India’s $14-billion (or Rs 1-trillion) poultry market has begun a massive culling exercise as consumers keep off chicken products for fear of catching coronavirus. While the Food Safety and Standards Authority of India (FSSAI) has said there is no scientific evidence to prove the virus spreads through consumption of non-vegetarian food, this has had no impact on people, executives at some of the top poultry firms said.
“It is difficult to change people’s minds. Consumption of chicken has fallen a lot. When I last checked, the price of chicken was down to half of its cost of production. It could be lower now,” Nadir Godrej, chairman, Godrej Agrovet said. The latter has a joint venture with the US-based Tyson Foods, which markets brands such as Real Good Chicken and Real Good Yummiez.
Weak demand from the poultry sector has resulted in a sharp decline in feed prices too, with both soybean and maize prices falling by nearly 25 per cent in the past two months. The poultry market consumes around half of soybean and maize production in India.
Industry estimates peg the loss to the market at Rs 1,000 crore. Losses could mount though as chicken prices hit rock bottom and sale of chicken products come to a standstill, experts said. “There are absolutely no sales happening for the past one month,” said K G Anand, general manager, Venkateshwara Hatcheries, which markets the Venky’s chicken. “Many farmers have shut operations. As long as the coronavirus scare remains, demand will be muted, impacting business,” he said.
The cost of production of chicken in India is pegged at Rs 75-80 per kg. The average price at which chicken is selling stands at Rs 15 per kg.
“Poultry farmers with around 1,500 birds will vanish from the market,” said Ramesh Khatri, president, Poultry Federation of India. “The bigger worry is that we could now see job losses in the market. Some companies could also see a sharp erosion in working capital,” he said.
Sanjeeb Chintawar, business manager, National Egg Coordination Committee, said culling had also been undertaken by farmers since it is impossible for them to continue feeding birds indefinitely.
Industry estimates peg the weight of birds now around 3 kg each, which is a 50 per cent jump over the weight of birds reported earlier. Typically, the poultry market works on quick turnaround cycles to avoid being stuck with old stock. Business cycles, however, have been thrown out of gear due to the virus.