Poultry farmers refuse to pay the ‘looming’ 15% GST on feed

Farmers fear paying an additional Rs1 billion to purchase poultry feed.

HYDERABAD:

Poultry farmers fear paying an additional one billion rupees on poultry feed, if the upcoming federal budget adds general sales tax (GST) on it.

The Pakistan Poultry Association’s Lal Baksh Kolachi addressed a press conference on Tuesday and said they have learned through reliable sources that a 15 per cent GST will be imposed on poultry feed in the 2011-2012 budget. Eighty per cent of the farm expenditures relate to buying feed for the birds so the production cost will increase.

“We are currently buying the feed at around Rs32,000 per ton, which roughly translates into Rs9.6 billion when the 6,000 poultry farms in Sindh are taken into account. These farms buy more than 3,000 metric tons annually,” said Kolachi.

“Our sector has to pay income taxes and other taxes imposed on purchasing tools, equiptment and raw materials. We do not receive subsidised rates as the agriculture sector does,” complained a farmer.

According to Kolachi, applying the GST on poultry feed is against taxation rules because “if the tax is not imposed on the produce, then it cannot be levied on the production cost either.”

India, Bangladesh, Thailand, Iran and China have avoided taxing poultry sector production in order to maintain affordable prices for people. “Even developed countries like Australia, New Zealand, the US and the EU do not impose these taxes,” he added.

A 15 per cent GST was imposed in 1995 but the government withdrew it in the next budget because of farmer protests.

“The poultry sector in Sindh is providing jobs to at least 150,000 people, especially in rural areas. With any drop in sales, redundancy will become inevitable,” said Pakistan Poultry Association’s Chaudry Ashraf. Poultry farms dealing with broiler chickens are most likely to be affected by the tax, added Ashraf. Nearly 3,900 farms produce broiler chicken and over 2,000 farms produce layer chicken. More than 3 million kilogrammes of broiler chicken are consumed in Sindh weekly, while the total production in Sindh is around 10 million.

Kolachi said that the government was also planning to impose GST on processed chicken. “Even though the consumption is 0.5 per cent, it will still increase prices.”

Published in The Express Tribune, May 25^th, 2011.