Urja Foods and Agro’s hatchery unit spread over 10 acres in Gawadewadi village of Pune district’s Ambegaon taluka wears a deserted look. Not surprising at all, when its production of day-old chicks was 5.4 lakh in February but is unlikely to cross 2 lakh this month. This is against the hatchery’s normal monthly capacity of 6 lakh.
“In February alone, we lost Rs 10 crore. The only way not to sink further is to produce less,” says Pramod Hinge Patil, the owner of the Rs 100 crore-turnover private limited company that “places” its day-old chicks with some 500 farmers. Urja Foods also supplies poultry feed and medicines to farmers within 50-km radius of Ambegaon, mainly in Pune and some in Ahmednagar district.
Patil’s woes are a result of a misinformation campaign, especially over WhatsApp, Facebook and other social media, linking the spread of the novel coronavirus (COVID-19) to chicken meat consumption. These messages — declared as “fraudulent and fake news” by the Union Ministry of Fisheries, Animal Husbandry & Dairying — have resulted in both demand and prices tanking.
In early January, farmgate prices of broiler birds in Maharashtra were ruling at over
Rs 80 per kg. By February 10, these had dropped to Rs 40-42 and further to Rs 30-32 levels at the start of March. The Maharashtra Poultry Farmers’ and Breeders’ Association has stopped declaring prices in the last few days, but there are reports of sales happening now at Rs 5-10 per kg.
Urja Foods is an integrated poultry company that maintains around 45,000 parent birds — 10% cocks, with the balance 90% hens that produce fertilized eggs. These eggs —not the unfertilised ones that are used for table consumption — are hatched in incubators and the day-old chicks resulting from them given to farmers. Urja Foods also has a 200 tonnes-per-day poultry feed plant. The feed from the mill, along with medicines and vaccines, is supplied free to the company’s 500 or so contract farmers. The latter are paid Rs 8-10 charge for rearing the 35-40 gm chicks into 2-2.5 kg birds over 35-40 days. This charge is subject to adherence to a standard feed conversion ratio (typically 3.5 kg of feed is required for a 2-2.5 kg live broiler). Once the broilers attain the minimum weight, Urja Foods takes them back for selling in the market. The farmers basically only provide the labour, electricity, and water for these birds housed in their poultry sheds.
“The current broiler realizations will just about cover the fixed rearing charges that I am paying to my farmers. It does not take care of the feed, medicines, and vaccines that I am giving, apart from the costs being incurred at the hatchery. And from where do I pay the salaries for my 120 employees?” asks Patil, who has been in the poultry integration business since 2015.
India’s poultry industry comprises 450-500 “integrators” such as Urja Foods and an estimated 15 lakh farmer-rearers. The integrators source the chicks of their parent birds, in turn, from the bigger poultry majors that own the pedigree or pure lines of specific breeds. Roughly 65% of the country’s broiler market is accounted for by the ‘Vencobb 400’ parent variety (the common white-feather bird) belonging to the Pune-headquartered Venkateshwara Hatcheries Pvt Ltd. Other major pureline/grandparent breeds include ‘Hubbard’ and ‘Ross’, which are owned by the German poultry sciences giant Aviagen.
The hit from a price crash, triggered by unsubstantiated fears over poultry meat posing the risk of COVID-19 infection, is currently being largely borne by the integrators. They are the ones that lift full-grown broiler chickens from poultry farms and sell to traders, who further supply these to retail shops in urban as well as rural markets. Since late last week, Hinge Patil’s company has taken the extreme step of transporting live birds from farmers’ poultry sheds in pick-up vehicles for selling directly in retail markets in and around Ambegaon.
In the event of the integrators slashing production of day-old chicks — which is already taking place — poultry farmers are the ones going to feel the heat, because of their sheds housing fewer birds. These farmers are mostly smallholders: A single bird occupies about 1.24 sq feet, which translates to 8,000 of them in 10,000 sq ft or just a quarter of an acre.
If the present situation continues, the problem can extend next to maize, the major ingredient in chicken feed. Since mid-January, maize prices at Davangere in Karnataka have fallen from Rs 1,850-1,950 to Rs 1,550-1,600 per quintal. With the rabi maize crop in Assembly election-bound, Bihar set to arrive in the markets from mid-April, there is the danger of prices going down further in the absence of demand from the poultry feed industry.
India’s weekly production of broilers is reckoned in the range of 7.5 crore live birds or 30 crore a month. With average production cost of Rs 75 per kg and realisations at Rs 25, the losses now work out to Rs 100 per 2-kg bird or Rs 3,000 crore per month. This kind of a crisis was last witnessed in 2006-07, when chicken consumption was affected by the H5N1 avian influenza. The Maharashtra government, at that time, paid farmers Rs 40 for every bird culled in order to prevent the spread of the highly infectious virus to humans.
“This crisis is worse. The government should instruct banks to come immediately to the industry’s rescue. There is a case for even allowing a one-year interest holiday, as opposed to mere restructuring of loans through rescheduling of payments,” feels Prasanna Pedgaonkar, general manager of Venkateshwara Hatcheries.
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