The domestic poultry industry's profitability is expected to improve sharply in FY17 majorly benefiting from lower soymeal prices, a report has said.
Domestic poultry industry is expected to register sharp improvement in profitability in FY17 majorly supported by lower soymeal prices in H2 FY17 and remunerative broiler and table egg realisations during Q1 FY17.
This comes after four years of muted profitability when the industry had suffered from dual pressures of high feed costs and unfavourable realisations, ICRA Research said in its report here.
The broiler volume growth for calendar year 2016 is estimated to be adequate at 6 percent y-o-y taking domestic broiler meat production volumes to 3.9 million tons (carcass weight) as against 3.7 million tons in CY2015 and broiler market value at Rs 660 billion in terms of retail prices.
Broiler volume growth is expected to remain at 6-7 percent in medium to long term, given favourable factors like low per capita consumption currently at 3 kg pa, religious preference for chicken meat, year round easy availability across country, increasing disposable income, changing food habits, increasing health awareness, and poultry being one of the cheapest source of protein.
The current fiscal started strongly for the poultry industry with record high realisations during Q1 FY17 though realisations moderated in Q2, in-line with seasonal trend for the industry. While Q3 saw some impact of demonetisation on realisations, lower feed prices declined by 10-12 percent from April 2016 levels and supported overall contribution levels for the industry.
Feed prices continue to remain affordable in Q4 FY17 and with realisations holding stable, the overall FY17 profitability is expected to be much better than last four fiscals.
India continued to report sporadic instances of 'bird flu' outbreaks in 2016, including in certain parts of Kerala, Karnataka, Haryana, Punjab and Odisha which had marginal impact on poultry prices and supply for short duration in and around the affected area.
Key challenges faced by the industry, other than sustainable feed costs, include inadequate cold chain and transportation infrastructure, high vulnerability to disease outbreaks and highly volatile realisations affecting cash flow.
Poultry integrators have limited control over feed prices and broiler realisations, and they continue to focus on improving productivity through better Feed Conversion Ratio (FCR) by experimenting with feed mixes, lower mortality rates through enhanced farm management, and continuous efforts towards improving other parameters like hatchability and average daily weight gain, ICRA said.
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