Fowl is fair for poultry firms on better economy, lower feed cost
HYDERABAD: The Indian poultry sector hopes profit margins will improve considerably this winter season, ending a four-year weak streak as good rains have increased activity in the rural economy and reduced feed costs.
Anticipating a decent increase in demand, poultry breeders are preparing to boost production by 10-15 per cent, after pruning production and importing feed ingredients for three years owing to recurrent droughts.
According to representatives of poultry bodies and large companies, demand should increase as the festival season, which typically witnesses a fall in meat consumption, has also ended. “We expect to improve our margins to the extent of 15-20 per cent, which had earlier fallen below 10 per cent on account of lower realisations and high cost of production for the past few years due to consecutive draughts,” said V Harshavardhan Reddy, vice-president of the Telangana Poultry Breeders Association.
Reddy, who is also a director at Hyderabad-based Mayuri Broiler Breeding Farms, said poultry producers expect production to grow 10-15 per cent during the November-February period. Telangana, along with Andhra Pradesh, is the largest producer of poultry products in the country , accounting for nearly a third of India’s poultry production.
Experts opine that a reasonable monsoon this year has resulted in improved rural incomes, which should result in increased demand and consumption of poultry products.
“The poultry industry is expected to report strong profitability in the current fiscal (year), post sizeable headwinds of last three-four years, on the back of a combination of factors, inclu ding improved demand dynamics from the rural segment… supply control measures adopted by the industry to counter seasonality of demand, recent moderation in feed prices and no major instances of bird flu,” said Ravi Kabra, assistant vice president at ratings firm ICRA.
Prices of feed ingredients, especially maize and soya, that account for 70 per cent of the production cost, had shot up significantly over the past three years due to subsequent draughts. These have now started to cool off with the increased harvest reaching markets after a good spell of monsoon. “We are seeing a fall in prices from November where maize, which till October was selling at Rs 18 a kg, has dropped to Rs 15,” Kabra said. Soya has become cheaper at Rs 24 a kg, compared with Rs 32 ealier.
With the drop in feed prices, poultry farmers are hoping to see higher margins this season. While broiler prices had shot up to Rs 90 a kg till September this year with production cost being around Rs 70, prices last year were hovering at Rs 70 level with cost at around Rs 65.Egg has become cheaper at Rs 4.50 from Rs 5 last year. “The improvement in margins is likely to bring the farmers, who had left the trade or shut down their farms few years back seeing higher costs and unfavourable margins, back into the fold,” said Reddy of the breeders’ body.
At present, the Indian poultry market is estimated at around Rs 67,000 crore with broilers accounting for Rs 42,500 crore and the table egg market at Rs 25,500 crore, said a recent ICRA report.
Source: ECONOMIC TIMES