Sri Lanka is set to export poultry products to China following an agreement drafted in collaboration with China’s General Administration of Customs. The Cabinet has authorised the signing of a protocol with China, and at a media briefing, Foreign Minister Vijitha Herath confirmed that the Chinese market was now open to the direct import of poultry products from Sri Lanka.
While Sri Lanka’s current poultry capacity has the potential to meet this opportunity, there is also a need for increased production and consumption within the country, The Sunday Morning learns.
Poultry production has long been the leading sector in livestock farming. It faced its most severe challenge in 2022, with the effects persisting through the first quarter of 2024. Production costs surged significantly, driving up overall expenses, with lowered consumer affordability.
In 2023, the sector accounted for 1.1% of the national Gross Domestic Product (GDP), amounting to Rs. 21.9 billion, which represented 79% of the total livestock GDP.
Need for increased production, consumption
Speaking to The Sunday Morning, Deputy Minister of Agriculture and Livestock Namal Karunaratne stated that the ministry was currently in discussions regarding exports based on the agreement.
“This is one of the agreements signed with China to further strengthen interrelationships. As the agreement was signed the previous week, necessary action is still underway. Currently, we are discussing the process to accommodate this, which will be conducted while ensuring the domestic requirement is fulfilled and the market is stable. The ministry will work towards implementing the necessary actions based on the agreement and will get involved as needed,” he said.
The Deputy Minister added that the ministry had arrived at several agreements regarding production following discussions with stakeholders including farmer associations and was also discussing ways to provide the necessary support to develop the poultry industry. This process is set to be implemented in the future.
Speaking about the current situation in the industry, he added that poultry consumption per capita stood at around 9 kg, which was insufficient. Sri Lanka has the capacity to produce more poultry to meet domestic requirements, but consumption levels need to be increased. As capacity depends on current consumption levels, this necessitates more production.
Karunaratne further noted that Sri Lanka was usually self-sufficient in egg production. Several years ago, the number of eggs required per day was 6,500,000. This consumption increased eventually.
However, he noted that during the crisis period, especially during Covid and its aftermath, consumption had decreased, with a shortage being evident. A shortage was created when egg consumption per capita per annum reached 100, necessitating imports, which heavily impacted the industry.
“We don’t plan on importing eggs and we will produce the required amount to meet local needs. A programme is already being implemented with the involvement of farmers,” said Karunaratne, further noting that egg consumption per capita must be increased as the current consumption by the general public was insufficient in terms of nutritional requirements.
He also emphasised the need to increase production to cater to these demands. Beyond that, the market requires strengthening.
Notable export potential and demand from farmers
According to the Department of Animal Production and Health’s (DAPH) poultry sector analysis in 2024, the industry holds significant export potential, driven by the adoption of modern technology and adherence to quality standards, further strengthened by the country’s status as free from Highly Pathogenic Avian Influenza (HPAI).
However, its heavy reliance on imported inputs, particularly feed raw materials, remains a major drawback, with adverse effects becoming evident during 2022 and 2023. In 2023, imports of chicken meat, eggs, and egg products saw an increase, while exports of chicken meat and table eggs declined.
Speaking to The Sunday Morning, Ministry of Agriculture, Livestock, Land, and Irrigation Secretary D.P. Wickremasinghe noted that there was notable demand from farmers for exports, as several companies in the country had the potential. However, this process is yet to commence.
He explained that since certain standards were required for exports, it was essential to develop these standards, a process which was being carried out by the DAPH. He further said that a decision to export pertained to poultry alone, adding that certain farms had identified the potential to increase poultry production as there was a capacity to produce more than the domestic requirement.
“For exports, there should be a separate production line meeting the required standards and regulations and the farms should be developed accordingly. There is also potential to export offcuts, such as chicken feet, depending on demand. The groundwork necessary for these exports has been laid by this agreement with China,” he said.
Speaking to The Sunday Morning, Sri Lanka Association of Animal Production President Ajith Gunasekara stated that the country’s poultry industry had the capacity to double production if needed, while it currently had an output of 15,000-18,000 MT of poultry products per month.
“Five years ago we made the same request to the Government as Sri Lanka is a bird flu-free country. This has created a significant opportunity for the country to access global markets, especially in Asian and Middle Eastern countries.
“Many investors have already invested in this venture and the industry has maximised its capacity to meet this need. Even now, due to the investments made, we are capable of doubling capacity,” he said.
According to Gunasekara, the primary barrier so far has been trade agreements involving taxes and health certificates. However, he noted that as standards in the sector had been continuously improving, the opportunity to export had now emerged.
He further noted that until now, exports to China had been conducted indirectly, but this had changed with the agreement signed with China which allowed for direct exports. The process will be commencing with chicken heads and feet to meet substantial demand in China.
Another challenge when it comes to competing with regional players has been the high cost of production due to import taxes on raw materials, according to Gunasekara.
“We have been requesting a return on import taxes for raw materials when exporting in order to remain competitive. This would significantly boost the industry, leading to increased foreign exchange, employment opportunities, and lower domestic prices.
“We are also asking the Government to provide the opportunity to further expand poultry exports, as this will not negatively impact domestic production due to the industry’s high capacity,” he added.
He further said that there was potential for egg production capacity to also be doubled. However, the egg industry is yet to develop to the same extent as the poultry industry, which has secured several international certifications.
Meeting health standards
Foreign Minister Herath explained at the media briefing that the agreement with China allowed for the export of by-products such as chicken heads and feet, targeting a boost in foreign exchange revenue, according to requests made by the industry. These exports necessitate measures for health and quarantine to align with export compliance requirements.
DAPH Director General Dr. Hemali Kothalawala told The Sunday Morning that Sri Lanka was free from HPAI, resulting in a premium pricing advantage. She also noted that the Veterinary Research Institute of the DAPH produced a local vaccine using local feed for Newcastle Disease, while certain other vaccines were imported.
“This local vaccine is distributed among backyard poultry (50-100 birds) free of charge, while large-scale farms conduct their own vaccinations. Due to this the Newcastle disease is also under control, with most provinces being free from it.”
She added that there were quality regulations and facilities in place for regulating antibiotic drug residues and heavy metal residues, as well as a biannual surveillance system that tested each processing farm and its originating farms. Based on these measures, the department works to maintain the disease-free status of farms, thereby improving quality.
Explaining the poultry products specified for exportation, she stated that whole chicken and chicken products would be primarily exported, including byproducts and offal such as chicken feet, chicken liver, gizzards, and hearts.
Further, according to Dr. Kothalawala, the 2025 forecast for chicken meat production is 288,000 MT, with current demand standing at 240,000-250,000 MT, revealing surplus capacity. Therefore, she noted that exports would be feasible.
She also detailed the production line, which consists of Grandparent (GP) farms, parent farms, and commercial farms. There are three GP farms in Sri Lanka, meaning chick production is high and if demand increases, the industry can accommodate it.
Commenting on consumption levels, Dr. Kothalawala added that the present availability stood at 11 kg per capita (per person per year on average). As per the forecast 240,000-250,000 MT, there is room for an increase of up to 12-13 kg per year.
Outlook for eggs
While the poultry industry holds capacity potential for exports, the country is currently experiencing a surplus in eggs, with stakeholders claiming that there is an excess in production.
Sri Lanka’s daily egg consumption witnessed significant increases in 2024, reaching approximately eight million eggs in May and growing to 11 million in August. With rising demand, prices fluctuated frequently, particularly due to increases in the price of corn.
Addressing the situation surrounding eggs in the country, All-Island Egg Producers’ Association (AIEPA) President Sarath Mandapola said that Sri Lanka imported 80% of the raw materials required for egg production with the cost of producing an egg under these conditions standing at Rs. 31-32.
Therefore, the potential of exporting eggs is challenging, as exporting eggs would also require additional materials for storage and packaging, further increasing costs. Nevertheless, in terms of quantity, it is possible. There is currently only limited exportation of eggs to the Maldives. However, Mandapola added that exporting poultry was a feasible option at present.
Explaining the current situation in the egg industry, he said that with prices dropping to Rs. 25, farmers who spent nearly Rs. 31-32 per egg were bearing the brunt of the losses. If a farmer maintains 1,000 chickens for egg production, the cost is nearly Rs. 2,500,000, and the farmer must recover that amount to sustain operations.
“The reason for previously higher prices was the crisis in the industry. However, there is overproduction at present, causing a surplus of around 1,500,000 eggs per day, which has driven prices down. This has a severe impact on small-scale farmers, while large-scale farmers are better equipped to withstand the situation for longer. This requires an immediate solution from the Government,” he said.