Egg prices hit a high, now as costly as chicken

“Egg prices usually rise at this time due to winter demand, while broiler rates fall because supply goes up, with the birds taking less time to reach slaughter weight. But we have never seen this kind of price spiral in eggs before,” said a leading egg products manufacturer based in Erode, Tamil Nadu.

Raju Bhosale, executive member of the National Egg Coordination Committee (NECC), attributed the jump in prices to an estimated 15 per cent increase in demand. That, in turn, has been primarily driven by vegetable prices. Onions and tomatoes are today retailing at Rs 40-50 per kg, while ranging even higher at Rs 60-100 for cabbage, cauliflower and brinjal. “When vegetables turn costly, people switch to eggs, pushing up its rates as well. This is simple substitution effect,” claimed Bhosale.

M P Sateesh Babu, chairman of the Mysore zone of NECC (which is an association of poultry farmers and traders), however, sought to link the price spike to demonetisation. The collapse of demand from the sudden withdrawal of Rs 500 and Rs 1,000 denomination notes from circulation led to lower realisations for eggs as well as broilers. Farm-gate rates for both averaged below last year’s levels right until July (see table).

“Simultaneously, drought in Karnataka and Tamil Nadu caused prices of maize, the main input for poultry production, to hit record Rs 1,900 per quintal levels. As poultry farmers were squeezed between low realisations and high costs, many of them resorted to premature culling of their birds, the effects of which are being felt now on the supply side,” noted Babu.

One indicator of this is lower inter-zone trade that ensures smooth supply of eggs across the country. India’s poultry market is divided into 25 zones. “The Namakkal zone alone, for instance, witnesses average arrivals of 3.5 crore eggs per day. This zone normally also feeds the North Indian market, whereas in the current year, there has been very little inter-zone transport of eggs, including from Namakkal,” Babu said.

But why has the price recovery, courtesy supply pressure, been sharper in the case of eggs than broiler? The answer, according to the earlier-quoted egg products manufacturer from Erode, is simple. The broiler production cycle is much shorter. A day-old chick weighing 40 g or so takes just 40-42 days to attain a live bird weight of 2-2.5 kg, when it ready to be sold for slaughter. That time is even lower, 37-38 days, during winter.

On the other hand, when it comes to egg-laying birds (“layers”), the minimum time needed for the chicks to grow for production to start is 18 weeks. A typical commercial layer would give roughly 330 eggs until it is 72 weeks old. During the peak production period from around 27 to 40 weeks, the bird will lay an egg every 26-27 hours, going up to 32-33 hours at the end of 72 weeks.

“When egg prices are goods, farmers may maintain the birds till 90 weeks, even if laying happens only once in 35-36 hours. This time, since egg rates were very low till July, with broiler realisations somewhat better, many layer farmers went in for early culling. It has impacted supplies now, just when demand is peaking,” the manufacturer explained.

Considering that egg production isn’t going to recover as fast as broiler, consumers may have to wait for a few weeks for prices to ease. In the meantime, it might be better for them to have chicken.