January 6, 2014

 

 

For the next two months, egg prices in Andhra Pradesh, a major producer in India, are expected to stabilise at the current INR350-390 (US$5.62-6.27) level for every 100 units (farm-gate).

 

After remaining stable at farm-gate price of INR280-325 (US$4.50-5.22) for the last 4-6 months, prices breached this range in December. At the retail level, they are much higher at INR4.50-5 (US$0.07-0.08) a piece now.

 

This comes against the onset of higher annual winter consumption demand in the state and in other parts of the country and higher input costs. Every year, starting from November to mid-February the consumption of eggs usually goes up in the country.

 

However, this year, besides the usual consumption demand, farmers in the state had to pass on the increased costs of production in essential feedstock including soymeal and corn. The two agricultural commodities constitute around 75% of the production cost.

 

After the fixation of minimum support price (MSP) of INR2,500 and INR1,300 (US$40 and US$21) per quintal, the prices of soy and corn are currently available at INR3,300 (US$53) and around INR1,600 (US$26) per quintal.

 

"In the last three years, the prices of these commodities went up by 65% and 50% after including their MSPs. This has resulted in industry losses for the three-year period for small and marginal farmers," said AP Poultry Federation president D Sudhakar. Due to factors including weak demand and higher costs, the losses per layer bird stood at INR100 (US$1.61) in the last 20-months, he added.

 

According to him, farmers get meaningful price only during these three to four months. For the rest of the year, their prospects depend upon market demand and bird diseases among other factors. "For the industry to sustain production at the current costs, farmers should get anything above INR335 (US$5.38) for every 100 units," said a layer bird farmer in Ranga Reddy district.

 

The state poultry federation expects moderation in prices only from February. AP produces 70 million eggs per day, which is equivalent to one-third production of the country. Around 50% of this is consumed within the state and the rest is marketed to Maharashtra, Odisha, West Bengal and Northeast. On average, a farmer invests INR600 (US$9.64) each in the 90 million birds in the state.

 

A senior official at the zonal office of National Egg Coordination Committee (NECC) said that the prices are a true reflection of the actual costs incurred by farmers. The average NECC price for the January-December period stood at INR311 (US$5) per 100 units and the December average stood around INR380 (US$6.10).

 

However, despite all the gloom surrounding the sector, the state government recently passed a government order for providing 50% subsidy in unit power consumed by the farmers. The subsidy is for the period December-March 2014. After this, the tariff would depend on the long-term power purchase agreements inked by the APGenco.