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Hen Prices Either Rise or Disappear from Market

Domestic manufacturers of poultry meat speak out about artificial obstacles in the sector development and rising product prices.

The poultry meat manufacturers complain about the standard act that was enacted several days ago. Namely, the new regulations introduces an additional tax on poultry meat.

Namely, under the government’s resolution, starting August 24, 2017,  the law on approval of deadlines and prices for  National Food Agency services determines deadlines and prices for the agency services, including veterinary inspection of poultry meat, the so-called form N2. The price for issuing the document for one chicken is 5 Tetri.

A part of domestic entrepreneurs states that similar precedents are not met in any country of the world and this decision may be appraised as an artificial frustration of Georgian production.

Elguja Nozade, director of LLC Gantiadi (Mukhrani Chicken), noted that National Food Agency has made entrepreneurs pay the mentioned tax on each slaughtered chicken. The entrepreneur says that the Government has taken the mentioned decision arbitrarily without a consent of business sector and this is a very bad precedent.

«We were not warned. A day earlier they called to us from National Food Agency and warned in the form of an ultimatum that we were to sign an agreement with them, otherwise they would impose fines on us. This is a wrong step and this is the shame of our Authorities», Nozadze noted.

All countries promote poultry production, both egg and chicken meat production. Moreover, in all countries domestic production is subsidized. “We pay VAT and now we have to pay 5 Tetri for each chicken in addition. These are huge expenditures for entrepreneurs”, Nozadze said.

The created realities will raise prices on domestic poultry production. It is not ruled out that production be suspended entirely, he added. “Georgian poultry meat will rise in price or may disappear from the market entirely”, Nozadze said.

LLC Gantiadi produces 1000-1500 chickens a day and the company will have to pay 50 GEL a day in addition, Nozadze said.

We have already calculated how much the price of one kilogram of poultry meat will increase as a result of the mentioned regulations. One kilogram  will rise in price by about 10 Tetri, as additional 5-Tetri tax constitutes 6-7% of the product’s prime cost, Nozadze added.

“Currently, one kilogram of chicken price ranges from 4.50 GEL to 5 GEL. In all countries poultrty meat production is subsidized as part of social programs, while this practice does not work in Georgia and this creates problems. This 5-Tetri tax would not hit so bitterly if we did not pay VAT”, Nozadze pointed out.

Revaz Vashakidze, founder of Chirina (Biubiu) company noted that Chirina company entered the market in 2013 and the company still remains unprofitable.

“We have been working without profits. The situation is difficult. The country imports low-quality chicken meat from Turkey and this meat is unfit for eating. This meat is not imported to Azerbaijan, Armenia, while our country admits it. It is worth noting that quality of similar chicken complies with the price and is very cheap and our citizens prefer to buy this product, because today in Georgia the ratio of solvent population is very unimportant. Moreover, there are very small entrepreneurs on the market, who are exempted from VAT. Consequently, they have much better conditions compared to us”, Vashakidze noted.

The ratio of the mentioned tax in the prime cost of a chicken meat accounts for 7%. Companies have to pay the sum in advance, before the product sales and this is an unreasonable decision of the Government, he added.

“Government has not communicated with us. They were to meet with us and learn about the condition of our products and finances. We follow our budget, but they imposed a new tax in the middle of the year. Where should we take this sum from?”, Vashakidze asked.

Business cannot understand why to pay this tax, while Chirina owns an international standard slaughterhouse, where 12 veterinaries are employed.

Business cannot understand why the Government has introduced this tax, while almost all major entrepreneurs have established HACCP standards  (Hazard Analysis Critical Control Point) in Georgia, including, Chirina company. Consequently, quality is also controlled. Vashakidze noted that despite this entrepreneurs have to pay money to the Government for taking meat safety certificate, the form N2. This 5 Tetri is not a small amount in the end, he said.

Chirina produces about 30 000 chickens a day and the new regulations oblige the company to pay 1500 GEL a day, 45 000 GEL a month, Revaz Vashakidze noted.

These regulations will raise price of chicken meat on the market, he said. “It is more profitable to import chicken from Turkey or other countries. What can we do? This decision was taken mainly against Chirina, because slaughterhouses in Georgia are very few or rhey do not exist at all”, Vashakidze said.

Poultry meat production in Georgia becomes nonsense, Vashakidze concluded.

Paata Kurdadze, head of food safety department of National Food Agency, explains that state veterinary control and supervision functions in all countries. A state official works at slaughterhouses in all countries and Georgia is not an exception, he said.

“We have veterinary doctors at all slaughterhouses, who control the whole process before and after slaughtering. This is a paid service”. He said.

These regulations will ensure market protection without changing product prices, Kurdadze noted.

“All these decisions are taken deliberately and  purposefully to protect the life and health of our population. We expand control and this policy has touched bird slaughterhouses too. The same regulations were introduced into animal slaughterhouses too and beef prices have not increased”, Kurdadze noted.

National Food Agency keeps intense communication with business operators and this decision was not a surprise for them, he added.

Besides additional tax, poultry companies talk about another problem – quality of poultry meat. “In Georgia, poultry meat market is not controlled and the distribution network is full of questionable and low quality products”, businessmen assert.

Revenue Service rejects the mentioned accusations by poultry companies and asserts that no product enters the country without monitoring and the product that do not meet food safety standards, cannot appear on the Georgian market.