The Tribune

By YOURI KEMP

Tribune Business

Reporter

ykemp@tribunemedia.net

An Abaco poultry farm believes the Government’s Budget is trying to strike a “happy medium” for stimulating the sector with plans to lower electricity costs designed to offset duty reductions on rival imports.

Lance Pinder, Abaco Big Bird Poultry’s operations manager, told Tribune Business he had been in talks with the Government for several weeks about lowering the cost of electricity for domestic poultry producers.

This comes after the Prime Minister, in last week’s Budget communication, pledged to assist local chicken farmers by reducing their energy inputs. “Local production of chicken is less than 5 percent of total consumption, but we want and need to expand local production of all agriculture products,” Philip Davis QC said.

“In this regard, the Government will provide support to local poultry producers by assisting in lowering the cost of electricity, one of the primary inputs in organised poultry production.” However, the need to immediately respond to the cost of living crisis facing many Bahamians as a result of importing surging global inflation also pushed the Davis administration to slash multiple food import tariffs.

Chicken parts, including leg quarters, wings and drumsticks, were among those targeted for the reductions, with their tariff rates being cut by two-thirds - from 30 percent to just 10 percent. Senator Michael Halkitis, minister of economic affairs, last week suggested this will be among the food-related tariff cuts that has the greatest impact for consumers, but it also has the effect of making imported chicken more price competitive versus domestic rivals.

Such a move thus appears counter-productive to efforts to increase local poultry production. However, Mr Pinder took it in stride, saying: “Obviously they are concerned with food costs, and I’m also being hit with increased costs. Electricity is a way that they thought they could help me if I had any negative impacts from a lower duty rate because they are looking right now at trying to help people because things are tough. So we tried to work it out.”

Calling this a “completely different approach” from any other government’s attempts to assist the poultry industry, Mr Pinder added: “I was shocked in a good way because no one has ever even entertained anything like that in the past about the big costs in poultry production.

“We always talked about the high cost of electricity, with all of the refrigeration and ice and things that’s needed for running a processing plant, but I think we came to a good common ground that they were very concerned with the impacts of food inflation and how it has impacted our business.”

Besides the inflationary pressures, Abaco Big Bird is still trying to restore its processing plant to full capacity following Hurricane Dorian’s devastation in 2019. “We’re still trying to regrow and expand as well, and they want us to continue to do that,” he added.

“On our business right now, I don’t think reducing the duties on poultry products will have a big impact particularly. They did mention about it being temporary, possibly. So once people get up and get going, and if we get someone that wants to invest in the industry, maybe they’ll revisit it. If you want to get where you’ve got 70 percent of the market supplied locally, you can’t have a 10 percent duty rate anyway.”

Mr Pinder continued: “I think these electricity offsets can be a good thing and, if not, the Government is open to trying to work with us. This is all about food, and food prices and food security, so you don’t want to run the last guy in town out of business.

“But, you know, with leg quarters, too, these guys are buying leg quarters for 20 cents a pound, sometimes 30 cents a pound, so really a 30 percent tariff is nothing when you add that on to those kind of prices. It’s just a couple of cents. So it’s still way below the production cost. A 30 percent tariff is no protection against leg quarter dumping.

“If you really want to use the tariffs to protect people from leg quarter dumping, you need a 150 percent tariff, which some places in the Caribbean have where they have those bound rates, when they hit a certain quota or the rate on the leg quarters goes sky high.”