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Outside of tomatoes and onions – both perishable vegetables - farm eggs saw the highest month-on-month increase in July monthly CPI basket, at 9.95 percent. Given the waywardness of food price levels over the past 24 months, a single digit jump in another perishable (eggs) may be hardly alarming. Yet, the poultry market players are agitated. Why?

Over the past three months, farm egg prices in Lahore have increased by 34 percent, closely trailing nationwide increase of 37 percent. Yet, these are in no way highest ever prices; just six months ago in mid-Jan, national prices were at similar levels, with even greater heights chartered during winters of 2016 and 2017.

Is the peak in mid-summer extraordinary? Not so much either, as past five-years trend indicate that farm egg prices begin to inch up after bottoming out somewhere in June. Moreover, while prices have been on an upward trajectory for some time, there is little evidence to suggest that they have touched peak levels already.

What is out of place, however, is the inversion of the farm eggs and broiler chicken price relationship since the lockdown ensued in mid-March. Recall that when broiler chicken prices collapsed in the first week following nationwide lockdown, farm eggs prices had held steady. Soon after, when broiler prices reversed trajectory during Ramzan, farm eggs prices collapsed. Since Eid, broiler prices are now self-correcting as demand eases, yet farm egg prices have continued their consistent climb. What is going on?

To unlock the mystery, look towards trend in Day Old Chick (DOC) prices. Unlike farm egg prices, DOC prices have been closely in step with broiler’s, in line with historic price behaviour. DOC prices are in fact also forward-looking indicators of future broiler prices, as DOC prices quickly rise in seasons when demand for bird meat gains more traction.

Recall that this space had pointed out that despite easing of the Covid-led lockdown, demand for broiler chicken has remained weak as large public gatherings have remained banned. This has restrained poultry farmers—they remain on the side lines, withholding investment in fresh flock/expansion. This has had an indirect impact on supply of fresh farm eggs, which continues to be limited.

At a time when other sources of protein have become less dearer – Eid ul Adha – the steady hold in farm egg prices indicate the relative price inelasticity of this breakfast table staple. This means that until the country declares a decisive victory on Covid and eases lockdowns/bans in all forms and sizes, the price anomaly between broiler and egg prices may persist. In the meantime, poultry players may have to make-do with profits on eggs alone. But there can be no egg without the chicken!