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Chicken prices soar at farmgate level due to high feed costs, cut in production

Farmgate prices have gone up to Rs 125 -130 a kg from Rs 70-80 a kg a couple of months ago.

Chicken prices soar at farmgate level due to high feed costs, cut in production
Poultry meat is much cheaper and healthier than other varieties of meat such as mutton and fish,” he pointed out. A recent international egg and poultry review on India has mentioned that India is one of the world’s largest and fastest growing poultry industries.

Chicken prices at farmgate levels have witnessed a sharp rise in the past couple of months with the industry reporting a 20-25% reduction in production caused by pandemic lockdowns, high feed costs closure of the HoReCa segments and a rise in mortality of the birds due to the onset of summer.

Farmgate prices have gone up to Rs 125 -130 a kg from Rs 70-80 a kg a couple of months ago. Industry players attribute the short supply to several small players culling their stocks due to high feed costs and poor sales in the Covid period due to the restriction in timings. For the retail customer, the chicken prices would be higher at Rs 200-225 per kg.

“It is all a matter of demand and supply. Due to the shortage of chicken, we are anticipating a further rise in poultry prices,” Ricky Thaper, treasurer, Poultry Federation of India, told FE. Thaper, who has been connected with the poultry industry for over 35 years, pointed out that almost every year poultry prices go up due to higher demand during March as during Holi festival, demand is very high. But this time the situation is different, he observed.

In the last three months, there has been 25-30% increase in feed cost as corn (maize) rates have increased from Rs 21,000 per tonne to Rs 25,000 per tonne and soyabean meal rates have increased from Rs 55,000 per tonne to Rs 70,000 per tonne. This increases the cost of production of broilers, thus resulting in increase in market price of broilers he said.

“The rising purchasing power, changing food habits and increased urbanisation is happening throughout India, not only in million plus cities but in smaller cities. With increased incomes and urbanisation, people prefer to go for non-vegetarian diets,” he said.

Poultry meat is much cheaper and healthier than other varieties of meat such as mutton and fish,” he pointed out. A recent international egg and poultry review on India has mentioned that India is one of the world’s largest and fastest growing poultry industries.

Prasanna Pedgaonkar, deputy general manager, Venky’s, one of the biggest players in this segment, said that Covid and high feed costs forced small, marginal and even some big farmers to liquidate their stocks because when the commercials are not matching, there is no sense in continuing business. “The premature liquidity of the stocks has brought some correction in the market, availability went down and at the same time demand is back to normal because of high vegetable costs and high costs of meat and fish,” he said.

Pedgaonkar explained that in summer usually mortality is on the higher side and production is on the lower side. The overall productivity goes down by 7-10% and that with correction and overall availability also goes down, he said.

Last year, although the government allowed GM soyameal imports, a deadline was given up to December 2021 and industry had wanted an extension till March 2021. Farmers are hoarding their stocks, he said. Venky’s (India) net profit declined by 15.6% to Rs 30.68 crore despite a 40.7% rise in revenue from operations to Rs 987.76 crore in Q2 FY22 over Q2 FY21. Venky’s said that during the quarter ended 30 September 2021, the poultry and poultry products segment’s profit margins were severely affected due to steep rise in the prices of key poultry feed ingredients. Price of soya has seen an unprecedented increase.

Suresh Chitturi, CMD of Hyderabad-based Srinivasa Hatcheries shared a similar view and said feed prices have been historically high with soyameal prices around Rs 65,000 per tonne and corn prices also moving upwards. Last four months, farmgate prices have been around Rs 90 per kg. In the last four months, poultry farmers have been losing money when traditionally, they get maximum income during the October to January period. Production has come down by at least 15-20% The mortality rate, which would be about 6-7% in the summer, has surged to 10-12% resulting in the short supply of the birds in the market, he said.

The consumption was impacted in the second wave primarily because of the timing restrictions by the governments and in the lockdowns, it is the small farmer who has been affected the most, he said.

Significantly, the online sales by start-ups went up during the second wave although they barely constitute 1% of the total market which currently stands at `2 lakh crore in value, he said.

Chitturi said he is not sure about which way the market is headed because the cash flows of farmers have been impacted and feed costs are likely to remain high for some time. Vasant Kumar, president, Poultry Farmers and Breeders Association, Maharashtra, said that while costs may have gone up, farmers are still not making money. Several small players have stopped production due to high feed costs and are still watching the situation before going in for replenishing their stocks, he said.

The association has urged the government to make available maize, wheat and broken rice available with the Food Corporation of India (FCI) to poultry farmers at subsidized rates to help lower the cost of production of the poultry sector. Sushant Rai, president, Karnataka Poultry Farmers and Breeders Association ( KPFBA) said that if high prices continue for a while, poultry farmers may start raising birds again.

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