Introduction:
Though the coronavirus pandemic has impacted every business on the planet, despite that, the recent Rabobank Quarterly Poultry report predicts growth in the global market provided that the industry handles the supply chain-related challenges swiftly. Rabobank also states that global economic growth for FY 2020 will slow down to 1.6% (from 2.9% in 2019).
On the other side, COVID-19 has cast a catastrophic impact on the Indian Poultry sector. With this article, we try to dive deep to figure out the reasons impacting the industry, and we will also try to understand the market scenario as of March-end.
Feed Commodities:
The drop in demand for chicken and eggs has severely impacted the raw material market for the feed. Mr Amit Sachdeva of Techpro India noted that India has substantial grain stocks of rice and corn as well as bumper wheat and barley harvest is expected.
He explained that all kind of grains could be used as feeds. Grains like barley has been used extensively for Dairy feed in late 2019 whereas pearl millet, wheat and rice were used in Poultry rations when the price of corn was high.
“Corn prices have dropped considerably since Dec 2019, primarily due to imports of Corn and Barley, at the same time demand disruption that has happened due to the coronavirus has resulted in a 25% drop in the wholesale price, which is unheard of,” he added.
Market Scenario:
The Indian Poultry sector is going through a rough patch; a massive drop in demand is happening due to rumours on social media of coronavirus spreading due to the consumption of chicken and the eggs. In a telephonic conversation, industry leader, Mr Jagbir Dhull of Skylark Hatcheries shared that the current placement is just 20% of the standard placements, which presents the real picture of the sector.
Another renowned face of the Indian Poultry industry, Mr OP Singh of Huvepharma, noted that the industry lost approx. INR 15 billion in past few weeks, due to weeker returns that are driven by surplus production, supply disruption due to nationwide lockdown and misinformation on social media.
Placements in the Indian Market:
A total number of broiler chick placement in India has mostly been guesswork, as different sources quote different numbers. Mr Sachdeva pointed out that, before COVID-19, India has placed about 72 million broilers/week with a steady growth rate of 8% over the last two years, while Mr Dhull mentioned this to be somewhere around 85 million broilers/week. In the meanwhile response from other industry leaders is awaited.
In a time of such crises, the need of the hour is a collective action for the industries survival. Ex-chairman of CLFMA of India, Dr Dinesh Bhosale said that while significant breeding companies reduced their placements responding to the change in market condition.
“East India, the placements have dropped by of 30-40%, while the in rest of the country it is around 50-60%. But the top 3 players of the industry have maintained their placements or have made a minimal reduction,” he added.
In the last quarter of 2019, there has been an oversupply of chicks in the market. But the correction on overproduction has already taken place. “Chick prices, chicken prices are low as the demand is not there. Institutional sales have been impacted, with a restriction on tourism, travel bans, people staying home, has reduced demand considerably. The industry will have to come back and work closely to gain the trust of the consumers,” said Mr Sachdeva.
The missing link in the Indian Poultry Industry:
Organised poultry sector cannot afford to have their fates any further in the hands of roadside butchers. It is an introspection time, and as an industry, we should change the way eggs and meat is sold in the country with different strategies to cater to rural and urban markets.
Dr Bhosale predicted post-COVID-19 era to change the way India Poultry sector operates and changing factors would be processing, food safety, uninterrupted value chain and purchasing pattern.
Food Safety and Standards Authority of India (FSSAI) has already set clear guidelines for the organised and unorganised milk and milk product manufacturing sector, followed by Animal feeds manufacturing sector. He predicted that food safety and the government would play an essential role in changing the way the poultry industry works as well.
Conclusions:
The changing economic and market conditions brought by the COVID-19 pandemic will have more significant impacts on the poultry industry in 2020 and might continue until next year. Global trade will face more volatility in the current FY.
Surviving the current hardship will require Indian Poultry industry to strategise and reorganise as per consumers’ expectations. Benison media also see this as an excellent opportunity for the further formalisation of the sector and apt time to see how we can act more swiftly to counter any misinformation on social media in the future.
by Prachi Arora, Think Grain Think Feed
