Global Policy Forum

By Feizal Samath

Debt-ridden chicken farmers in Sri Lanka are pleading for government help to take on transnational companies they accuse of trying to grab the country's lucrative poultry business. Sri Lanka's 75,000 chicken farmers, most of whom have small businessses, owe 168.5 million rupees (more than 2 million U.S. dollars) to institutional lenders. But servicing this is not easy in the face of high feed costs, imports of eggs and chicken meat and new taxes.

The poultry farmers say unless the government helps them, they will be forced to mortgage their properties to transnationals that have already offered to settle their loans. "We are facing a serious crisis," said D D Wanasinghe, president of the All Island Poultry Association. In April, four chicken farms were mortgaged to a transnational.

Speaking recently at a meeting of poultry farmers in the farming town of Kuliyapitiya, some 90 kilometres northwest of Colombo, Wanasinghe said transnationals were trying to buy out farmers by offering to service their loans. "That appears to be the plan and if that happens, the entire poultry industry would be controlled by a few," he said, without naming any transnational company. A handful of foreign companies own some of Sri Lanka's biggest chicken farms.

The farmers owe debts mainly to the Development Finance Corporation of Ceylon (DFCC) - a development bank and one of the country's biggest lenders to industry. Other poultry industry leaders at the meeting said the transnationals had offered to settle the loans on behalf of defaulting farmers in return for a "long-term relationship." "Farmers won't be able to get out of their grip once committed," Wanasinghe warned.

While the typical small chicken farmer owes a few thousand rupees, some owe as much as 20 million rupees (more than 270,000 dollars). One of them, who runs a farm with 6,000 chickens outside Colombo, said she was paying 100,000 rupees (1,400 dollars) a month on bank interest and there was "very little left at the end of the day."

"I dumped my entire savings with three friends in this business five years ago, but it has been a case of losses and losses," she said. The poultry farmer said she would settle all her loans in the next five years and then sell her business, rather than "bow before" the transnationals. "I know they are waiting on the sidelines, watching my business as well as other farms, to falter, and then come in for the kill,"she said.

"This is a high risk business and profit margins are very small. We are at the mercy of the banks," said another farmer, who also did not want to be identified.

Livestock ministry officials, who were present at the meeting, reassured the farmers that they would discuss with the banks the possibility of rescheduling interest and loan repayments. The problem of the Sri Lankan chicken farmers was compounded by overproduction last year that pushed meat prices down, forcing some farms to close down after heavy losses.

Thousands of kilograms of chicken meat stocks had then piled up unsold in cold storages of the big producers. Farmers were forced to destroy chicks at the rate of 120,000 per week. However, industry leaders like Wanasinghe blamed the farmers for that crisis. He said the Department of Animal Production had warned the industry of a looming over-production crisis. "No one took this warning seriously," he said.

Adding to their woes was a 12.5 percent tax slapped by the government on chicken feed sales, pushing up meat and egg prices. "Farmers are fed up with the GST (goods and sales tax) and despite appeals in the past, nothing has been done to ease this burden," pleaded S Pathirana at the farmers' meeting in Kuliyapitiya.

Another worry for chicken farmers are reports that the birds are being artificially fattened with hormonal injections. "These reports worry us as people are afraid to eat chicken," said a farmer from the northcentral region.

However, L Gunaratne, a government veterinarian at the meeting, said there was no truth in these reports. "All chicken- related drugs and medicines imported to Sri Lanka must be approved by the authorities and we conduct regular checks," he assured the farmers.

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