was approved shortly after the Uzbek government discovered that egg producers were suffering losses, while broiler meat producers experienced a sharp decline in profitability due to the unprecedentedly high costs associated primarily with the expensive grain on the global market.
Currently, produced suffer a net loss of 15 soums (US$0.0015) from producing and selling 1 egg while generating a net profit of only 369 soums (US$0.034) from producing and selling 1 kg of broiler meat, the government estimated. It is believed that the profitability in the broiler meat segment has more than halved during the past year.
One of the goals of the new subsidies is to curb the domestic prices, which have been rapidly rising since the beginning of the year. In addition, Mirziyoyev ordered to halve the tax rate for property tax, land tax, and tax for the use of water resources for all poultry farms in the country up until July 2024.
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By July 1, 2022, the government will also subsidise 50% of logistics costs for broiler meat and eggs exports, as well as soybeans import by road, rail, and air.
More poultry is needed
However, the problems of the Uzbek poultry industry are not the only reason pushing the prices up on the domestic market. The government forecasted that in 2021 poultry farmers would manufacture 450,000 tonnes of poultry meat, slightly more than in the previous year. This is clearly not enough to meet the demand of the country’s population, which is close to 32 million people.
The Uzbek Finance Ministry has approved an additional subsidy to support new projects embarked on by poultry farmers. The Ministry plans to reimburse 10% of investments allocated to build poultry farms and processing infrastructure, limited to 40 billion soums (US$3.8 million) per single project.
The Ministry said that this decision was expected to encourage investors to expand production, even though the profitability in egg and broiler segments left a lot to be desired.