Poultry industry in trouble due to the rise in the price of chicken feed

The business of eggs and chicken was once considered a profitable venture, but not anymore. As per the traders, this business has suffered loss for the past one year resulting in the winding up of numerous poultry farms by small farmers

Diti BajpaiDiti Bajpai   26 Aug 2019 12:32 PM GMT

Poultry industry in trouble due to the rise in the price of chicken feed

Due to the rise in the price of chicken feed, the poultry industry is witnessing a recession. Both the farmers and the traders are worried and several farmers have even given up the work.

Gulam Mohammad runs two farms with the capacity of more than 17,000 chickens in Uttar Pradesh's Behraich district. He laments that profit aside he is unable to break-even his costs; be it for eggs or chicken. He now concentrates more on banana plantation.

"The poultry business suffers from great challenges for the past one year. Due to the chicken feed becoming expensive, our costs have shot up though the price of chicken and egg remains the same. Almost all of the broiler farms in our village have closed down," Gulam explained.

Elaborating further about the challenges of poultry trade, he explained the gap of its cost and price. "Formerly, a bag (50 kg) of chicken's readymade feed used to cost Rs 850-900, now it is about Rs 1,200. The input cost per egg falls about Rs 3.75 and it sells for about Rs 3.15. Similarly, a chicken's input cost is Rs 80, while it sells for Rs 55. Currently, all the operational farms belong to big business houses, while those belonging to small farmers had to be shut down." In Uttar Pradesh, the number of poultry farms that have closed down runs into several hundred.

Gulam Mohammad, a poultry farm owner, laments that he is unable to break-even his costs; be it for eggs or chicken.Gulam Mohammad, a poultry farm owner, laments that he is unable to break-even his costs; be it for eggs or chicken.

Akbar Ali, head of UP Poultry Association, which has over 5,000 members, said: "Not only UP, but also the entire country is witnessing a slump in the poultry industry. In UP, 40% of the poultry farms have closed down. This winter won't see an egg sold under Rs 12. People may not even get eggs that easily."

The decline in poultry can also be attributed to a decline in exports. The government of India's Agricultural and Processed Food Products Export Development Authority (APEDA) has estimated that 2018-19 had a total export of 5,44,985.05 metric tonnes of poultry products worth Rs 68,731.46 lakh while 2019-20's eight months could see export of just 82,459.66 metric tonnes worth Rs 9,900.47 lakh. This shows an 84% fall in the export of poultry products.

The country's total worth of poultry trade is Rs 90,000 comprising 65% of chicken meat and 35% eggs. The poultry industry has developed rather rapidly in the country. Crores of people from various states of Telangana, Tamil Nadu, Andhra Pradesh, UP, Haryana, and Punjab are associated with the industry. Poultry trade is largely unorganized, which had only small farmers' presence till the recent past, but now even big players have taken to poultry business upon contractual basis.

Hissar and Jind districts of Haryana are major hubs of poultry trade. Barwala in Hissar has over 150 poultry farms, which are now suffering from the slump. This place supplies eggs to seven states, including Jammu-Kashmir, Himachal, Punjab, Delhi, UP and Rajasthan, but is itself facing difficulties due to the rise in feed-price.

Due to the rise in the price of chicken feed, the poultry industry is witnessing a recession. Due to the rise in the price of chicken feed, the poultry industry is witnessing a recession.

The country's 47% of total corn is utilized for making poultry feed. Besides corn, soybean is yet another major component. As per traders, not only are these crops expensive, but also short of supply. This has adversely affected a gamut of diverse businesses such as egg and poultry farmers, companies producing poultry and other feeds, incubators and chicks-supplying firms and pharma-companies producing the vaccine and other medicines.

Marketing head of Sai Durga Industries, which deals in the feed-making machines in Telangana, G Prasada Raju told Gaon Connection over the phone, "This is like a loop where farmer's profit fetches manufacturer's profit. Our quantum of feed making machine orders has reduced from 80% to 50%. If one doesn't have money to buy corn and soybean, one would hardly buy a machine. The rise in the price of corn has resulted in losses for both major and minor poultry farmers."

The poultry industry would be a major contributor to achieving the Indian government's target of doubling the farmer's income by 2022 as per the Ministry of Fisheries, Animal Husbandry, and Dairy. The ministry has also admitted that in comparison to the traditional farming animal husbandry and poultry farming bring about faster growth in income. In egg production, India ranks third in the world after China and the US with 3.97 million tonnes of annual yield.

As per the statistics of the ministry, the country's current production of poultry meat is 3.46 million tonnes, which is about 6% more than the production of 3.26 million tonnes in 2015-16. The present situation can, however, pose a major setback to the trade and hopes of the ministry.

Uttar Pradesh daily consumes 1-1.25 crore eggs procured from elsewhere meaning the existence of a business potential that small farmers are unable to exploit. Saroj of Madwana village in Bakhsi ka Talab region of Lucknow used to keep over 10,000 chickens at a time but is now left with barely 50-60 chicks. Saroj said: "Previously, I used to earn a handsome profit, but for the past one-and-a-half years I've incurred losses. Two times I tried reviving my poultry business, but ended up losing two buffaloes instead to cover up the resulting loss, this time I haven't purchased any chicks."

Earlier, Saroj had 10,000 chickens but now she left with only 50-60 chickens.Earlier, Saroj had 10,000 chickens but now she left with only 50-60 chickens.

The Bareilly-based Central Bird Research Institute's director Dr AP Mandal informed, "There is a visible increase in the production cost of both broiler and layer chickens resulting in the loss for small farmers. Currently, a farmer suffers a direct loss of Rs 12-15 per chicken at the ongoing chicken rate. Corn being crucial for the poultry feed, even its alternatives like millets and rice polish are in short supply."

Dr Mandal added: "The poultry business in the entire country is suffering currently. Farmers are incurring loss even in states like Telangana and Tamil Nadu where the consumption is significant. In Andhra Pradesh, a farmer is only getting Rs 3 for an egg, which costs him Rs 3.60."

Besides poultry farmers, even the big companies associated with the trade are running into losses. Nikhil Gupta of Sunrise Hatcheries, a company which supplies chicks to the eastern area of UP, said: "No more is the ailing business of poultry farming feasible. We had 70 poultry farms, out of which 25 have closed down. The running of remaining 50 too is challenging even though the company bears the expense of chicks, feed, and medicines. If the company itself runs into loss, how will it supply chicks to the farmers for their business?"

Many companies in the country do poultry farming through farmers under contract. In such arrangements, the farmer provides a place, structure and care whereas chicks, feed, and medicine costs are borne by the company. The farmer gets a fixed commission per kg of ready chicken -- for example, in Uttar Pradesh, it is Rs 6 per kg.

Nikhil's company also does contractual poultry farming besides supplying chicks to the farmers. He said: "One chick's production cost comes to Rs 16, while it sells for Rs 13. So, the companies are running at a loss. It this situation continues, we may have to wrap our business. We do, however, hear that October onwards, there may be a fall in corn's price."

The country's total worth of poultry trade is Rs 90,000 comprising 65% of chicken meat and 35% eggs. The country's total worth of poultry trade is Rs 90,000 comprising 65% of chicken meat and 35% eggs.

In 2018, the Modi government had increased the price of corn by Rs 275, which was further raised by Rs 60 in 2019. Besides the rise in MSP, the production of the crop in Bihar, Madhya Pradesh, Karnataka, Maharashtra, and Telangana was first affected by weak monsoon and later by fall-army worm pest. This directly affected the poultry industry and starch companies.

Recently, the Central government had sanctioned on 15% fee, an import of four lakh tonnes of corn to meet the demand of poultry industry with another lakh tonnes sanctioned before. No imported corn has, however, touched the Indian shore so far.

In July, Tamil Nadu's Ravi Poultry Farms' director Shashi Kumar had issued a statement stating: "The government had decided to issue a tender to import corn from Russia and Ukraine to improve its supply. This, however, has been delayed while crops are getting ready for harvest in those countries and the prices are escalating."

Poultry traders hope for a revival after the end of sravan -- the religious month which sees a dip in the sale of chicken and eggs -- and winter's onset. They would also be relieved by the new crop of corn reaching the market by October.

But as per Union Agriculture Ministry's preliminary estimate, the country's corn production would be decreased. As per its third preliminary estimate, for the crop season 2018-19, the production of corn is forecasted to be decreased at 70.19 lakh tonnes as compared to last year's Rabi's 80.63 lakh tonnes. The country sees more production of corn in Kharif cycle. For the crop season 2018-19, total corn production, including rabi and Kharif, is projected to be 287.2 lakh tonnes, while last year it was 287 lakh tonnes.

The poultry farms are shutting down due to massive losses. The poultry farms are shutting down due to massive losses.

Poultry traders are demanding a subsidy on corn for the revival of poultry business. The Central Bird Research Institute's scientist Dr Jaideep Rokade informed: "Small farmers are at a loss because they have to sell the eggs at whatever price offered to them because unlike big companies, they do not have the facility of cold storage. They must sell the eggs within 48 hours." He further added, "Besides, South India faced floods resulting in poor production of agricultural products upon which poultry farming hinges. This also has contributed to the rise in feed-price."

Everyone in the poultry industry -- be it a chick producing company or a medicine making firm -- has suffered a loss. At the condition of anonymity, marketing personnel associated with the firm making poultry medicines, informed: "Selling of medicines is an uphill task. With the closure of farms, it has become impossible to sell medicines and vaccines."

What is in a poultry feed?

Poultry feed has 50% corn and 15-18% soybean besides 15% rice bran polish. Other components are energy boosters. Chickens are given three different types of feed as per their age.

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