Indian poultry producers struggle with low prices and rising costs

By Raghavendra Verma

- Last updated on GMT

G Ranjith Reddy: 'it is very difficult for us to continue'
G Ranjith Reddy: 'it is very difficult for us to continue'

Related tags International trade Meat Livestock Poultry

Southern India’s key poultry hub in the state of Telangana is struggling to deal with a 50% rise in chicken feed prices within the past year because of drought conditions in the region.

The production cost of chicken is US$1.03 [per kg] and farmers are getting only US$0.90 for it,​” G Ranjith Reddy, president of the Telangana Poultry Breeders Association, in Hyderabad, told GlobalMeatNews​.
These losses follow even weaker prices during the summer, when Indian chicken was sold for as little as US$0.57 per kg, he said.

The crisis has been precipitated by the failure of local corn crop. Drought in the summer months brought down the country’s annual corn production from two million tonnes in 2014 to around one million tonnes this year, said Reddy.

As a result, feed prices went up from US$0.30/kg to US$0.45/kg in the past year and there is no hope of these costs falling in the near term, said Rama Rao, principal scientist at the Indian Council of Agricultural Research’s directorate of poultry research, based in Hyderabad.

'Panic'​ 

In India, most poultry farmers make their own feed by mixing ingredients such as corn and soya, so the feed prices are directly linked to commodity prices, said Rao.

All this has occurred amid a backdrop of chicken prices not rising due to existing oversupply, a fragmented market and a continuing lack of cold storage and processing facilities in the country, said Rao. “Any surplus creates a panic situation in the entire chain of market and the price falls drastically,​” he said.

The industry has requested that the government allow imports of corn and soya, which could soften the prices in the local markets, but Reddy doubted if the central government would agree, because of concerns about Indian grain farmers.

US enters the fray

The continuing losses are pushing some poultry farms to quit the business as, according to Reddy, they cannot just decide to scale down production. “Birds keep laying the eggs and we are bound to produce chicken out of them​,” he said, “Big companies are able to procure loans from the banks, but it is very difficult for us to continue for very long without the remunerative prices.​”

The industry is also worried that American exporters are about to start exporting chicken legs to India. In October 2014, the World Trade Organization (WTO) asked India to lift a ban on American chicken exports, imposed in 2007 to protect the local industry from avian influenza.

Reddy opposed the lifting of this ban and wanted India to appeal against the ruling. He was concerned that the US would export legs cheaply: “The [chicken] breast meat is consumed at a very high price in the US and their farmers are getting their [whole] cost covered from that,​” he said, “Chicken legs are picked up by the middlemen and frozen for exports at throw-away prices.​”

Reddy said the Indian poultry industry was not shy of competition as it had all the ingredients, manpower and knowledge to produce chicken at the lowest prices. However, he said that imports of whole chicken only should be made mandatory, and not just legs.

According to the United States Department of Agriculture, in 2015 India produced 3,900 tonnes of broiler meat and, according to India’s Ministry of Commerce, in the financial year ending March 2015 India imported poultry meat worth US$170,000 and exported US$11.94m-worth.

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