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Egg and chicken prices might come down - but here's how it impacts the poultry farmer

The price of eggs in Delhi for the summer season rose to Rs 4.4 per unit on May 31 from Rs 3.5 per unit on May 1, according to data from the NECC website. The change was 42 percent in July and 20 percent in June.

August 22, 2022 / 07:52 AM IST
Representative image.

Representative image.

“I have second thoughts about carrying on with poultry... Who would carry on the business with losses and why would anyone invest in it when you have to do a side business to sustain your family?” says Mudassar Sheikh, a poultry farm owner from Gorakhpur, Uttar Pradesh. Sheikh, who took over his family business in 2010, has been facing issues to carry on due to high input costs, low demand and wild swings in prices.

The price of eggs in Delhi for the summer season rose to Rs 4.4 per unit on May 31 from Rs 3.5 per unit on May 1, according to data from the NECC website. The change was 42 percent in July and 20 percent in June.

In 2021, the minimum variation was at four percent (in August) and the maximum at 15 percent (May). In 2020, the minimum variation was at six percent (May) and the maximum at 21 percent (August). The numbers from the recent pre-COVID years indicate the average variation at 10-20 percent.

Not only is the price variation high this year, but there is also fluctuation. From 2018 to 2021, the price either decreased or increased in these months in a stagnant manner. In 2022, this has not been the case.

For instance, on May 1, the price was at 3.5 per egg, on June 30, at Rs 5.4 per egg — a rise of 54 percent, and at Rs 3.6 per egg on July 16 — a fall of 33 percent. The current price, according to the NECC, is Rs 4.3 per egg.

“Production of one egg costs Rs 4.5-5 and the rate keeps on fluctuating... Big companies have facilities to keep eggs in cold storage but small farm owners don’t have such resources. The rate today is Rs 408-410 per 100 eggs, so what will a small farm owner earn? The cost is above Rs 4.5... Even if we sell it at Rs 420 or Rs 430 per 100 eggs, still, there is a 20-30 paise loss on each egg (Rs 20-30 loss per 100 egg),” said Ali Akbar, President of the Lucknow-based Uttar Pradesh Poultry Association.

High production costs for one egg due to high input costs (fodder, labour, medicine and transportation bills) and fluctuating prices have already built up losses for small poultry farm owners.

Now with the upcoming Sraddha and Chaitra Navratri (days in which the Hindus restrain from eating non-vegetarian food), the farmers estimate a dip of up to 15-30 percent in the egg price owing to weaker demand based on earlier experiences.

“The demand goes down from Shravan to Navratri,. I estimate the prices will go down to Rs 3 per egg. It is impossible to stop birds from laying eggs when prices decline. There is no switch that can be turned on and off. Our feed, energy and labour costs continue to rise, and we are forced to sell at a loss,” said Valinder Singh, a poultry farm owner based out of Panipat, Haryana.

The current price there is at Rs 3.5 per egg.

Rising input costs

One of the major concerns that farmers have been facing is the high cost of poultry feed. The price of Maize, one of the main ingredients besides soybean, has been rising.

According to the NECC, the domestic maize price has risen from Rs 18,000 per tonne last year to over Rs 25,000 per tonne, and anticipated to go all the way to Rs 30,000 per tonne soon.

Poultry feed constitutes about 60 percent grains — such as maize, broken rice, bajra or wheat, 35 percent soyabean, groundnut or sunflower meals, and around five percent of a premix of vitamins and calcium.

 According to data by Agriwatch, the price of maize futures in June 2021 stood at Rs 16,000 per metric tonne (MT). (1 MT = 10 quintal).

Soymeal, the residue after crushing soybeans, is used in poultry feed. The price of soymeal has been increasing since 2021.

This year has been a relief from last year with the price for ex-factory (Indore) soymeal ranging from Rs 48,000 to Rs 52,000/MT for July. Last year, the price ranged from Rs 62,000 to Rs 90,000/MT.  In 2020 it was between Rs 29,000 and Rs 30,000/MT, according to data from The Soybean Processors Association of India (SOPA).

“The cost of maize in our area is around Rs 2500/quintal... In my farm, we have 5,000 chickens and use 50-60 quintals of maize per month... The total poultry feed cost per chicken comes to Rs 120/quintal,” said Singh.

The cost of poultry feed for his farm per month has increased from Rs 17,800 to Rs 20,000/MT.

With that, there are also additional costs of diesel, medical expenses and labour that the farmers are battling, mentioned Sheikh, who supplies poultry feed in several districts of Uttar Pradesh.

The current price of diesel in Delhi is Rs 89.62 per litre. Fuel rates in the country were last revised on May 22 after Finance Minister Nirmala Sitharaman announced a reduction in the excise duty.

It's not just the egg feeling the heat

According go the Poultry Federation of India (PFI), the cost of production for eggs has increased by 20-25 percent this year. And it’s not just eggs. Chicken prices too have followed an equally tumultuous trajectory.

“Broiler chicken rates have been declining. It was Rs 119 per kg of a live bird on July 1, then by the end of the month, it was around Rs 76 per kg — a drop of 36 per cent. In comparison, poultry growers spend Rs 90-95 per kg,” said Ranpal Dhanda, President of the PFI.

He also pointed out that due to mounting losses, small farmers are being forced to open up side businesses, and reduce or even shut their farming spaces.

“In order to set up a 15,000-layer bird farm, a capital investment of over Rs 1 crore is required. It takes about 20 weeks for the birds to start laying eggs, after which farmers have to pay for feed and maintenance,” said Dhanda.

For instance, Sheikh had nearly 20,000 chickens on his farm in Sahjanwa (a village 20 km away from Gorakhpur). It now has nearly 10,000 chickens. He has also reduced the usage of his farm size from 30,000 hectares to 15,000 hectares, and leased out the extra space for more money.

According to him, his annual profit before the pandemic used to be nearly Rs 6 lakh, which has gradually decreased to Rs 1-2 lakh.

“Price fluctuations, rising feed cost and the hot weather this year that increased medical expenses on chickens have declined the business further, it’s very difficult for a small farmer to carry on,” Sheikh added.

According to farmers, the prices of egg and chicken are likely to come down with the Sraddha and Chaitra Navratri weeks, further burdening their finances. However, they are hopeful of a revival by the end of October with a gradual easing of grain and fuel rates worldwide.
first published: Aug 22, 2022 07:52 am
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