July 6, 2011

India's chicken prices decrease amid oversupply

As there is an oversupply of chicken in the market, India's chicken prices have dipped below INR60/kg (US$1.35).

The current prices have put poultry farmers under pressure given the rising prices of feed. Producers said the glut could remain for a few more months. Egg and poultry prices have been contributing to high food inflation for the last six months.

The entry of new players into the fray, following a shortage of broiler chicks last year, has raised production. This has impacted chicken prices which are hovering in the range INR50-60 (US$1.13-1.35) per kilogramme in the wholesale market. The prices were higher by INR5 (US$0.11) last month and were ruling well above INR100 (US$2.25) a few months ago.

"At present, the cost of production is around INR47/kg (US$1.06). Taking into account the commission of middlemen, any price lower than INR67-68 (US$1.51-1.53) will not be profitable for producers," said Shabir Ahmed, secretary of Poultry Federation of India.

With an addition of over one crore to 1.5 crore poultry layer birds across Andhra Pradesh, Uttar Pradesh, Chhattisgarh and Haryana, where major investment have been made in the poultry industry, chicken prices have crashed in the past few months.

"The production of broiler chicken has gone up by as much as 25%. Normally the consumption rises 10% annually. But this time, consumption has doubled and still the excess production has not been covered," said Venkateshwaran, director of Kohinoor Hatcheries in Hyderabad. While the prices are falling, input costs are likely to rise. Already the price of corn, the main ingredient of chicken feed, has shot up by INR200 (US$4.50) to INR1,300 (US$29.26) per quintal, he said.

The glut-like situation is likely to remain for the next few months. "There is excess supply of broiler chicks available in the country which has reduced the prices of live chicken to INR45-50 (US$1.01-1.13) per kilogramme," said Rajpura-based poultry farm owner Sandeep Mehta. He added that demand from New Delhi, Uttar Pradesh, Bihar, and Jammu & Kashmir have increased in the past few days.

"Dressed bird prices were in a range from INR80-150 (US$1.80-3.38) per kilogramme depending on the location," said a National Egg Coordination Committee official.