Poultry prices: what next?

National poultry prices appear to have run amok since Ramzan began and show no sign of abating. Historically, that makes sense as Ramzan and Eid-ul-Fitr is peak demand season. On the other hand, shutdown of commercial consumption (read restaurants and catering) due to lockdown was said to have wiped off one-quarter of demand. So, what is going on?

Intuition validated by market intelligence may help. Nearly 50 percent rise in prices within a month only looks so steep because demand saw its worst collapse in a matter of fortnight during Mar-20. Live chicken prices flat-lined for first three weeks of lockdown, as demand dried up while the roadside kiosks had to offload non-storable birds at below cost. With no end in sight to lockdown, poultry farmers shied away from raising new flock, as households also switched to cheaper protein sources amid uncertainty regarding future income levels.

Little surprise then that the easing of lockdown while supply is still disrupted during peak Ramzan demand season has sent prices into an upward spiral. Differences in city-wise average prices offer further evidence: price in major cities of Punjab where lockdown began to ease early are rangebound below national average, whereas price across Sindh is still substantially higher.

But what happens next depends which way the Covid-19 camel sits. If the easing continues at current pace, it should not take long before supply is restored. Afterall, it takes just 5 to 8 weeks on average to raise poultry flocks for slaughter.

However, that may not necessarily reign in prices beginning June. Since demand tends to taper off post-Eid – and the weeks in the run up to Eid-ul-Adha are particularly bad – farmers may err on the side of caution and restrain from aggressive investment. That could keep prices at current level for several months if supply remains tight.

It does not help that feed price forecast is also increasingly volatile. Domestic maize prices have begun to inch upwards again after witnessing a short-lived crash, whereas soybean/soymeal import may suffer from disruption in global supply chain. According to an FAO report, soy supply to feed factories in Argentina – world’s largest meal exporter – have been cut to half due to restrictions on movement of labour and raw material.

Yet, all the forecasts in the world may come to naught if the risk of contagion grows exponentially and the death toll mounts in the days to come. Any sign of lockdown reinforcement will once again squeeze the sellers into offloading birds at throwaway rates. And that may permanently force many suppliers out of business, although may finally drive home the need for cold storage and supply chain development to policymakers. Here is hoping.