Reducing import taxes on maize: A step in the right direction

In a huge relief for consumers, the Government has reduced the import tax on maize by 60%. Maize is a major energy feed ingredient in the diets of poultry, and Sri Lanka’s local maize production is not sufficient to satisfy the demand. All-Island Poultry Farmers’ Association Chairman Ajith Gunasekara had remarked that the price of a kilo of frozen chicken will come down from Rs. 1,350 to Rs. 1,250 in two weeks while by December, eggs will be available in the market at Rs. 40 as a result of this move. 

Eggs and chicken represent vital elements of Sri Lanka’s protein intake. Protein is particularly essential for growth and development in children, teens, and pregnant women whereas options of animal protein – like chicken and eggs – are complete proteins as they provide all the essential amino acids the human body demands. Chicken is the preferred mode of protein in Sri Lanka in terms of meat, as the consumption of red meat among people is low due to cultural/religious reasons. On the other hand, eggs are the most sought-after source of protein because refrigerators are not commonly available across households.

The prices of both chicken and eggs increased substantially in the recent past, thus, causing an adverse impact on the standard of living of the populace. In fact, Sri Lanka’s food inflation rate last September was measured at a staggering 94.9% by the Colombo Consumer Price Index, and the nation was among the top 5 countries with the highest food price inflation. It is said that a hungry man is an angry man and it was no surprise that former President Gotabaya – whose policies caused food prices to go over the roof – was violently chased out by the public. High food prices for a long period of time have created social and civil unrest throughout history, and it was yet again demonstrated by the turbulent events that took place during 2022 in Sri Lanka.

As the prices of the two commodities reached excessively high levels, the Government imposed price controls on chicken and eggs, leading to market distortion. Such naive moves resulted in eggs and chicken disappearing from the market, at the same time creating black market prices and severe shortages, eventually pushing ordinary citizens out of the frying pan into the fire. 

About 70% of contribution to Sri Lanka’s livestock sector is made up of chicken meat and eggs. For a considerable period of time, poultry farmers requested the Treasury to bring down the unreasonably high import tax on maize, but the authorities refused to respond positively to those fair demands. Food is the critical basic necessity of mankind, hence, ensuring that food prices remain at affordable levels is a fundamental obligation of any government. However, Rajapaksa-led governments, heartlessly imposed unreasonably high taxes on food items to maintain a massive State machinery as well as to spend lavishly on ego-boosting initiatives. 

Furthermore, there is an influential group in Sri Lanka which drives the narrative that import taxes on food and agricultural items must remain high to safeguard the interests of politically powerful rent-seeking groups and achieve so-called self-sufficiency at the expense of consumers, especially vulnerable low-income families.

Due to high prices of maize, Sri Lanka could not produce chicken meat at globally competitive prices and consequently, valuable export prospects were lost. The fact that a finished product of one sector serves as raw material of another industry is often ignored by ill-informed policy makers in the country. For Sri Lanka to achieve economic prosperity, the mindless penchant towards protectionism and restrictive practices that stifle free trade and compromise the well-being of consumers need to be abandoned.