Poultry farmers are facing a crisis from soaring feed costs amid poor demand for eggs and chicken meat

August 8, 2019

Poultry farmers are facing a crisis from soaring feed costs amid poor demand for eggs and chicken meat. Rather than let them complete their roughly 85-week life cycle, Kiran Abhale culled all his 18,000 egg-laying birds by April-end, when they were between 58 and 72 weeks of age.

“The losses were too much to sustain. I was incurring a production cost of Rs 3.70-3.75 per egg, whereas my realisations were Rs 3.25-3.30. I couldn’t have continued to feed them for their whole laying cycle,” states this farmer from Madhi Khurd village in Kopargaon taluka of western Maharashtra’s Ahmednagar district.

A typical ‘layer’ bird starts producing eggs after it is about 18 weeks old. Over the next 67 weeks or so, it will lay 325-330 eggs and also consume some 110 grams of poultry feed daily. That, over 85 weeks, works out to more than 65 kg.

“When I culled my birds, layer feed costs had already reached Rs 25 per kg. Today, they are even higher at Rs 27.5. So, my feed expenses alone will now be Rs 3 per egg and adding labour, water, electricity, interest on loans and other costs takes it to Rs 4. This is as against the current realisation of Rs 3.60-3.65 per egg” notes Abhale, whose prematurely-culled flock included 7,000 birds that were 72-weeks-old, 6,000 of 58 weeks and 5,000 of 62 weeks. The 18,000 birds were laying 16,000-17,000 eggs daily.

Poultry feed is basically a combination of maize and de-oiled cakes — which are sources of carbohydrate and protein, respectively — in addition to various mineral mixtures. In the case of layer feed, maize alone constitutes up to 50% of the total weight, with de-oiled rice bran (DORB) and soyabean cakes accounting for 20% each. The balance 10% comprises calcium supplements and other minerals. Broiler chicken feed, too, contains 50% maize by weight, with de-oiled soyabean cake (25%), rice polish/broken rice (10%), soyabean/palm oil (5%) and mineral mixtures making up the rest. 

“In July 2018, layer feed prices were Rs 18-19/kg, whereas they have been Rs 25-27 this July. Broiler feed rates have similarly gone up from Rs 24-25 to Rs 33-34. Neither layer (for egg) nor broiler rearing (for chicken meat) are viable for farmers,” complains Abhale, who has also reduced the size of his broiler operations to 10,000 birds, from 50,000 till April-end.

For poultry farmers, the problem isn’t only of spiraling feed costs; they are also unable to pass on these to consumers. The average farm-gate price of eggs at Pune in July was Rs 419 per 100 pieces, below the Rs 469 for the same month last year. Broiler chicken rates have also fallen from Rs 76-77 to Rs 69-70 per kg between January and July.

“It’s a double whammy. On the one hand, feed costs have soared, mainly due to prices of maize and DORB rising from around Rs 14 to Rs 22 and from Rs 12.5 to Rs 18.5 per kg, respectively. On the other hand, realisations, too, are down,” points out Prasanna Pedgaonkar, general manager of the Pune-headquartered Venkateshwara Hatcheries Pvt. Ltd or Venky’s, India’s largest integrated poultry breeding-cum-processing firm.

The farmers rearing layer birds are feeling the pinch much more than the ones doing it for meat. Unlike broilers, where a day-old chick weighing 40-odd grams takes hardly 45 days to attain a slaughter-ready live bird weight of 2-2.5 kg, the production cycle for commercial layers is much longer. “Broilers consume 3.5-4 kg of feed. At current feed costs and broiler realisations, I am losing money here as well, but the birds can at least be sold in 6-6.5 weeks. In layer, the investment and payback are longer, which is why I was forced to prematurely cull my flock,” adds Abhale.

The 39-year-old also grows maize and soyabean on three acres each, apart from sugarcane on another four out of his total 10-acre holding. Last year, Abhale’s entire maize crop on six acres was destroyed by the farm armyworm insect pest, while drought-like conditions led to his cane yields dropping from the normal 60 tonnes to 45 tonnes an acre. “The government wants us to diversify our agricultural operations in order to reduce production risks and double incomes. If after growing so many crops and also taking to poultry farming, my losses are only mounting, what is one supposed to do?,” he asks.

Shyam Bhagat, chairman of the National Egg Coordination Committee’s Pune zone, claims that at least 200 out of the 25,000-plus poultry farms in Maharashtra have shut down, with all their birds being culled, during the last 3-4 months. Raju Bhosale, executive member of this body representing the country’s broiler and egg industry, attributes the ongoing crisis to both rising feed costs and supply-demand imbalance.

“Egg production went up by 30% in 2018-19, as farmers expanded their flocks encouraged by the previous year’s high prices as well as low feed costs. However, there has been no corresponding increase in consumption, which has actually slowed down, especially for chicken, because of pressure on overall incomes. As a result, you are seeing prices dipping after March-April,” he explains. With the holy month of Shravan continuing till August 22 — non-vegetarian food is avoided by large sections of the population during this period — any immediate uptick seems unlikely.

The poultry industry’s hopes as of now rest on a decent harvest of maize. While the area under the feed grain is marginally up in the current kharif season — from 69.03 lakh hectares (lh) to 69.27 lh, as on July 31, with Madhya Pradesh (from 13.12 lh to 15.01 lh), Rajasthan (8.56 lh to 8.61 lh) and Maharashtra (7.23 lh to 7.41 lh) reporting increases and Karnataka posting a decline (from 10.06 lh to 8.89 lh) — there are also concerns of the fall armyworm wreaking greater havoc this time.

In the meantime, the Narendra Modi government has permitted import of five lakh tonnes (lt) of maize at a concessional 15% duty under the so-called tariff rate quota regime. These imports — quantities beyond five lt attract the regular 60% duty — are to be non-genetically modified and allowed only for actual users (i.e. the poultry and feed industry). But out of the total 5 lt, only tenders for 50,000 tonnes each of imports have so far been floated by the state-owned MMTC Ltd and the National Agricultural Cooperative Marketing Federation of India.

“The landed cost of the maize will be in the range of Rs 21 per kg, which, after including transport and handling expenses, comes to Rs 22.50.