Maize prices, which have hardened by over 50 per cent in the past six months, have put poultry players in a quandary. Maize is a key ingredient in poultry feed and accounts for 70 per cent of production costs.
While the producers of broiler chicken have been able to pass on the hike in production costs to consumers to a certain extent, egg producers continue to reel under the impact of higher feed costs. This is reflected in the prices of chicken, which has moved up by around 40 per cent since early March.
The retail price of live bird, which was at around ₹86 per kg in Bengaluru in early March, is now ruling around ₹123. However, the egg prices continue to trade lower on excess supplies.
According to the National Egg Co-ordination Committee, the egg prices are ruling now at around ₹325 per 100 pieces against ₹435 in early March in Bengaluru.
Lower maize output
The biggest worry for the poultry players is there’s unlikely to be any respite from higher feed prices over the next 5-6 months, when the new maize crop arrives into the market. Already, the Centre has already allowed imports of 1 lakh tonnes of maize. However, the poultry industry says the quantum of imports is too little.
While a weak monsoon and the infestation of the Fall Armyworm impacted the output in the kharif 2018 season in the major producing States of Karnataka, Telangana and Maharashtra, in the rabi season the production was hit by the prevailing drought in Bihar and parts of Andhra Pradesh.
In its Second Advance Estimates released during the end of February, the Agriculture Ministry had pegged the maize output for 2018-19 at 27.8 million tonnes — lower than the previous year’s 28.72 mt. However, the industry estimates that decline in output could be higher. Industry players said the Bihar crop size is not that encouraging.
“We expect the crop to be 10-15 per cent lower than the previous year,” said B Soundararajan, Chairman, Compound and Livestock Feed Manufacturers Association (CLEFMA), and Managing Director of Suguna Holdings.
Poultry sector hit
Poultry sector is the major consumer and accounts for over 60 per cent of the maize produced in the country. “The consumption of maize by the poultry sector is growing at around 8-10 per cent annually, largely in line with the growth of the sector,” he said.
“Imports of one lakh tonne is nothing and it is not going to solve the problem. The government should allow at least 20 lakh tonnes to soften the prices,” Soundararajan said.
Broiler prices up
KS Ashok Kumar of MAA Integrators said the cost of production of per kg of live bird has gone up from ₹65 to ₹91 in the past three months. “It will go up further in the coming days. One should not be surprised if the cost is doubled,” he added.
“We are unable to pass on the costs to the consumer to the extent of rise in production costs of broiler as consumption may take a hit. The broiler prices are higher by 7-8 per cent over the previous year,” Soundararajan said. However, the egg prices are ruling below the cost of production for a long time and the egg industry is suffering a lot, Soundararajan said. “The ideal prices should be ₹4.70-4.80 per egg, only then the farmer can make a small money,” he added.
“This is a peak demand season. Meat consumption peaks up during the holidays season and up to Shravan in August. This is the period when poultry farmers used to make profits. However, farmers will not be able to make money,” Kumar added.
Cheaper substitutes
The high prices have already forced the poultry producers to look at substituting maize in the feed with low quality wheat and rice brokens, Kumar said. As a result, the prices of rice brokens and wheat have also firmed up. “It is not just the rise in prices, but the availability of maize is also a big challenge as it has become difficult to source the grain,” he adds.
KS Akhilesh Babu, President of the Karnataka Poultry Farmers and Breeders Association, said the quantum of imports permitted by the Centre will not even help meet the needs of Karnataka, where the shortfall is estimated at 3 lakh tonnes. Besides allowing higher imports of 15 lakh tonnes, Babu said that the government should exempt the poultry farmers from payment of 15 per cent customs duty as the sector is going through severe crisis.