Poultry industry profits revive as feedstock prices fall

After four-years of prolong struggle, the poultry industry will witness sharp increase in profitability with fall in feedstock prices and realisation improving on strong demand.

Poultry feed costs were close to Rs 30 a kg in the first half of this fiscal on the back of high maize prices. In October, the cost fell by 10-12 per cent as soymeal prices tumbled 35 per cent given bumper domestic crop estimates and minimal export opportunity due to lack of price parity.

Following this, maize prices also cooled off to an extent post kharif harvest arrivals. Given favourable monsoon in current fiscal and strong growth estimate in maize and soybean output during 2016-17 crop year, poultry feed prices are expected to remain at manageable levels, said a study by rating agency Icra.

However, any increase in soymeal exports may affect domestic supply surplus but soymeal shipments from India will be un-attractive due to high prices.

The current fiscal started strongly for the poultry industry with record high realisations but it moderated in the second quarter due to increasing feedstock prices. Though the third quarter realisation was impacted by high value currency demonetisation, the fall of 12 per cent in feed stock helped the industry post record profits, it added.

Average farm gate broiler realisations for this fiscal at Rs 70 a kg are better than Rs 67 a kg in FY'16 while the average broiler production cost fell by seven per cent to Rs 64 a kg in this fiscal with sharp decline in soymeal prices.

STRONG DEMAND

Broiler volume growth last year is estimated at six per cent taking domestic broiler meat production volumes to 3.9 million tonnes (3.7 mt) with the market size of Rs 66,000 crore.

The broiler volume growth has been intentionally kept at manageable levels to avoid supply glut given industry wide supply control measures adopted like lower chick lacements, hatching holidays, early liquidation of parent stock, etc to control supply and ensure reasonable broiler realisations, said Icra.

Broiler volume growth is expected to remain at 6-7 per cent in medium to long term given favourable factors such as low per capita consumption, religious preference for chicken meat, year round easy availability across country, increasing disposable income, changing food habits, increasing health awareness, and poultry being one of the cheapest source of protein.

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