Poultry prices jump by 25% in two weeks on increased consumer demand

Despite the increase, both broiler chicken and eggs are selling at break even, though their cost of production has declined on account of a sharp fall in the price of feed such as maize and soybean

Poultry prices have risen by as much as 25 per cent in the past fortnight, due to a gradual increase in consumer demand. This follows the resumption in economic activity under Unlock 1.0, which started on June 8 after a 75-day lockdown.

With this increase, chicken is available at the farmgate for Rs 75-80 a kilo (kg), from Rs 60-65 a kg in the first week of June. Similarly, eggs are quoted at Rs 4.50-5 apiece, against Rs 3-3.50 apiece. Despite the increase, both broiler chicken and eggs are selling at break-even levels, even though their cost of production has declined on account of a sharp fall in the price of feed, such as maize and soybean meal.

The recovery in poultry prices has offered breather to farmers, who suffered heavily during the lockdown phase. Consumption had dropped to zero on fears that Covid-19 could spread through poultry.

“During the initial days of the lockdown, consumption of poultry products was low due to the Covid-19 scare. Later, availability became a problem due to disruption in transportation. Now, availability of poultry products has improved with relaxation in interstate and intrastate transport service. Since, restriction in business activity has also been relaxed, poultry consumption has risen, resulting in prices of chicken and eggs moving up amid supply shortage,” said K G Anand, general manager, Venkateshwara Hatcheries — the producer of Venky’s brand chicken and ready-to-eat products.

Meanwhile, the lockdown has hit small, independent farmers who did not have any allied or value-added business. Farmers surviving only on chicken and egg sales were the worst hit, with at least two rounds of replacement i.e., selling of live birds and eggs after parenting of small chicks.

 

 

Normally, one round of replacement takes place in 40-45 days. The first round of replacement was damaged in the beginning of lockdown as consumers stayed away from purchase. Consequently, farmers sold live broiler chicken at Rs 7-8 a kg in order to prevent matured birds from dying. The second round was also damaged due to transport disruptions.

“The two rounds of replacement damages resulted in nearly 30 per cent of small and independent farmers shutting shop due to weak demand sentiment and lack of working capital which emerged after selling of live birds almost gratis,” said Anand.

The rest 70 per cent of poultry farmers, however, survived the massive economic jolt through selling value-added and ready-to-eat products, in addition to allied activities.

“Poultry is the only sector that does not attract government aid, even though the livelihood of millions of farmers is attached to it. Millions of entrepreneurs start business with a small capital and provide the cheapest protein-rich food items to consumers. With the HoReCa (hotel/restaurant/catering) segment continuing to remain shut — save for parcel services, which is just a small fraction of the entire business — poultry farmers would continue to bleed this year,” said Sanjeeb Chintawar, business manager, National Egg Coordination Committee.

The HoReCa segment contributes nearly 40 per cent of the entire poultry demand, which is likely to remain lacklustre due to deferment of weddings and a limited number of attendees in any function.

“The demand for poultry products has revived during the last two weeks despite partial closure of hotels, restaurants, and caterers. Consumers have realised there is no link between Covid-19 and poultry, and hence, chicken and eggs cannot be a carrier of the novel coronavirus. But, farmers have suffered immensely during this lockdown and incurred unrecoverable losses during this period,” said S V Bhave, managing director, Berg + Schmidt India, and chairman of Compound Livestock Feed Manufacturers Association.

Interestingly, the demand for frozen chicken in India is likely to move up due to jump in home delivery services.