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Chicken or egg? Doesn’t matter, neither is really selling well since Covid hit India

Broiler chicken prices have plunged for third time in the past year. And weekend-focused lockdowns have made things worse, stakeholders say.

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New Delhi: The lockdowns, sparked by the fresh Covid-19 wave, are threatening the poultry sector, which had already taken a severe hit due to a bird flu outbreak and coronavirus-related rumours last year. 

Industry stakeholders say the second Covid-19 wave has led to a dip in demand and prices, especially at the wholesale and the HORECA (Hotel/Restaurant/Catering) ends, just at a time when the sector had started a marginal recovery from the mounting losses of last year. 

This has been further aggravated by surging production and transportation costs, induced by a fuel hike and the “highest ever fodder soymeal prices”.  

According to industry experts, many small and medium poultry owners have abandoned or cut down their businesses due to heavy losses and that this has led to a temporary surge in prices. 

They added that dip in demand and prices have disrupted the normal hatching and selling cycle of chicken, and that this will lead to the sector going through a painful gestation period before things become normal.

“The current surge in prices of poultry products in major cities is temporary and due to slight increase in demand caused by Ramzan and the need for eggs by Covid patients,” Ramesh Khatri, president of the Poultry Federation of India, told ThePrint. 

“Still, sales are just 20-25 per cent of the usual. They are also mostly of eggs and not the profitable broiler chicken ones. The current supply of eggs is largely coming from cold stores and the chickens are being supplied by large farmers. This may have led to a supply deficit and an increase in prices.”

Khatri said the sector has faced devastation in the last year.

“The annual worth of the poultry sector is nearly Rs 90,000 crore, of which Rs 60,000 crore was wiped off last year. Similar losses might happen this year too if the situation remains the same,” Khatri said. “Due to the devastating losses of last year, many poultry farmers abandoned their birds in the jungle or culled them at farms as it was not sustainable for them to maintain stocks with increasing fodder and fuels cost. This, in turn, has now led to a supply deficit leading to a spike in poultry product prices. However, this will falter in coming months with Savan and Navratri.”

The poultry sector was also severely hit by a decline in exports in the 2020-21 fiscal. According to reports, for the April-February period, exports were down by 29.55 per cent in dollar terms at $52 million as compared to $74 million in the corresponding period of the previous year. 

Also read: Punjab and Haryana set to surpass wheat procurement targets with days to spare

‘Weekend lockdown adding to woes’

The weekend-focused lockdown in several states has made the situation worse for the sector as Saturdays and Sundays are the two days of the week when chicken sales substantially pick up.  

According to the stakeholders, chicken sales have fallen 25-30 per cent since the beginning of the lockdowns in April while prices have dropped more than 40 per cent.

Akbar Ali, head of the UP Poultry Association, told ThePrint: “The weekend markets used to make up a major chunk of profits for the sector as major chicken sale and consumption happens in these days. The demand for eggs might be there but the demand for chicken is wiped off with lockdown and transport restrictions.”

Ali added that just the sale of eggs will not sustain the cost of feeding and maintaining flocks of chicken. 

“This is the reason why people are not taking new birds and culling the existing ones, which are reducing the supply and hence increasing the prices,” he said. “Every farm’s capacity in the state has been reduced to 30-40 per cent with many farms being closed.”

While there is a demand for eggs, Ali said production has dropped as this was only marginal. 

“Last year, before the Covid-19 outbreak, 1.25 to 1.5 crore eggs were being produced in a day in UP. But all of this has reduced to just 50-60 lakh now,” he said. “Due to this decline in production, wholesale egg prices have temporarily increased from Rs 325/kg to Rs 450/kg.”

Yashwant Chandrakar, a broiler chicken poultry farm owner at Mahasamund in Chhattisgarh, told ThePrint that the sector was in a similar situation last year as well. 

“The cost of production of a kg of live chicken is now Rs 85-90, whereas we are getting a wholesale price of just Rs 40-55 per kg,” he said. “If the supply side remains high against low demand, then production will dip further. There’s no choice but to cull the birds. This happened last year too when rumours spread in the market that chicken was a source of Covid infection and sales went down drastically causing culling and huge losses.”

He too cited the weekend lockdowns as a major reason for the disruption in the sector.

“Weekend lockdowns have hurt us the most as on Sunday, the sale is more than the whole week combined,” he said. “There is a loss of at least Rs 50,000 to Rs 60,000 in maintaining 10,000 broiler chickens now. Moreover, poultry feed prices have also increased and transportation costs have surged, making the poultry business less feasible for us.”

High input costs

The record surge in soymeal prices has added to the woes of poultry farmers. According to reports, soybean prices have crossed the Rs 6,500-7,000/quintal mark in major markets across the country. 

This has led to a subsequent rise in soybean meal rates, which have risen by almost 50 per cent, from Rs 35 per kg to Rs 58 per kg. Soybean meal is used as chicken feed. 

“The farmgate prices of soymeal prices have increased from Rs 36/kg to Rs 65/kg,” said Rakesh Singh, chairman of Dayal Poultry Foods. “It makes at least 15-18 per cent of the total meal portion in poultry. The feed prices make up to 70 per cent cost of production in poultry. This price has further increased due to lockdown and fuel prices making farmers reluctant to maintain or hatch birds from which a major chunk of their profits arrive.”

He added that the prices of other raw materials like edible oil, vitamin, oil cakes, and maize, which are given to increase the weight of the birds, have witnessed a jump to 35-40 per cent. “We use to sell about 300-250 tonnes of feed a day, which has come down to 50-80 tonnes a day. At an estimated cost of Rs 32,000 a tonne for feed, the loss is over Rs 70 lakh a day.”

(Edited by Arun Prashanth)

Also read: No juice in alphonso again, 50% price fall makes second wave worse for Maharashtra farmers


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