Poultry industry seeks policy rate cut to lower cost

The poultry industry has urged the State Bank of Pakistan to review its policies and facilitate the private sector particularly, the poultry industry because credit off take has sharply dropped by 77 percent to Rs117.384 billion in the first half of the fiscal year 2019-20, as higher interest rates and economic slowdown dampened business appetite for bank loans.

Pakistan Poultry Association (PPA) former chairman and ex-president of Lahore Chamber of Commerce and Industry (LCCI) Abdul Basit said the cost of production has spiraled upward, reaching the highest level of last 10 years owing to huge depreciation of Rupee against dollar, record high markup rate and continued hike in power and gas tariffs, leading to slowdown in economic growth. The State Bank of Pakistan’s (SBP) data showed that credit to private sector stood at Rs503.628 billion in the corresponding period of last fiscal year.

He demanded a considerable reduction in the key policy rate, taking it into single digit, with a view to providing the private sector access to low-cost borrowing.

In the last monetary policy, the SBP kept the interest rate unchanged at 13.25%, causing hardships for the business community, particularly the poultry industry consisting of mostly the small and medium enterprises (SMEs), in accessing finance.

The cost of doing business and cost of production had shot up to uncompetitive levels as the borrowing cost is huge and capital financing has become more expensive.

The outgoing year has proved to be the worst year for poultry industry, breaking record of last 30 years’ losses mainly due to unprecedented escalation in cost of production.

Abdul Basit said that poultry sector is unable to pass on ever soaring cost of production to the consumers. Rather the industry survives by enhancing its efficiency through technology advancement.

The SBP should step up efforts to get credit flowing at a faster pace and spur growth that slowed at 3.3 percent last fiscal and is expected to taper further to 2.4 to 3 percent in the current fiscal year.

“The demand for the private sector credit is to remain subdued unless the SBP eases policy rate and economic growth gets momentum,” he said.