Patron-in-Chief Pakistan Poultry Association Khalil Sattar has proposed a comprehensive plan to reduce/eliminate malnutrition, under-nourishment, stunting and wasting in children in line with the Prime Minister’s vision. The World Food Program estimates that approximately 43 percent of Pakistan’s population is food insecure and the main reason for malnutrition is an acute shortage of protein consumption.

“In order to fill in the protein gap and to provide additional poultry products there is a definite need to expand the poultry sector. The production of poultry should be rapidly increased at low input cost,” said Khalil. But, he added, the proposed budget totally makes it impossible to achieve this.

The poultry industry was growing 8 to 10 percent annually for the last few years contributing significantly to the GDP, however, the proposed taxes on the poultry products will undo all the efforts put in by the industry to support the PM’s vision to reduce malnutrition. Ironically, the steps taken to increase revenue collection will result in negative growth of a steadily growing poultry industry, resulting in less revenue generation from the industry.

Prior to the proposed Mini Budget, a Grandparent day old chick, which costs USD 54 C&F, attracted 3% custom duty and 2% additional custom duty – a tax impact of Rs 486.

“In the proposed budget, the proposed levy of 17% sales tax would cost an additional Rs 1735 and the total tax impact of sales tax and custom duties would be Rs 2,221 per grandparent chick.

“It is emphasized that without grandparents, no poultry production can take place. The increase in levy will definitely increase the cost of Day Old Parent Stock chicks as well,” reasoned Khalil.

Similarly, he added, the poultry feed currently costs Rs 86,200 per ton and 60 percent of the input cost is of sales tax and import duties on micro and macro raw materials, which amounts to approximately Rs 8000/ton, which varies on different lines of feed and formulations.

In the proposed budget, sales tax has been increased from zero and 10% to 17% on some of the aforesaid raw materials, which would further increase the input tax on feed cost by approximately Rs 900/ton.

“In the proposed budget, the sales tax exemption on vaccines has also been withdrawn. Average cost of medicines and vaccines in Grandparent and Parent Stock production is approximately Rs 475 and 17 percent sales tax would increase the cost of vaccines & medicines by Rs 80-90. This would also add to inflation,” said Khalil.

so, he added, levying a 17 percent sales tax on incubators would deter the expansion plans of the poultry industry as taxing inputs of poultry feed, vaccines and poultry machinery is no different than levying a sales tax on all forms of poultry farming i.e. Grandparent, Parent Stock, Broiler Farming and final poultry product, which results in inflation in poultry product prices.

“It is proposed in the budget that processed chicken meat, packed and branded be subject to 17 percent sales tax. This would only further benefit the unorganized sector at the cost of the organized and documented sector. Processed milk sector has been zero rated enabling it to compete with the undocumented, unbranded and unpacked milk in the larger interest of consumers. This principle should be applied on processed poultry as well,” said Khalil.

Also, he added, the process industry bears heavy labor costs including contribution to social security, EOBI Workers Profit Participation Fund, payment to apprentices and handicaps etc. The cost to the unorganized live bird and street side slaughter wet market is negligible. The unorganized sector pays no taxes at all whereas the organized sector pays all kinds of taxes and produces safe and healthy products.

“The proposed imposition and increase in levy of sales tax is inflationary. The snowball effect of the increase of sales tax on Grandparents, poultry feed ingredients, poultry vaccines, poultry and feed milling machinery & equipment and processed, packed and branded chicken meat would result in short supply which would lead to increase in prices of poultry products including eggs, live birds, meat sold at wet market as well as branded & packed meat defeating the Prime Minister’s vision and adding further to the inflation. Poultry production should be treated at par with milk production, which is zero rated, as poultry is the quickest and most economical way of filling in the protein gap,” said Khalil.