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News 515 views last update:6 Aug 2012

VAT on poultry feed in Pakistan to increase

Poultry farmers in Pakistan have cut production ahead of likely levy of VAT on poultry feed that will increase poultry rates by 20%, an official said.

“Poultry feed accounts for 70% of production cost on chicken,” said Khalil Sattar Chairman Punjab Chief Minister Task Force on Livestock.
 
He said that 98% of the 200,000 poultry farms are in un-organized sector. Therefore, the government is likely to adopt the sales tax procedure of sugar industry, where the industry pays 3% additional tax on behalf of sugar dealers that are not documented.
 
Sattar, a former chairman Pakistan Poultry Association, said that the industry is in dark whether VAT would be slapped on day-old chicks too. “VAT on day-old chick will further increase poultry cost,” he added.
 
Inflationary trend in past two years has pushed up chicken cost, while poultry production has dropped by 40% during this period due to high input costs.
 
Three years back Pakistan was producing 800 million chicken a year that went down to around 550 million, he said adding that the industry had just started turning around when VAT threat dampened the spirit of the farmers.
 
Processors said it was impossible to pass on the impact of VAT to the consumers in view of declining real incomes of the people.
 
Also, the proposed levy of VAT would force the poor to stop eating chicken. Furthhermore, farmers would go bankrupt, production would nosedive, and poultry rates would rise to unprecedented level if VAT was levied, a leading poultry exporter said.

Dick Ziggers

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