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Last month, BR Research noted that broiler chicken prices had witnessed their longest downward spiral in several years, lasting nearly 3 months. By July end, wholesale prices – that had peaked over Rs 300 per kg post meethi Eid in May 2021 had come all the way down to under Rs 110 per kg. Although national average is still trading under Rs 200 per kg as per PBS, it may be safe to conclude that the bulls have made a strong comeback since.

Looking for strong evidence to back this claim? Look no further than prices of Day-Old-Chicks, the most reliable indicator of the direction future retail prices may take. As of yesterday, DOC prices are once again trading above Rs 75 per unit, levels last seen in May 2021. But that might not indicate much to the readers in a year of many “highest- and lowest-evers”. Consider instead the following: DOC prices were trading under Rs 12 per unit pre-Independence Day; and have increased over four times in less than a month!

This is clearly another highest-ever in shortest possible time and has characteristically led to over one-third rise in broiler retail prices in urban centers within four weeks. So far, national- and city-wise averages as per weekly PBS data indicate that retail price is still trading in and around the Rs 200 per kg territory. But here is a kicker: the last time DOC prices touched these levels, retail prices were averaging over Rs 300 per kg nationally, and Rs 350 per kg in Karachi!

It will be worth recalling here that DOC is in effect the primary raw material of commercial poultry industry, as the chicks are reared for anywhere between 5 to 7 weeks, and then sold for meat. Thus, all else equal, higher cost of DOC today means higher poultry prices tomorrow. Except, will all else remain equal?

Short of jinxing Pakistan’s persistent good luck in keeping pandemic’s high fatality rate (seen elsewhere) at bay, it may not be too optimistic to claim that the virus has failed to dampen consumption. Even the frightening Delta variant did little to subdue faithful’s inclination to live on the edge. Social gatherings over most of the last three months threw caution to the wind. Commercial activity seems to have finally entered full throttle, helped by hyperactive vaccination-drive by the NCOC – as evidenced by re-opening of schools.

The key takeaway? In the months to come, the country may see a lot more demand as wedding season also begins post October, while physical schooling shall also help prop up consumption of farm eggs. Yet, it may be too soon for commercial poultry farmers to bring the supply back to fifth gear-mode.

Why? Because the industry continues to behave like a jilted lover, who was once bitten and is now twice shy. In the short-term, the now-ending monsoon season will ensure that poultry farms err on the side of caution and not raise the size of flock due to the disease-prone weather conditions. Moreover, the ever-rising global commodity prices of key poultry feed inputs – soybean and maize - are proving no help; and the situation may be further exacerbated no thanks to recent currency depreciation.

In the medium-term, there is no telling whether limited lockdowns or bans on weddings - the lifeline of commercial poultry business - and large size social gatherings might make a comeback, as Covid spawns an endless list of Greek alphabet-named variants.

But as things stand, even the deadly pandemic may not be industry’s biggest fear. The recent Price Control Order by federal government empowers the Controller General Office to impose price controls on broiler and farm eggs any time prices exceed 33 percent over last year. The action may be taken on district or provincial level, depending upon the geographical extent of price spiral.

But if last year’s rollercoaster ride of poultry prices is the metric to go by, the Controller General Office may end up spending all of its manhours on setting and re-setting broiler prices – considering the extreme price volatility that the market had witnessed due to frequent imposition of lockdowns. Prices may often appear more than double over last year. Especially, if the administration indeed goes ahead with the inane suggestion of making Covid year its reference period – as suggested by the Order.

If the Price Control sword continues to hang over the heads of poultry farmers, they will have little incentive to scale up production. The demand-supply gap that may follow shall quicky lead to a market failure, dwarfing previous year’s sugar price spiral in comparison.

No political government would make that grave error, unless of course its convinced it needs phantoms to haunt; just to keep the support base charged as electoral season begins. Such are the consequences of playing politics with markets.

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Habib ur rehman Sep 08, 2021 12:57pm
اس حکومت کا یہی تو مسئلہ ہے ہے ان کی آنکھوں کے نیچے اتنی بڑی کرپشن ہو رہی ہے لیکن ان کو پتہ نہیں چلتا تا پھر چینی آٹا بحران والی کیفیت بن جاتی ہے ہے اس سے چھوٹا کاروبار تباہ ہوجاتا ہے ہے اور اور معافیاز کے ہاتھ مضبوط ہو جاتے اور تب حکومت کی آنکھیں کھلتی ہیں اور قانون نافذ کرنے والوں کو بھی اس وقت ہوش آتا ہے
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