After two months of double-digit jumps in chicken prices, monthly CPI for June finally pushed brakes on average broiler prices nationally, clocking in at Rs203 per kg. If weekly SPI differential in prices between cities is any indication, nationwide rates still have a long way to fall before plateauing; however, same does not appear to be the case for farm eggs.
The beginning of lockdown in the third week of March saw a rare occurrence: the price of broiler chicken fell below the price of per dozen farm eggs. That was a clear indication of oversupply in the market, which quickly addressed itself over the next fortnight. For more, read “Poultry prices: what next” by BR Research, published on May 12, 2020).
The rollercoaster ride that has since followed has been covered frequently in this space. First, the culling of Day-Old Chicks flock in early April led to a supply shock in Ramzan due to unexpected easing of lockdown in Punjab. Followed by phased slowdown in prices across the country beginning May-end, as the supply corrected itself given poultry’s 6-8 weeks crop cycle.
Given the historic Eid-ul-Adha and Muharram seasonality-driven lows in poultry demand, the slide in broiler prices nationally is expected to continue till late August. This line of reasoning is further validated by the arrest in Day Old Chicks prices recorded since beginning of June, and explained by a downward shift in demand levels due to an indefinite ban on large social gatherings, where murgh continues to be a national favourite.
Except, this trend is yet to reflect itself in farm eggs prices. Back when the nationwide lockdown was imposed, broiler prices declined by over 30 percent in Lahore in a matter of week. However, it took another 6 weeks for farm eggs prices to fall sharply in tandem, indicating far more resilient demand for eggs.
In the nine-weeks since hitting bottom, farm eggs prices have kept apace a steep climb, rising beyond their pre-lockdown levels. In fact, on national basis, while broiler chicken prices have recorded a 1.41 percent decline in June CPI, average national farm egg prices have witnessed a double-digit growth of 20 percent over May-20.
So, which poultry product in the CPI basket is supposed to be the lead indicator of the direction of future prices? It appears neither the chicken nor the egg. While Day Old Chick prices – effectively the raw material for poultry suppliers - would indicate that farm eggs prices should plateau if not altogether decline, demand for eggs appears to be holding out on its own.
A non-scientific sample of kiryanas by BR Research indicates that farm eggs remain high in demand and have withered the regulatory confusion/indecision on lockdown. One explanation offered suggests that as greater percentage of the population remains homebound, eggs consumption remains a breakfast favourite. Another suggests that as economic downturn becomes severe and going gets tough, more people have switched to cheaper sources of protein (in per unit and caloric terms).
While both hypotheses require further evidence, it raises an important question. As poultry farmers reduce supply due to poor broiler demand outlook – also evidenced by slowdown in Day Old Chick prices – how long before farm eggs prices run amok in face of limiting supply?
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