Ring the alarm bells! Day-Old Chick prices in Karachi are all set to score a century soon. The last time DOC prices came this close to one hundred was in May 2021 (Eid ul Fitr), which pushed broiler prices close to Rs 350 per kg in retail market. What does the latest price hike have in store for bird meat buyers this Ramzan?
For most market watchers, the latest upswing comes as little surprise. It follows the spread of lumpy skin disease (LSD) in livestock over the past month, which has raised the popularity of bird meat. Although PSAs have been issued clarifying that the LSD does not pose risk to human consumers of dairy and red meat, consumer weariness is only natural after two years of pandemic-fatigue.
As unfortunate as the incidence of LSD is for livestock farmers, the disease has only been raging in Sindh, and thus fails to explain the upsurge in poultry prices across rest of the country, especially Punjab. Rise in demand during months of religious festivities – Ramazan and Eid – is intuitive. However, the holy month is still 10 days away, and while some anticipatory buying may be expected, Pakistanis are largely wet market consumers, and rarely stock up on meat months in advance.
Meanwhile, according to PBS, broiler prices in major urban centers such as Lahore and Karachi had risen by three-fourths in six weeks following end of January. And while price rise may also be chalked up partly to supply re-adjusting to demand resurgence during spring, when consumers switch back from other protein sources during winter (seasonality). During peak summers, farm egg and broiler also sometimes exhibit an inverse correlation, at full display currently.
But none of the seasonal factors or disease outbreak explain the rise and rise in DOC prices, which are the most reliable leading indicator of poultry prices in near future. And with Ramazan right around the corner, are broiler prices all set to record a new high?
That no longer seems out of question. First off, raw material prices for feed input – both locally produced maize and imported soybean are charting fresh heights with the dawn of each morning. Maize prices are also impacted by the tight international market which is reeling from the war in the Black Sea region. Meanwhile, maize substitution with wheat in feed preparation may also be out of question this year, given the bleak outlook for domestic wheat harvest in Rabi 2022.
But most of all, it may be the fresh slew of taxes imposed on poultry inputs that is keeping DOC prices higher. Recall the Supplementary (Finance) Bill, 2022 imposed uniform GST on various imported components for poultry value chain, from vaccines to micronutrients such as enzymes, vitamins, and grandparent stocks etc.
And while the federal government is now mulling the removal of one of such taxes – imposed on imported seeds for maize – the step may be too little and too late, at least for the ongoing season. Market already seems to have priced in the tax impact on retail prices of maize seeds, which in turn is reflecting itself in higher prices for the spring maize crop (which was sown during pre-supplementary budget).
Moreover, elimination of seed tax alone may no longer do the trick for market participants. Given the extreme level of political uncertainty prevailing currently, industry shall also wait and watch until the annual budget in June to present a flurry of demands, possibly to a new political regime. Until then, consumers should brace for impact.
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