March 4, 2020

India's poultry prices plunge below production cost

The poultry prices in India have declined by a third in the past month due to receding consumer demand amid the coronavirus outbreak.

Broiler chicken in the benchmark Bengaluru wholesale market was quoted INR61.76 a kg on average in February, as against INR91.58 a kg in January. Similarly, broiler chicken in the Hyderabad and Muzaffarpur (Bihar) wholesale markets was sold at INR61.28 a kg and INR78.66 a kg, respectively, in February, as compared to INR86.28 a kg and INR90.13 a kg in January. Egg prices have also plunged.

Though the government and farmers have rejected the possibility of coronavirus spreading through consumption of chicken and eggs, demand for poultry has plunged.

"Poultry consumption has declined sharply since the outbreak of coronavirus. Mammals, not birds, are the main source of coronavirus," said K G Anand, general manager, Venkateshwara Hatcheries, which sells poultry products under Venky's brand.

Poultry farmers are suffering heavy losses following the sharp drop in prices. According to Anand, a broiler chicken is currently being quoted ex-farm at INR40 a kg, as against its cost of production of INR80-85 a kg.

"The entire poultry sector is led by small and unorganised players. They cannot survive at such massive losses. As a consequence, they are cutting their production capacity. In fact, many small farmers have shut down their operations and shifted to other means of livelihood," said Ramesh Chander Khatri, president, Poultry Federation of India.

Poultry farmers have been suffering for over two years because of a sharp spike in prices of raw material. Though feed prices have moderated of late, the decline in chicken consumption because of the coronavirus fear has hit farmers hard.

Feed prices have declined 6-15% in the past month. The average soybean price has fallen 6% to INR4,067 a quintal in February, as against INR4,329 a quintal in January.

Similarly, corn and bajra have become cheaper by 15% and 8%, respectively. Corn and bajra traded at INR1,994 a quintal and 1,806 a quintal, respectively, in February as against INR2,347 a quintal and INR1,965 a quintal in January.

"We expect demand to return to normal in two months. But by then the summer season will set in and it remains a lean period for the poultry sector. However, reduced availability may have some positive impact on prices," said Anand.