Guild warns shortage of chicken due to rising cost of inputs and decreasing production

The high price of inputs such as corn and soy is generating an increase in the costs of poultry in the country, which translates into a fall in the production. According to the president of the Peruvian Association of Poultry (APA), Julio Favre, this situation could lead to a shortage of chicken nationwide.

He noted that costs for producers have been increasing for more than a year, as a result of the international situation. But this has not been exactly reflected in the cost of the product in retail markets. So, this has resulted in a loss of production.

A tonne of corn, in June 2020, cost US $174 CIF (that is, the price includes the cost of goods, transport and maritime insurance). And in March of this year, it reached US$351 CIF.

For this reason, it points out that small poultry farms are the ones that could be most affected. Without financial support, they may end up getting into debt and/or raising less. Since 2021, these companies were already showing a 10% decrease compared to 2020 production.

This decline would not have been perceived by medium and large companies. The big ones, especially, have a financial capacity to leverage themselves, he said.

“Since then, the small poultry companies showed a decrease in the volumes they carried. But it was compensated by medium and large companies, which ended up showing growth of 4% for the sector,” he said.

On the other hand, chicken consumption in restaurants and chicken restaurants shows a more positive situation. Favre noted that a remarkable recovery is expected in the national economy this 2022, so that consumption of this product is approaching 2019 figures. The current per capita consumption in the country is 51 kilos per year.

“The pandemic marked a very sharp drop in the consumption of grilled chicken, however, the numbers are getting better and better. Above all, with the consumption of restaurants,” he said.

CHICKEN PRICE WILL NOT FALL DESPITE IGV EXONERATION

Regarding the exoneration of the General Sales Tax (IGV) for chicken, he reiterated that this will not have a significant impact on the final price. The reason is that the norm has not considered live or standing chicken, which represents 90% of those consumed by Peruvians and those sold in the markets. However, it will favor importers of frozen chicken.

On another occasion, he noted that the prices of these products could even end up rising. This possible adverse effect would occur because the text of the opinion did not add the VAT charge paid on inputs, raw materials, intermediate goods and services used in its production. Therefore, this amount would become a cost in the production chain and could affect the final price.

In addition, he also noted that the standard only considers major inputs as a tax credit. This would cause other inputs and services, which would reach 40% of the total value, to be charged at the price of the product in markets.

In this way, the APA argues that the exemption should be included throughout the supply chain, so that the price is reduced. In addition, the representative expressed the view that it would have been more effective to provide a direct subsidy to the neediest families.

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