Defining Inflation in Poultry & Livestock Sector

Inflation rose to 7.44% during July, up sharply from 4.87% in June, putting it at its highest level since April 2022. Food inflation, which accounts for around half of the total consumer basket, jumped to 11.51% in July from just 4.49% in June. Think Grain Think Feed connected with Amiya Dharmapada Nath, Vice-President, Japfa Comfeed India, to understand his opinion on inflation in the poultry & livestock sectors.

Would you please share the present scenario of the Indian feed industry?
The Indian feed industry operates as a commodity business that relies on the supply-demand scenario and market sentiments. Consider the case of maize from the last Rabi season. Due to unexpectedly low prices, a large inventory was created in May, but prices further droped at the beginning of June while the majority of inventory was already done by the large players in the poultry sector and maize traders. In June and July, the price of maize increased further due to export parity and traders lobbying. However, during Shravan, there has been poor demand from the industry, and as a result, the maize price has stabilized. Based on the current year’s yield of maize, existing inventory, and low demand from the poultry sector, there is a less likely chance of maize prices increasing until November. The kharif maize harvest typically arrives after Shravan, from September onward. Although there is a possibility of good poultry replacements and incremental demand for maize, the prices of maize and soy doc should remain relatively stable until October.

For the aqua industry, the government’s introduction of the Blue Revolution scheme has led to significant developments in the aqua sector, whereas the shrimp market has been negatively impacted by slow demand, falling prices in the global market due to excess stock, and a resulting decrease in local production.

Over the past five years, the Indian dairy industry has become better organized and is shifting towards balanced feed. With a better understanding of compound feeding, demand is increasing in both dairy as well as aquaculture sectors. Conversely, the poultry industry is struggling with inconsistent demand.

Veg. thali price has increased by 34% in July, would you please share the impact of inflation on the poultry and livestock sector?
As a representative of the industry, I want to clarify that there is no inflation in the poultry and livestock sectors. In fact, chicken is the only major food commodity that has experienced negative inflation. If the cost of production is compared with end-product prices, the farmers hardly make any profit throughout the year. With such an ongoing scenario, delivering on the government’s vision of doubling farmers’ income is impossible.
The costs mentioned above are calculated at the farm level. However, when considering other expenses such as transportation, shrinkage, trader/cooperative margin, and retailer prices, the live bird per kg hardly brings any profit to the farmer. Often, it is even below the cost of production. The same principle applies to dairy farmers as well. Per kg of chicken cost INR 150 ten years ago and it is the same price even now most of the year. The prices of Rahu or Catla fish are also almost the same as they were a decade ago. Even if there is an increase in milk prices, the government immediately intervenes to control the end prices. Despite this, farmers in the poultry, dairy, and aqua sectors hardly make a profit of over 10% throughout the year. Does it look like inflation?

What would be your suggestions for the industry to support the farmers?
Multiple associations represent various industries, but unfortunately, no one is reaching the farmers. There are associations for breed, feed, layer, broiler, cattle feed, fish, animal health, and many others. State associations are different from all India associations. There is almost no coordination between different associations. If stakeholders are not working together, how can we effectively advocate for farmers? How can we approach the government with a unified goal? It is important that we ask ourselves if we are truly fighting for the benefit of farmers.

This lack of coordination is not only challenging the industry but all players who are directly and indirectly associated with the livestock and aqua sector. It is a low-profitor loss-making business.

To tackle this issue, all associations could collaborate with the government to strategize ways to reach farmers in different regions. Education programs for farmers for better productivity, applying for various available schemes, etc. will help in achieving the government’s goal of doubling farmers’ income with adequate profit for investors by selling products at better prices.