The lockdown is as good as dead, yet national average poultry prices continue their downward slide. Prices are now even lower than the last week of March-2020 when the lockdown had begun; in fact, touching an 18-month low in August-2020. Should the narrative that blamed Covid-19 and ensuing lockdown for crashing poultry demand be thrown out of the window? Let’s examine the evidence.
The recovery in poultry prices witnessed during Ramzan and post Eid-ul-Fitr was always meant to be short-lived. Barring 2019, prices have historically made a sharp turn close to Eid-ul-Azha and Aashura weeks, when the demand for bird meat is substituted by influx of the red variety. But conventional wisdom dictates that the seasonality effect this year should have somewhat subsided due to lifting of lockdown and easing of restrictions on social gatherings beginning August. Yet, that seems to so far been missing from PBS reported data. Is the bottom nowhere in sight?
It may help to dig a little deeper. Historic trends alone indicate that the slide may continue well into September if not through October as well. However, there are several more anomalies at play.
One, for the second time in less than six months, price of a kilo broiler chicken in several cities/towns of Punjab is lower than average price of dozen eggs. Although the two commodities do not bear any causal relationship, trend analysis shows that anomaly never lasts for too long. The market ordinarily places a higher value on price of chicken than that of eggs; perhaps because parathas and leg piece is too royal a combination for breakfast meals!
Two, day-old chicks (DOC) price is once again on a climb. Based on privately gathered data, DOC prices in Karachi have risen by four times in the last 10 days alone, and at Rs 25 per unit are at their highest since Eid-ul-Fitr. Industry watchers would note that DOC prices usually serve as a reliable leading indicator of broiler prices, considering it takes a six to eight-weeks cycle for a DOC to be raised into a fattened bird ready for slaughter.
Third, national average broiler prices have converged with prices in southern cities, where prices are usually much higher than the north. Although the PBS data for Punjab is not always a reliable indicator of market movements considering it quotes prices as per DC-rate sheet.
Fourth – and the devil that is missing from the graph-based details – is the outlook on poultry feed prices. Provisional estimates from provincial crop reporting services indicate that maize sowing has taken a serious hit during the ongoing season. Recall that maize farmers had to bear serious losses for the last season crop (March and April 2020) when crop harvest coincided with imposition of nationwide lockdown. Market intelligence at the time suggested that grain prices crashed by as much as one-third in less than a fortnight.
Come winter season, if the crop numbers prove to be as dismal as market reports currently suggest, then a serious rebound in maize prices – and by corollary, poultry feed price – may be very much on the cards. Mind you, broiler prices have historically also displayed a seasonality effect during winters, when prices are usually on the higher side. Add easing of curbs on social gatherings such as weddings to the mix, and it won’t be long before August’s all-time bottom seems like a distant memory. Unless Covid-19 also makes an 11th hour comeback!