Agri Business

Why the poultry sector needs a rescue package

Vishwanath Kulkarni / KV Kurmanath Bengaluru/Hyderabad | Updated on March 09, 2020 Published on March 09, 2020

The Indian poultry sector produces about 400 crore broilers and 9,300 crore eggs per year   -  AFP

Coronavirus and the rumours associated with consumption of chicken has dented sales and put the industry in a limbo

The prevailing crisis in the poultry sector is seen hurting the rural incomes. About 80 per cent of the poultry produced in the country is through contract arrangement with farmers.

What is contract farming arrangement? Poultry integrators produce the hatching eggs and incubate them to produce chicks. The three-week-old chicks are then sold to farmers to rear them over six weeks. Farmers are typically paid a rearing charge on a per kg basis.

“As farmers are badly affected by the current crisis, restarting their business is difficult unless some support is provided. Farmers don’t have money to buy chicks. More than 60-70 per cent of their investment is made in rearing one batch of birds,” said B Soundararajan, Chairman of Suguna Holdings. It is estimated that there are over 2.2 lakh farmers rearing the birds in the organised set-up. The Indian poultry sector, which produces about 400 crore broilers and 9,300 crore eggs, has been growing between 6 and 8 per cent per annum.

“The scaremongering, which has badly impacted the sales, has led to a total collapse of the industry,” said Sushanth Rai, President of Karnataka Poultry Farmers and Breeders Association.

On liquidation spree

Saddled with birds that would have taken care of supplies for the next 6-11 weeks, the poultry industry is trying to liquidate the stocks to trim costs.

“We are trying to liquidate at whatever price and in some cases giving it free...whatever it is. Even if it is a low price, we are trying to liquidate the stocks. That’s the only solution to prevent further losses. There is no point keeping the birds as we have to keep feeding them” Rai said.

As the sales of the existing birds have been hit, the fresh placement of chicks with farmers has also been impacted. “There are no takers for chicks. Virtually it is given free,” said KS Ashok Kumar of MAA Integrators. “We have stopped placement of birds for the past three weeks as there is no point in keeping them. Hatching eggs have no takers. For the old batches of birds, we have stopped doing insemination. Virtually the revenue is zero,” Kumar said.

Bailout package needed

The Centre has to come out with a package for poultry and the industry bodies have written to the Prime Minister and Finance Minister requesting for intervention. The All-India Poultry Breeders’ Association, sent a memorandum to the Union Finance Minister, Nirmala Sitharaman, appealing to her to release fresh loans to the poultry farms and bail them out from the present crisis.

“We request you to exempt Goods and Services Tax on soya seed and soyameal,” Bahadur Ali, Chairman of the Association, said in the memorandum.

Sushant Rai said most of the farmers have closed down. “As no is one buying chicks, we have not put the hatching eggs in incubators. We have placed them in cold rooms and will have to sell them as table eggs,” Rai, an integrator, said.

Prices plummet

The prices of hatching eggs have now dropped and are ruling at par with the table eggs.

“We are now forced to sell at lower prices. Hatching eggs are now being sold at ₹5-7 per piece as against ₹20-25 in December, while the cost of production is ₹18-19 per piece,” Rai said.

Also, the integrators have started liquidating the older flocks of birds by selling them to trim their costs. “Poultry is in pathetic shape due to misinformation and the demand has dropped by more than 50 per cent,” said Ashok Kumar said.

Maize, soya farmers hit

The poultry industry being the main consumer of soya and maize, the crisis is impacting the farmers growing these two crops. The price of maize has dropped from ₹25 to ₹15 per kg in last few days.

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Published on March 09, 2020
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