Business

Poultry farm prices at pre-lockdown levels

For poultry products, it takes over 10 production cycles to recoupver losses, says Ramdas Kambale of Vetphage.

For poultry products, it takes over 10 production cycles to recoupver losses, says Ramdas Kambale of Vetphage.   | Photo Credit: H. Vibhu

‘Not enough, we need working capital’

Having suffered an estimated loss of ₹20,000 crore in three months on account of fake news linking chickens with COVID-19, the poultry industry is limping back to normalcy with demand slowly picking up post partial lifting of lockdown.

With demand far exceeding supply, farm gate prices of poultry have risen up to ₹120 a kg compared with the ₹72 per kg in January and the ₹5 or ₹10 per kg in March and April when the industry bore the maximum brunt. When consumers stayed away from buying chicken for the fear of contracting the virus due to unsubstantiated rumours, the farmers and growers had, in some cases, gave away their birds free of cost and even released let them in the fields.

Egg prices had also crashed from ₹48 to ₹24 per dozen.

Financially, the farmers are in dire straits with the mounting losses and are unsure about the future demand, making them vulnerable to market forces.

“Though the prices have gone up due to sudden demand, this rate is unsustainable. Farmers are unsure about the future demand and pricing. There was a loss of 110% and now the profit is only 30%,” It will take two more months to see how the demand pans outIts too early to comment about future,” said P.G. Pedgaonkar, GM, Venkateshwara Hatcheries. He said with the industry’s working capital having almost vanished due to the ₹20,000-crore loss, the need of the hour is infusion of working capital that can help farmers achieve a long term capital goal.

“The government, with the help of the RBI, has to replicate some of the measures it took during the swine flu outbreak of 2006,” Dr. Pedgaonkar said.

Recently, the government announced a financial package of ₹15,000 crore for the fisheries sector and it is understood that it also includes the poultry sector.

Commenting on the impact, Dr. Pedgaonkar said it is serious because the poultry industry contributes 6-7% to the GDP.

“Farmers were forced to sell their livestock at very low prices due to panic. A lot of restaurants are also closed and they contribute up to 20-25% in the supply chain,” he added.

Stating that a large section of the population is facing uncertainty due to job losses and salary cuts, he said it is difficult to predict when the situation will get back to normal.

Ramdas Kambale, senior vice-president, Vetphage Pharmaceuticals Pvt. Ltd. said, the unfounded rumours about the possible transmission of COVID-19d from the consumption of bird meat ravaged the poultry industry which is primarily based in Maharashtra, Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Haryana. Unfounded rumours destabilised the industry and the supply chain which led to massive dip in production. The shortage of labour has added to the problem, he said.

“Since poultry is a low-margin commodity product, it takes over 10 production cycles to recover the losses. The government must provide subsidies to the poultry sector, extend interest-free working capitall to recover the losses incurred by the industry, and help procure raw material at cheaper rate,” he said.

“We need concerted efforts from the government and the players in the sector to allay public fears and revive the slump in demand. We do not expect the demand to get back to normal any time before winter,” he added.

According to Krishna Chandra Sahoo, global product manager, Vetphage Pharma,theIndian poultry industry was growing at 7-8% per annum for the past few years which propelled it to be the fourth largest producer of chicken in the world and second largest producer of eggs. “Currently valued at ₹1 trillion, the industry employs over five million farmers and indirectly supports millions of maize and soya farmers, medicines and vaccines manufacturers all of which contribute to the GDP,”he said.

He said since the poultry industry in India relies mostly on private butcher shops, most medium and small level poultry businesses don’t have the capital for storage units wherein culled chicken can be preserved for seven-eight months at sub-zero temperatures.

“This is why the government must actively help farmers who cannot look after their chicken any longer, by offering subsidised rates for fodder as well as storage space to preserve culled chicken which will cut down the losses significantly,” Dr. Sahoo added.

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Printable version | Jul 10, 2020 1:41:03 AM | https://www.thehindu.com/business/poultry-farm-prices-at-pre-lockdown-levels/article31768657.ece

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