Agri Business

Poultry sector cries foul as US chicken legs loom large

Gayathri G KV Kurmanath Chennai/Hyderabad | Updated on January 17, 2018

BL22_Fresh_chicken.jpg

India has eased entry barriers after losing WTO case to the US

As dumping of chicken legs by the US becomes imminent after India lost the case at the World Trade Organisation (WTO), the ₹50,000-crore domestic poultry industry proposes to approach the Centre seeking protection of its interests.

“There is no level playing field. We are planning to ask the government to either ban import of chicken produced by using genetically modified (GM) corn and soya as feed or allow import of GM feed (which is cheaper) to cut down our production costs,” said K Singaraj, President of the All India Poultry Export Association. Poultry feed accounts for almost 30 per cent of the total production cost for domestic farms and this makes it more expensive than the potential imports, says the industry.

Singaraj, who is the Chairman of Namakkal-based Ponni Feeds, feels that institutional buyers will prefer the imported frozen legs because of cheaper bulk rates. The chicken legs market in India is pegged at just 2.2 per cent of the overall industry size.

Sources said that the landed cost of frozen legs at Indian ports is estimated to be at ₹60-70 a kg — almost half of the domestic price of ₹150-175.

“Though the frozen market is still at a nascent stage, there is a 3-5 per cent growth per annum due to changing lifestyle and rapid pace of urbanisation. Eventually, the domestic industry will lose out in the long-term,” he added.

India agreed to change rules facilitating import of chicken legs following a WTO ruling in the favour of the United States. This created a flutter in the fragile Indian poultry industry, which feels that the eating habits of people in the country were in its favour.

Fresh vs frozen

“We love eating fresh chicken, while what is going to come is only frozen legs,” said KG Anand, General Manager of Venkateshwara Hatcheries.

Of the 30 crore broiler birds that are consumed in the country every month, the share of processed chicken is just under 5 per cent.

“It is only a perception issue that the inflow of chicken legs from the US would flood the market and local players will face a serious threat. Our market is not ready for frozen or processed chicken yet,” Anand feels.

There, however, are some fears at one level of the industry. They feel that institutional buyers could go for the imported legs for more than one reason. “The market that has developed a taste for the meaty American chicken legs would quickly shift to the US legs. It is a high-value market,” an executive at a retail chain said on condition of anonymity. Anand, however, allayed the fears. “We are predominantly a ‘live’ market. There is a huge market out there in India that is yet to be tapped. The per capita chicken consumption in the country is very low at 3 kg as against the global average of 9 kg,” he said.

Untapped demand

The industry is looking to open up States such as Bihar, which are relatively untapped for chicken products. Rural areas, too, hold huge potential.

“The government can’t do anything now. We will have to live with the imports. We are not worried. But it is unfortunate that we are allowing them to sell what they don’t want to consume there (in the exporter’s country). We are okay if they export the whole bird, not just the legs,” an industry executive said.

Though the big players are feeling relatively safe for now, small farms are a worried lot. “Small farms sell to roadside eateries and hotels in towns and cities. If the eateries and hotels get legs at a cheaper rate, they would rather go for the US products. No one knows whether it is fresh or stacked,” said Prakash, who runs a poultry farm in Hyderabad.

Published on July 20, 2016

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

null
This article is closed for comments.
Please Email the Editor

You May Also Like