Poultry industry faces ‘doom’ with Rs 30,000-crore Loss

India’s poultry sector is witnessing some revival in demand this month after a complete sales wipeout during the nationwide lockdown. But the demand remains at low levels as the crucial hospitality, restaurant and catering (HORECA) sector is yet to pick up pace.

According to poultry associations, the demand for products has risen in June to up 15-20 per cent, but losses to the sector during the lockdown are estimated at around Rs 30,000 crore. Prices have spiked due to a supply deficit. This crisis is also aggravating the distress of maize farmers, who are complaining of low demand and fall in prices. Maize forms a major part of the feed for the poultry sector.

Ramesh Khatri, president of the Poultry Federation of India, said, “Even if there is a demand revival of 15-20 per cent in the poultry sector now, it cannot make up for the losses of the past few months as the sales of poultry had been completely stopped during the lockdown. The countrywide loss to the sector is estimated to be around Rs 30,000 crore.”

Supply down, prices up

In June, chicken prices have shot up from Rs 90-120 per kg to Rs 175-200/kg due to a massive supply deficit across the country.

During the Covid-19 lockdown, enforced on 25 March, chicken prices had hit rock bottom at Rs 10-15/kg while the cost of production is Rs 75/kg. Similarly, egg prices dipped as low as Rs 1.5/egg in contrast to the production cost at Rs 3/egg.

In this period, many poultry farmers either abandoned their birds in the jungle or culled them at farms as it wasn’t sustainable to maintain stocks on abysmal returns.

This, in turn, has led to a supply deficit leading to a spike in poultry product prices.

“The current supply of eggs is largely coming from cold stores and the chickens are being supplied only by large farmers, which have led to supply deficit and increase in prices. Many small and medium poultry farmers have abandoned their business due to loss,” said Akbar Ali, head of Uttar Pradesh Poultry Association.

“Even if farmers set up the farm with fresh birds, the normal supply will resume only in four-five months. Due to the upcoming months of saawan and Navratri, poultry will only revive at the end of the year which is also uncertain,” added Ali.

‘Doomed industry’

While the country has been unlocking after two months of lockdown, the demand for in-home consumption of poultry products has revived. But a major portion of poultry products in the country is consumed by market demands by the HORECA sector and the demand from here is unlikely to revive anytime soon, according to experts.

Tarun Sridhar, former secretary of animal husbandry, dairying and fisheries, said, “Poultry sector will take more than a year to revive completely as it has taken a severe financial hit with the repeated extension of lockdowns. It is doomed for the year 2020.” He added that over 90 per cent of poultry markets in the country exist as a wet market where people are still reluctant to visit and the footfall in major consumption centres like restaurants and hotels “is also unlikely to revive for a year”.

Impact on maize farmers

With the decline in the chicken and egg industry, feed demand and prices for the poultry sector has also fallen drastically. The market prices of major raw material like maize dipped more than half over the last few weeks causing severe distress to farmers.

Apart from paddy and wheat, maize is the third largest cereal crop of rabi season in India which is currently being harvested in India.

According to experts, maize accounts for 60 per cent of chicken feed by weight. On an average, around 3.5-4 kg of feed is given daily to a bird to grow from 30-35 gram to 2-2.5 kg over 30-40 days.

Rakesh Singh, chairman of Dayal Poultry foods, said, “The rate of maize which makes up to 60-70 per cent of poultry feed has declined from Rs 23/kg to Rs 8/kg as demand from the poultry sector has completely crashed.”

He added that he usually sells about 200 tonnes of chicken feed per day. This has fallen to 20 tonnes a day now.

In the absence of market demand and procurement from government agencies, maize farmers are being forced to sell their produce at Rs 1,000 to Rs 1,200 per quintal in the market while the minimum support price (MSP) of this crop was hiked to Rs 1,850 per quintal for kharif season 2020-21 and was at Rs 1760 per quintal in rabi season 2019-20. This has led to a loss of Rs 20,000 per acre to the maize farmers.

The farmers are particularly distressed in Bihar and Madhya Pradesh, the major maize producers during the rabi season. Out of India’s annual 240 lakh tonnes production, 180 lakh tonnes is produced in the kharif season while 6 lakh tonnes is produced in rabi.

Surendra Yadav, a maize farmer in Kamaldaha village in Bihar’s Araria district, said, “The maize harvest started in April but to low demand, we waited for few weeks but now we can’t store it any longer and have to sell it at a loss because the Patna poultry feed manufacturer has refused to buy the maize.” Yadav said the contractor of the manufacturer “told me that no one is buying any poultry feed as people are not eating chicken and the egg”.

He said local traders are willing to buy maize but are offering prices between Rs 900-1,200 per quintal which is lower than the production and harvest cost. “Also, the offer above Rs 1,000 is being made only to only top-quality maize. Last year, we got Rs 1,650-1,750/quintal,” he added.

Related posts

Leave a Comment