High supply and low demand scenario reason for plunging retail prices

After hovering around Rs.120 per kg till last month, the price of dressed chicken in the retail market has dipped to Rs.80 per kg in the city. Even as customers are happy looking at the price list in retail shops, poultry farmers continue to stare at losses.

Right from increased production to low consumption, there are few factors that aided in plunging retail prices. Usually, there is a consumption of 4 lakh birds per day in the city but in the last few weeks, the supply increased by 20 per cent. As a result, there was high supply and low demand scenario, says D. Ram Reddy, president of A.P. Poultry Breeders Association.

Left with no choice, farmers had to offer the birds at a lesser gate price of nearly Rs. 45 per kg to retailers. As the stock piles up, losses will increase further due to rising production costs and other factors, says Mr. Reddy.

Industry experts say that though established companies can sustain this, it is very tough for individual farmers to bear losses regularly.

However, with minimum temperature dropping considerably this season, farmers are expecting the consumption to increase and this would help them to achieve breakeven.

At present, the cost of production is around Rs.60 per kg and if farmers have to achieve breakeven, the present gate price of Rs. 45 has to increase further, says K.G. Anand, General Manager of Venkateshwara Hatcheries.

This is possible when the sales improve and demand increases consistently.

With weddings and functions being organised and many more to be conducted in the next couple of weeks, things should fall in place. This apart, festivals like Christmas and Sankranti would result in increased consumption, he hopes.

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