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With 26 crore eggs and 1 crore chicks a day, India is among the top-5 poultry players in the world. For the domestic poultry industry, which engages about 60 lakh farmers and labourers, the November-January winter period, when more eggs and chicken are consumed, is normally a very lucrative season.
Upcountry markets consume more eggs and chicken in the winter. In an average year, the Northern markets consume 60 per cent more eggs and chicken. But this year, chicken retail outlets wear a deserted look with consumers spending their money sparingly.
The industry now fears a huge drop in demand there and in other parts of the country as the demonetisation drive has also disrupted the supply chain. “We have estimated losses at ₹100 crore per day as demand dips. People have stopped buying eggs and chicken. Even restaurants have reduced their intake,” Subba Raju, a leader of the NECC (National Egg Coordination Committee), told BusinessLine.
The farmgate price of an egg has fallen to ₹2.93 from ₹3.90 before November 8, the day the Central government announced the demonetisation drive.
With the cash crunch hitting all layers in the supply chain, the industry is apprehending that working capital is drying up.
The prices of chicken fell in the range of ₹15-30 per kg in different southern markets. Retail chicken outlets have reduced their order sizes, forcing the farms to keep back birds. This puts an additional burden on the feed. Feed costs account for one-third of the total production cost in a poultry farm.
According to Suguna Foods Managing Director GB Sundararajan, demonetisation has resulted in a drop of 20-30 per cent in consumption, severely impacting the management of inventory. There is no cash transaction happening between traders and farmers due to the scarcity of new currency.
Consequent to the disruptions in supplies following the impact on the transport sector, the prices of feed (maize and soya) have gone up. “The increase is about ₹100 a quintal in the last two weeks,” said one poultry farmer.
Another difficulty poultry farms foresee is the impending payments in the first week of the month to labourers. “You don’t have cash on hand. Even if you want to credit into their bank accounts, most of them don’t have accounts. We are asking them to open accounts,” said Subba Raju.
The farmers, however, see a bigger danger. As inventories pile up and working capital reserves evaporate, they see an impending crisis in the summer.
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