Pusalla teams with Hubbard for poultry expansion

Fresh on the heels of a new one million chick/month hatchery, Sri Lankan meat producer, Pusalla, has signed an agreement with Hubbard to operate GP farms.

Dilshan J. Wewita, managing director, said that the first PS flock was launched in Q1, 2012. Market share in the breeder segment will climb to 40% in 2013, up from the current 30%. Pusalla also has plans to enter the cooked and ready-to-eat food market.

The company experienced 30% growth per year over the last two years since the 26-year civil war ended. However, due to the oversupply situation that appeared in Q3, he expects growth in 2012 to be slower.

Expanded breeder and broiler farms are being planned to support Pusalla’s growth target of supplying 40% of chick demand in the domestic market by 2014. Per capita chicken consumption is then expected to rise to 8.5 kg/year.

In addition, the breeding flock expansion will enable the company to export parent stock to Nepal, Bangladesh, Pakistan and the Middle East.

The competitiveness of the broiler industry is hampered by expensive grain and costly feed. An import tariff of 25% for maize makes it virtually impossible to import corn. However, high raw material costs also create a barrier to competition, which helps established producers.

Despite this, all of Sri Lanka’s existing players are expanding and the market is becoming saturated. Profitability and growth over the next 2-3 years will be moderate, unlike the early post-war period when all producers achieved growth of more than 20% per year.

“As far as instability and all those problems are concerned, things couldn’t be better. We faced those problems for the last three decades, so come what may in the next three years, it will always be better than it was,” said Wewita.

The company currently holds 18% of the Sri Lankan market of 7.5 million birds/month. Current per capita consumption is 6.5 kg/year, up from 4.6 kg/person/year. Pusella is active in both breeding stock and broilers, with an 18% share of the day-old broiler chick market. It also operates a slaughterhouse and is the only company in Sri Lanka whose core product is chilled poultry meat.

It recently completed the first phase of its hatchery construction. The project is designed to produce one million broiler chicks/month once completed, and three million chicks/month by 2014.

In parallel with the poultry capacity expansion, the Sri Lankan company is bolstering its “Golden Pork” brand and increasing hog production.