If there is one industry whose confidence has been shattered since the pandemic, it is probably poultry. Nearly four years since the fateful March of 2020 – when prices of poultry dropped by some 75 percent overnight with the imposition of lockdown – the industry is still finding its bearings. Not only is the supply and demand struggling to find a new equilibrium level, but the prices have also lost all historic synchronicity, bucking all seasonal trends and highs and lows.
Consider the past quarter. Between Oct–Dec 2023, national average retail prices of live chicken (per kg) remained surprisingly range bound, trading in the narrow band of Rs340 – Rs 370 per kg. During the peak wedding demand season of Dec 2023, national average prices reached Rs350 per kg, up 19 percent year-on-year, but still significantly lower than the average rate of inflation across various commodities in the CPI food basket. In fact, prices during Q4 – CY23 were significantly lower than the 9MCY23 average for Jan – Sep, when poultry prices had averaged above Rs425 per kg, and rarely fell below the Rs400 per kg floor. It is as if the winter demand never came.
Except it seems to have arrived come January. With the beginning of the new calendar year, poultry prices have shot up by 20 percent against Dec 2023 average. Why poultry prices would shoot up with the end of the annual winter holiday season is a mystery, but the magnitude of the rise is significant. Day Old Chick prices have also shot up to Rs110 per chick across major consumption centers, which is a once-in-a-decade event. Although Day Old Chick prices remained on the higher side for much of CY23, DOC prices adding between Rs 75 – 100 to the price of chicken itself is a 25 percent markup on average live chicken prices for the last year.
Remember, DOC prices often serve as a reliable forward indicator of where broiler prices are headed. DOC prices usually peak before the peak demand season of Ramzan and Eid ul Fitr, and the latest rise to Rs110 per unit indicates that there may yet be more upside to DOC prices. Market watchers would note that while the DOC to live bird cycle usually spans 7 – 8 weeks, Eid ul Fitr is still 12 weeks away. At this rate, live broiler prices could shoot past Rs550 per kg come mid-April. Unless something gives.
What could be that something? Although the caretaker government has conceded some space to the solvent extraction industry by allowing the import of GMO soybeans for feed purposes, the battle is far from over. If the soy cargoes start making their way into the country over the next four weeks, poultry prices may finally break ground – finding some sense of semblance come Ramzan/Eid. However, the Food Security Ministry is still in the process of streamlining the approval process for GM commercial events, which could mean that it may be too soon to declare victory.
What then is fueling the latest cycle of price resurgence against CY23 averages? It is hard to conclude with certainty. The crisis of the past four years has plunged the industry into an existential crisis, resulting also in a substantial decline in the stock of parent and grandparent birds, according to K&N’s Khalil Sattar. Even if the soy imports resume, it may be a long time before poultry becomes the protein of choice for ordinary Pakistanis again.
The least caretakers can do for the industry is to not make things worse by further adding to the delay of soy regularization process.