ECONOMYNEXT – Sri Lanka’s Three Acre Farms, a top poultry firm involved in hatchery and processing chicken said it improved productivity as chicken and egg prices fell in the past year.
Sri Lanka’s central bank missed its target to push up the cost of living by 5 percent a year, amid broadly deflationary policy (inflationary policy was seen in the last quarter) which allowed the exchange rate to be stable allowing prices to be stable or fall.
Three Acre farms said its profits fell as the prices of egg and chicken fell.
“The decrease in Group profitability was attributable to lower market prices, although this was partly mitigated by improved efficiency in broiler farm operation,” Three Acre Farms said.
Three Acre Farms said its hatchery in Kosgama moved into a machine operated immunization system for day-old-chicks.
“This advancement will enhance operational efficiency by reducing costs, eliminating manual intervention, and reinforcing our commitment to innovation and productivity.”
Ceylon Grain Elevators, the parent of Three Acre farms also cut prices of chicken feed, amid exchange rate stability, though it was hit by higher prices and lower quality of domestically produced maize amid import restrictions.
The group had spent 270 million rupees to retrofit an ammonia refrigeration system at its chicken processing plant.
“This upgrade was vital for maintaining the quality of products and improving operational efficiency across essential cold chain processes,” CGE told shareholders.
When a central bank does not print money to push up prices by demand or inflation, capitalist companies are forced to improve productivity and efficiency to compete and remain in business.
However, when ‘price pressure’ is provided by printing money, there is no such incentive as profits can be easily made by reduced real salaries of workers which however may trigger social unrest, critics say.
A global productivity boom was seen from 1980 to 2000 when the US Fed ran monetary policy to keep down both retail prices and prick asset price bubbles that emerge as a consequence of inflationary central bank operations.
At the time the Fed did not have a formal inflation target and Fed Chiefs Paul Volker and Alan Greenspan ignored the employment mandate. The Great Moderation ended after Ben Bernanke persuaded Greenspan to cut rates triggering an 8-year cycle involving the housing bubble and attendant commodity bubble.
Global inflation and food prices started to go out of control in the 1960s as so-called full employment policies started in the 1960s in the US and UK in particular, driven by so-called Saltwater academics in the US, leading to the collapse of the Bretton Woods and Great Inflation of the 1970s/
Greenspan in particular pricked asset price bubbles (irrational exuberance) as mal-investment and asset price bubbles as well rising commodity prices are automatic consequence of inflation (expanding money) in classical economic terms.
Oil prices fell around 36 dollars to 15 dollars a barrel during the so-called two decades Great Moderation and gold fell from 800 to about 280 dollars an ounce.
After the Fed started to reflate the economy, firing the housing bubble in the prices and running excess liquidity frameworks, oil has gone up to around 70 dollars a barrel and gold to 3200 dollars an ounce with attendant price increase in foods.
While inflationary rate cuts trigger commodity and asset price bubbles in floating regimes after a time, retribution comes swiftly in the form of forex shortages, currency collapses and external defaults in pegged regimes.
(Colombo/June20/2025)
