Indian state, Andhra Pradesh's poultry production is finding itself in the middle of an unprecedented crisis.

According to a local publication, the industry is facing an 'exorbitant' rise in prices of feed and absence of commensurate increase in prices of birds and eggs.

Decline in the demand for birds coupled with a hike in prices of essential ingredients like corn and soy has forced farmers to sell the birds at a loss of close to INR10 (US$0.19) per kilogramme. In addition, reports on occurrence of bird flu in some parts of the country, affected sales significantly, thus crippling the industry.

Andhra Pradesh accounts for production of 3.5 crore live birds every month, which is one-third of the country's production, apart from six crore eggs a day. In revenue terms, poultry's contribution to the State's annual GDP is estimated at INR20,000 crore (US$3.7 billion) with employment to close to 20 lakh people.

The industry was first hit by a hike in the minimum support price of corn and for soy. This was followed by the export of soy cake in large quantities to Iran, owing to the country's bilateral relations, at prices almost 150% higher than the domestic market.

The situation in the egg market, where the State leads, is no better. "The National Egg Coordination Committee has declared price of INR3.35 (US$0.06) an egg, but this does not guarantee returns to farmers as the cost of production and overheads is higher than the offer price," Hyderabad Layer Farmers Association president K. Mohan Reddy said.

Industry players are not hopeful of the situation improving during the current year too. They wanted banks to announce one-year moratorium on repayment of the principal and interest on the loans they had obtained besides rescheduling the loans.

The AP Poultry Federation held meetings with Union Finance Minister P. Chidambaram, RBI Governor Duvvuri Subba Rao and Food and Agriculture Minister Sharad Pawar seeking their intervention in recovery of the sector and enhancing working capital limits as there was serious erosion in the amount employed. They also wanted the government to regulate exports and essential ingredients and freeze them at a certain limit.