Agri Business

Chicken prices soar on pent up demand

K V Kurmanath Hyderabad | Updated on July 19, 2021

Scores of small farmers with birds up to 10,000 have not been able to sustain their losses and have wound up their businesses   -  The Hindu

As restaurants and eateries open, offtake rises; retail rates up at ₹260-270 a kg

After the Coronavirus pandemic lockdown restrictions across the country affected it badly during May-June, the poultry industry is now witnessing a rebound, with a sharp rally in prices of broiler chicken.

Reopening of hotels and eateries, too, have spurred the demand for chicken.

Farm gate prices of live birds are hovering around ₹130 a kg, nearly double compared with ₹60-75 during mid-May. In retail markets, prices of dressed chicken are ruling in the range of ₹260-270 a kg in different States against ₹140-₹160 two months ago.

A surge in prices of soyabean and drop in production due to the exit of small poultry players have led to the increase in chicken prices.

Exit of small farmers

“The industry has suffered heavily in May and June due to the country-wide restrictions on vehicular movements. They severely hampered the poultry supply chains. Scores of small farmers with birds up to 10,000 could not sustain losses and exited business,” Suresh Chitturi, Vice-Chairman and Managing Director of Srinivasa Farms, told BusinessLine. “Small farmers constitute some 30 per cent of all the broiler bird production. A significant chunk of them exited business,” he said.

“Now there is a shortage of birds in the markets in all the States including Tamil Nadu, Andhra Pradesh and Karnataka among others. Not only farmers, but even integrators also faced the impact of the lockdown, low demand and higher production costs,” Sushant Rai, President of Karnataka State Poultry Farmers and Breeders Association, said. “The cost of production has gone up from around ₹75 to ₹115 a kg on higher feed costs,” he said.

Feed costs up

The cost of production has gone up significantly in the last six months. Soyabean prices have more than doubled over last year to around ₹75 a kg, while maize prices are ruling around ₹23 a kg up from ₹15 early this year.

A Chennai-based small poultry farm owner said that prices are higher as the realisation was poor for the farmers in the first quarter.

“When production costs were ₹89-90 a kg in the June quarter, we had to sell live chicken at ₹40-50 at the farm gates. Feed costs shot up and we had to incur losses,” the owner, who did not wish to be identified, said.

The rising costs led to a wide difference between production costs and realisation, forcing many small players to wind up their businesses.

“This led to big players not ramping up production to make up for the output cut. This has led to increase in prices as demand has increased. But we are not sure how long the demand will continue,” he said.

“In Chennai, the average cost of chicken is ₹260, though it is being sold at nearly ₹300 a kg in elite neighbourhoods,” the small farm owner said.

Hoteliers up in arms

Soaring prices of broiler chicken in Kerala has prompted hotel and restaurant owners threatening to exclude chicken dishes from the menu.

Moideenkutty Haji, President of Kerala Hotels and Restaurants Association, said that hotels are the major consumers of broiler chicken.

Prices of chicken have doubled in the last fortnight, making it difficult for the hotels to procure it,” he said.

Binny Emmatty, State President of Poulty Farmers and Traders Samithy, said that the rising prices was a temporary phenomenon. “Prices will start declining from next week,” he said.

Temporary phenomenon

Suresh Chitturi has said that the current prices, if sustained for two more months, would help the industry recoup the heavy losses that it suffered in the last two months.

Demand for chicken might drop in Tamil Nadu during the auspicious month of Aadi that began on Saturday.

“In North India and other States, the auspicious month of Shravan will begin next month and by that time, it ends another auspicious month of will begin in Tamil Nadu,” a small farmer in Tamil Nadu said.

(With inputs from Vishwanath Kulkarni, Bengaluru; V Sajeev Kumar, Kochi and Subramani Ra Mancombu, Chennai.)

Published on July 18, 2021

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