High poultry feed prices to affect negatively on profit margins of poultry farms business.

High poultry feed prices to affect negatively on profit margins of poultry farms business.

The overall increase in raw material and feed cost has raised the cost of production of broiler chicken business and it will affect the chicken meat price massively.

Poultry farm business in India is facing sustainability on their profit margins due to the massive increase in birds feed prices and their inability to pass them on to the consumers, except a peak chicken meat demand season.

The business scenario has changed in the poultry sector over the last two months. The government’s effort to protect poultry farmers through a sustained increase in the minimum support prices (MSP) has seen a rise in prices of maize and soybean. Both are the main content to make feeds and take up 60% of the cost of chicken and eggs.

Maize price has raised 22% in the last few months to Rs 2,000 a quintal due to crop losses owing to deficient rainfalls in South India, and pest attacks in other parts of the country.

Thus, poultry owners have to pay around Rs 2,000 a quintal compared to Rs.1,500 a quintal last year. India government raised the MSP by 19 percent to Rs Rs 1,700 a quintal this year.

Soybean prices jumped 16% to hit a five-year high at Rs 3,964 a quintal. This is attributed to a regular hike in the MSP, which was raised by 11% to Rs 3,400 a quintal this year.

“Owing to the chicken feed price increase, the cost of eggs and broiler chicken meat production has gone up by 15-16% in the last few months. But, prices of chicken and eggs have not gone up proportionately in the retail market.

In fact, prices of poultry products are flat, resulting in pressure on profit margins. If the same trend continues, the poultry industry will have to cut down production in the coming months,” said KG Anand, general manager, Venkateshwara Hatcheries, the producer of Venky’s brand of chicken and other poultry products.

“Poultry feed prices have been rising abnormally high, which need to be passed on to the end buyers,” said Balram Yadav, managing director, Godrej Agrovet.

Meanwhile, the increased cost of poultry feeds has not been passed on to the consumers due to the fear of the consumer may shift to usage-based purchase instead of volume-based one.

“When consumers purchase boiler chicken or poultry products, they fix an average amount in their mind. In case of price is high, they reduce the quantity instead of raising their budget or they try another substitute,” said another poultry business owner.

The overall increase in chicken feeds cost has raised the production cost of broiler chicken to Rs 80 for a kg. But, it is being sold at Rs.68 for a kg in the northern states, and Rs 78-80 a kg in Maharashtra.

“Many poultry farmers have already shut their poultry business due to the feeds price hike. If the current market trend continues, poultry farmers would be in deep trouble again,” said Ramesh Khatri, president, Poultry Federation of India.

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