Egg Industry: Eggcellent or not?

Sri Lankan Trends

The poultry industry in Sri Lanka plays an important role in supplying the protein requirement to a nation that is developing. The supply side is supplemented throughout the country by small retail shops to supermarket chains. The source for the Industry are hens that are bred for the specific purpose of producing unnaturally high numbers of eggs throughout their life span. These layer hens are confined to farms in small cages their entire life for the sole purpose of meeting the high consumer demand for eggs not only for consumption in egg form but also as an ingredient in many other products.

The egg Industry in SL refers primarily to the mass scale producers of chicken eggs however both quail and duck eggs too form part of the production. Suppliers to the local market consist of capital intensive high tech modern large Corporates such as CIC, Switz Lanka, Nel Farms, Bairaha Farms, Fresh Fields Farms, Pussellawa Farms, NLDB, Maxis’ etc. and middle markets with players such as Suduvalle Farm, Justin, Chuty Duwa Farms and the Thalahitimulla Farm in Kuliyapitiya etc. There are also the small scale semi intensive back yard systems that make substantial contribution to livelihoods in rural communities and to household food security. The largest egg producing districts in SL are Nuwara Eliya and Kurunegala districts supplying approx. 18.2% of the local requirement.


Despite cultural and religious challenges faced by the poultry industry in Sri Lanka, the egg Industry has grown steadily at an annual average of 2% growth in production over the past 20 years gaining a relatively higher scale of activity since 2010 & contributing to sustain increased local production, employment, consumption and trade. The production of egg has increased from 862 million eggs in 1995 to 1,899 million eggs in 2015.

However, come 2022 with the economic crisis that stuck the country in March ’22 the daily farmed egg production which was around 700,000 to 800,000 has dropped to 400,000. As per the Department of Census and Statistics indicated that the daily production of 7.5 Mn. To approx. 8 Mn. eggs had dropped to approx. 5.5 Mn. Eggs a day rendering the poultry industry unable to feed its population of approx. 22 Mn. Consumers. Farmers and small holders are losing their livelihood while the exporters are losing demand for their product. Egg production in the year under review has dropped by approx. 40% with egg consumption dropping by 80% in the past 7 months.

The reasons affecting the decline of the egg industry as whole as as follow.

The basic requirement in order to produce high quality eggs begins with the requirement of land space, high quality layer hens imported for the purpose, infrastructure with an emphasis on electricity, animal feed, nutrients, medicine and vitamins and supplements etc. required to produce high quality eggs also the demand for the end product, Govt. policy, capital intensive etc.

Land Resource
The poultry industry is land intensive and being an island nation, it requires government intervention in order to earmark the availability of environmentally friendly land where no residential living is allowed, making such investments even more difficult.

The import of high quality layer birds for hatcheries as well as for day to day production
The foreign currency crisis faced by the country in the year has severely affected the import of high quality livestock. So much so that according to Mr. Ajith Gunasekara Agronomist and the President of the All Island Egg and Poultry Industrialists Association warns of a severe shortage of eggs in the local market in the near future as the number of hens imported to SL have dropped from 80,000 in 2021 to 7,000 in November 2022.

The requirement of electricity in egg production
In order to consistently lay eggs hens need about 16 hours of daylight and 8 hours of darkness when they are roosting. If anything less than 12 hours of daylight is available egg production slows down considerably or ceases completely. Farms supplement the requirement of additional daylight with electricity which right now in SL is one of the costliest energy forms available on the island. The ongoing power cuts have forced farmers to resort to generators or Solar energy. However, the capital investment for solar energy is high and the increased price of fuel coupled with limited issue of fuel has again affected the egg industry adversely.

Non availability of animal feed or limited substitutes
The two main sources of raw material needed for poultry feeder in SL is maize and soya meal. Locally produced maize accounts for 70 % of the cost of producing animal feed. The decrease in the local production of maize to 90 000 Mt. tons in 2022 as per statistics received from the Ministry of Finance as a result of the ban on chemical fertilizer in 2021 was a devastating blow to the industry compelling Industrialists to request the subject Minister to provide part of the rice to supplement to fill the lack of maize in preparing animal feed. Also the non-availability of raw material required for the production of feed such as soy meal due to import restrictions have resulted in the price of Soy meal going from between LKR 40/- to LKR 45/- a kg to LKR 80/- to LKR 90/- a kg. Also in SL we have only rice that can be used as substitute for maize where as in countries like India there are a variety of substitutes and less reliance on one or two raw materials.

Non availability of nutrients, medicine, vitamins, supplements & limited knowledge in the usage of same
As a result of the depreciation of the rupee coupled with the drop in reserves in March 2022 affected the SL economy and the import of amino acids, fatty acids and calcium as well as vitamins and poly saturated fats as well as medicine needed to prevent the spread of disease increased by 3 fold. As a result of this, small and medium scale producers found it impossible to finance as the cost of production in the face of a diminishing market resulting in either no usage or a limited usage of nutrients and supplements etc. affecting both the quality and quantity of the final product.
Poor biosecurity and disease protection in backyard and village chicken populations harboring poultry pathogens such as New Castle Virus and the infectious Bursal Disease Virus. These together with the Zoonotic Pathogens and the emergence of antimicrobial resistance represent a further threat to commercial farming systems. Medicine to fight these diseases are imperative as it would otherwise result in severe losses to the farmer.
It should be noted that even if the above is available in the market, the expertise to obtain the optimum output by usage is limited to large Corporates and a limited number of players in the market with majority backyard flock holders opting to follow traditional methods.

Ad hoc Govt. Policy
The poultry industry is at present confronted with a serious profitability challenge due to rising domestic cost of production on both animal feed and day old chicks, tax distortions such as VAT on chicken but not on egg, policy contradictions such as the guaranteed floor price for maize and controlled price for eggs, controls on animal feed raw material import, the fertilizer ban resulting in low production of essential raw material etc. Such policy changes have resulted in an egg produced at a cost of LKR 49/50 being forced to be sold at a maximum retail price of LKR 50/- in keeping with the Consumer Affairs Authority. Eggs that were between 24/- to LKR 26/- in 2021 have gone up to 50/- to 64/- by 2022. The shelf life of an egg subject to refrigeration is 3 to 5 weeks and ready markets should be available to farmers in order to purchase their produce. For this Govt. intervention is needed to ensure infrastructure and markets are in place.

Being a capital intensive Industry
Modern farms and poultry product manufacturing and ancillary industries require advanced technology, machinery and equipment made available in advanced economies. Apart from a few large Corporates the majority of producers do not have the capacity to undertake high tech capital investment to the business preferring to follow traditional methods resulting in low output devoid of the benefits of economies of scale.

Income levels of Consumers
The demand for eggs is elastic and dependent entirely on the income levels of consumers. Studies reveal that there is a positive relationship between per capita consumption of poultry products and increase in per capita incomes. Similarly, this holds true when the situation is in reverse. After the downturn in the economy after March ‘2022 job losses coupled with unchecked inflation resulted in people losing their livelihoods and when an egg that was between LKR 18/- to LKR 25/- rose to between LKR 50/- LKR 64/- egg consumption dropped by 80% in the past 7 months.

The Export Market
At present SL exports eggs to the Maldives, Oman and the Seychelles. The SL egg weighs approx. 55g per egg over its’ Indian counterparty who weighs approx. 35 gms. According to the Daily FT, in 2021 egg exports to Oman alone amounted to USD 149,000 & Maldives USD 134,000. With bird flu that affected many countries & India halting its egg exports in the face of its food security crisis the demand for the SL egg has grown. However, with the shortages in basic raw material the imposition of the MRP and over regulation of the poultry market the quality of our egg has dropped, resulting in us losing potential markets to competitors. Getting back the quality of our eggs to its original state and regaining lost markets would take years. The poultry and egg export Industry generates an annual income of approx. LKR 70 Bn. (paying taxes of between 7- 8 Bn. To the central Govt. annually)

In view of the above unless the Government plays an active role in reviving the Industry not only would there be a threat to food security but also a loss of potential overseas markets rendering the capital investment of local entrepreneurs as well as the loss of livelihoods of thousands of stake holders.

By Dianne De Zilwa

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