The Hindu Business Line : `Poultry sector must aim for higher price realisation'

Is it high time the poultry producers of Tamil Nadu reconcile themselves to higher maize prices and mark up production cost for their chickens or eggs? The answer appears to be "yes".

The chicken (broiler) and egg producers have to rediscover a higher market price for their produce to offset the rising input costs which, in the case of the broiler sector, is expected to go up by 12-15 per cent mainly on account of increasing cost of maize, which accounts for about 60 per cent of the chicken feed cost.

Production cost

"In the last seven years or so, the production cost for the integrated broiler producers had stayed in the Rs 27-28 band (per kg) and in the case of others it used to be in the Rs 30-31 band," said Mr B. Soundarajan, Managing Director of the Suguna Poultry Group.

"But now the average chicken production cost for the integrated players has gone up to Rs 30 per kg. This is mainly because poultry feed cost rose from Rs 9,500 to Rs 11,000 a tonne."

According to him, with the unabated demand for maize from ethanol producers the world over, corn prices of Rs 550-600 a quintal could be a thing of past and poultry farmers must wake up to the reality. In order to live in an era of high raw material cost, poultry farmers and producers should readjust their positions by aiming at a higher average market price realisation for their end products.

"We have to now move from Rs 25-35 average farm gate price band to an average price realisation of Rs 28-38 (a kg) if we have to sustain the trade," said Mr Soundarajan.

Domestic growth

The domestic poultry sector is set to witness accelerated growth of 18-20 per cent over the next three years or so against the average year-on-year growth rate of 13-15 per cent seen so far. This is due to the higher per capita income and increased urbanisation.

At the other end, demand from exports and diversion to ethanol even at the current level at 12.5 million tonnes would leave a supply gap of about three million tonnes annually in the domestic maize crop. This will also necessitate import of maize.

Domestic maize price

"In the last three years, the domestic maize price has remained in the Rs 5,000-5,500 per tonne range and we feel that the price over the next three years would hover around Rs 7,000," Mr Soundarajan said. Though the poultry sector has the facility of importing five lakh tonnes through the tariff rate quota at 15 per cent duty (over and above this quantity imported would entail 50 per cent duty), the landed cost would be still quite high and there would not be any parity with local maize cost.

Duty-free import

"Still, the industry has to have maize to feed the poultry sector and, hence, the import option is to be available."

He also said that the sector has approached the Centre to allow duty-free import of three million tonnes of maize to augment domestic supply.

The proposal has been cleared by the Union Agriculture Ministry and is pending with the Commerce Ministry. The industry is eagerly awaiting final clearance soon, he added.