March 23, 2020

 

India's chicken, corn prices crash as COVID-19 takes a toll

 

Chicken prices in India have crashed from INR90 a kg last month to INR20 in Mumbai as people are staying away from consuming poultry in fear of COVID-19.

 

Despite several awareness campaigns to demolish misconceptions that poultry had something to do with the dreaded virus, people are still staying away.

 

Listed poultry companies such as Pune-based Venky's (India) Ltd. and Indore-based Simran Firms Ltd. (SFL) are likely to report lower revenues in this quarter as business has suffered enormously.

 

Despite several attempts a senior official from Venky's was not available for comment.

 

"The poultry prices are all time low. Ex-farm broiler price is INR10-INR15 per kg (cost of production INR75 per kg) and egg prices are INR1.5 per egg ex farm (cost of production is INR3.5 per egg). Due to reduction in chicken and egg production , feed demand and prices are coming down on daily basis. The price of main raw material , like corn and soya bean meal , have dropped more than 10% in last two weeks," said a Godrej Agrovet Ltd. spokesperson.

 

As per a previous estimate, the poultry trade in Maharashtra was losing over INR10 crore a day due to lack of appetite for chicken.

 

"Though there is no direct link between chicken and COVID-19, people will stay away from poultry as long as the fear is there. So it will impact the poultry companies like Venky's and SFL and any other company that is linked to this business. In this quarter, their revenues will be lower and the trend has been reflected in their share prices on account of this direct impact," said Ambareesh Baliga, independent equity analyst.

 

Poultry farmers are bearing the maximum brunt due to the price crash and there has been no compensation from the government.

 

"The business has totally collapsed. Prices have crashed to INR20 a kg and there has been no demand. Earlier, I used to sell 150 birds a day, now it has come down to a dozen," said Salim Momin, a poultry dealer from Lalbaug, Mumbai.

 

Similarly, prices of corn which goes into making poultry feed has reduced to a great extent.

 

Grain merchant Devendra Vora, proprietor, Friendship Brokers, APMC Market, New Mumbai, said corn prices had slumped since last two to three months when COVID-19 started spreading around the world.

 

"Maize prices have slumped because there is no global demand. Since demand for poultry feed has come down, maize prices have suffered. Due to COVID-19 effect, prices have reduced to INR1,500 to INR1,600 per 100 kg from INR1,900 in January. Farmers are the worst suffers," Vora added.

 

In Maharashtra, the minimum support price for corn has come down to less than INR1,300 per 100 kg from INR1,700 last year.

 

This indicates the lower income for farmers.

 

"Demand for maize, a crucial component for the poultry industry is hit and there has been an dip in prices as well. This is owing to the food processing industry facing issues such as shortage of staff owing to COVID-19. However, we believe that if we as a society are able to control the spread of Corona virus in the next couple of weeks, we would witness the prices will springing back to normal. The graph of food grains prices will rebound quickly as demand from food processing industry will rise in order to upsurge capacity utilisations from the low levels of operations presently," said Amith Aggarwal, CEO, Agribazaar.

 

"We believe that this is the right time for government agencies to collaborate with private companies like us and plan for greater MSP procurement to protect the interest of our farmers. Any current stress to farmers may spill over and adversely impact sowing in the Kharif season," Aggarwal said.