India’s poultry sector, valued at nearly ₹90,000 crore, is going through a rough ride yet again, the third time in a space of 14 months. But this time, its problems have been compounded by high production costs as critical inputs such as soyameal and edible oils prices have doubled.

“We struggled during the Covid pandemic last year mainly because fears were spread about consumption of poultry meat. This year, we are affected because of financial reasons as weekend consumption of poultry products has been affected,” said a broiler meat supplier to retail units in Chennai without wishing to be identified.

The problem for the poultry industry is that in many States, shutdowns are being clamped on Sundays when people tend to consume more non-vegetarian items.

“On a single Sunday we sell poultry meat that is equal to the total sales on the remaining six days of the week,” the supplier said.

Output costs up 40%

“Our production costs have increased by over 40 per cent since last year. This makes the current problem more acute,” said Vangili Subramanian, Tamil Nadu Egg Poultry Farmers Marketing Society (PFMS) president Vangili Subramanian.

“Increase in soya prices coupled with lockdown uncertainty and limited timing of shops are few main reasons (for the sector being affected),” Prassana Pedgaonkar, GM at Venky’s, said when asked for the reasons for drop in chicken and egg prices.

Vasant Kumar Shetty, President, Poultry Farmers and Breeders Association (PFBA), Maharashtra said the problems faced by the industry are mainly since sales have been reduced as shops are open for only for a short while and the “uncertainty of sale has affected the offtake by traders considerably”.

The problem in Tamil Nadu is that now broiler meat cannot be sold even on Saturdays. “Last Saturday, no social distancing was followed, forcing the State Government to shut down outlets on that day too. This has actually resulted in panic sales,” said the broiler meat supplier.

In Andhra Pradesh and Telangana, restrictions on people’s and vehicular movements in different States and overall negative sentiment have impacted the poultry industry.

Lockdowns and night curfews in Maharashtra, Karnataka and Telangana have disrupted the supply chain network of poultry farmers and limited their ability to send the consignments to Maharashtra and Karnataka.

“The window for movement in Maharasthra is just between 8 am to 11 am. You can’t transport the goods in the night,” N Prakash, owner of an egg business in Hyderabad.

Live birds price

Sushant Rai, President, Karnataka Poultry Farmers’ and Breeders Association (KPFBA), said that farmgate prices are well below the cost of production.

In Karnataka, against a price ₹85-95 per kg of live birds fetched during early March, current prices are hovering around ₹70-85.

Retail consumer prices are, however, holding on to around ₹200 a kg across various cities such as Bengaluru and Mangaluru, Rai said.

In Tamil Nadu, live birds prices are ruling at ₹60 a kg in places such as Chennai compared to production costs of over ₹80 a kg, said the broiler meat supplier.

“Farmgate prices have dropped to around ₹40 a kg. In retail outlets, sales were done at ₹50 a kg on Wednesday and we saw good demand. But this is not a viable option,” PFMS’ Subramanian said.

He said that the current situation could make it difficult for broiler meat growers to break even. “The problem is more acute in the broiler sector than egg,” he said.

Broiler problems

Broiler meat farmers have to sell off a bird once it is around 40 days old since maintaining it after that could become a problem.

“There are two problems when summer has begun. One, birds become heavy and cannot survive extreme heat. Two, they need more space which most farmers, who do contract jobbing, cannot afford,” the PFMS President said.

Usually, a poultry bird’s weight is around 1.3-1.4 kg when it is 40 days old. These need 1.3 sq ft of space to move around. But when they gain weight to around 2 kg, they need more space thus adding to a small growers’ problems.

“For someone like me who produces 20,000 birds, the loss is at least ₹1 lakh a week,” said the Chennai-based broiler meat supplier.

Subramanian said in view of all these, growers will have no option but to cull chicks. “Mostly we will cull chicks that are a few days old besides these grown up birds,” he said.

For the poultry sector, the Covid second wave has come at a time when it had recovered from the impact of avian influenza, which affected it during October-November, and the production was coming off nicely.

“Sales volumes of broiler meat have come down by 50 per cent because of the negative sentiment, restriction on timings and people not going to hotels,” said Ram Reddy, Managing Director of Sneha Farms in Hyderabad.

Andhra Pradesh and Telangana generally sell about 12-15 lakh (broiler) birds a day. Though the production levels come down by at least 10-15 per cent owing to lean demand, the second wave-induced reduction has hit the industry very hard.

“Now, that normal cycle has been disrupted again and we have to go through a painful period before things normalize,” said Subramanian.

The problem for those in the layer-bird sector is not that very acute. They can always adjust and sell accordingly.

Egg prices

Egg prices, which were ruling at ₹4.85 per piece during April 17-21, had dropped by over 20 per cent to ₹3.85 earlier this week but have gained 10 paise in the last two days.

“Egg prices are likely to look up further since there is some movement,” said an official of the National Egg Coordination Committee from Namakkal, the hub of India’s poultry sector where 3.08 crore eggs are produced a day.

In Andhra Pradesh and Telangana, the price of an egg at the farm gate is hovering at 3.65 a piece, just about the level that meets the production costs.

The issue for all of them is that when prices of their products have dropped, production costs have increased.

According to T P Sethumadhavan, Deputy Director, Kerala Animal Husbandry Department (KAHD), poultry feed price including broiler and layer-feed affect the cost of production of chicken and egg.

Feed prices make up 70 per cent of the production costs in the poultry sector, he said.

Other costs

“Soyameal prices which were ₹35 per kg last year have increased to ₹75 currently. Similarly, soya or other edible oils cost ₹120-160 a kg against ₹55-60 last year,” said Subramanian.

Edible oils are given to the birds to gain energy. “Besides costs of other inputs such multi-vitamins that need to be imported have doubled. Even these, we don’t get on time,” he said.

“Covid disruptions coupled with scarcity of raw materials and extreme hot weather have resulted in increase in feed prices. Some of the raw materials like soya, oil cakes, and maize witnessed a quantum jump in price of up to 25-30 per cent,” the PFMC President said.

KPFBA’s Rai said though soya and maize prices have softened from their peak levels, they are still high for the poultry farmers.

Sethumadhavan said in Kerala, particularly, raw material prices are comparatively high as it relies on nearby States for raw materials and 80 per cent of the feed requirements

“Average broiler feed price in Kerala is ₹36/kg whereas in TN it is only ₹26. Poultry layer feed price is ₹28 in the State,” he said.

The high prices of soyabean and maize has led to change in poultry feed mix and some sections of the producers are substituting them with mustard seeds/meal, bajra and wheat broken among others, mainly in the broiler segment.

With demand for exports dropping, soyameal prices could ease further for the poultry sector.

Financial woes

PFMS’ Subramanian said the problem for the poultry sector, which sells products valued at ₹1.75 lakh crore annually, is finance from recovering the current mess.

“Last year, banks came forward and helped the sector recover. Will banks help us again? That is our concern,” he said.

PFBA’s Shetty said governments must allow chicken and eggs shops to be open the whole day so that sales will rise and farmers, shopkeepers and traders will get a better price.

“Chicken shops must be considered as an essential commodity as chicken and eggs are protein-rich for patients to consume,” he said.

KPFBA’s Rai said consumption continues to be good. “People are now aware that consuming more protein will help them,” he said

“Though hotels and restaurants are closed, the take-away counters are open and the business is good,” Rai, also managing director of Raison Nutrition in Mangaluru, said, adding that there is no fall in demand as compared to last year.

“The supply chain network has been hit and we are witnessing labour moving back to their villages, impacting work on the farms,” said Errabelli Pradeep Rao, President of Telangana Poultry Federation.

Exports slip

The poultry sector has also been hit by a drop in exports of products during 2020-21 as the outbreak of bird flu impacted shipments. For the April-February period, exports were down by 29.55 per cent in dollar terms at $52 million compared with $74 million in the year-ago period. In rupee terms, exports were lower by 26.5 per cent at ₹389 crore as against ₹529 crore in the same period previous year.

The Indian poultry sector plays a key role in the economy and its compounded annual growth has been projected at 16.2 per cent between 2019 and 2024.

(Contributions from Vishwanath Kulkarni, Bengaluru; Radheshyam, Pune; V Sajeev Kumar, Kochi; K V Kurmanath, Hyderabad; and Subramani Ra Mancombu, Chennai)