Poultry market: on the brink?

The poultry market has strange ways of sending price signals. Between the first weeks of October and December 2022, Day Old Chick (DOC) prices slumped from a peak of Rs 80 to Rs 15 per unit. Exactly a month later – with the change of calendar year - DOC prices had jumped back up to Rs85 per unit. Since then, prices have been rangebound between Rs60 – Rs80, stuttering about without any clear direction. What is going on?

This section has long identified DOC price level as an indicator for future broiler prices. Why? Because it takes roughly 6 – 8 weeks to raise a day-old chick to the appropriate weight of a poultry bird, ready for slaughter/sold off for its meat. During Dec 2022, DOC prices slumped to their lowest level in six months not as a result of an anticipated lull in poultry meat demand, but for a whole different reason altogether.

Regular readers of this space would recall that in late October last year, the government of Pakistan placed a ban on the release of imported cargoes of soybean from the local market that had been imported from various destinations such as Brazil and the USA, under the pretext of their GMO origin. (For more, please read: “Banning nutrition: one GMO at a time”, published on Dec 05, 2022) Since soybean is a key component for the preparation of animals – in particular, poultry feed – feed prices began to skyrocket.

Higher feed prices usually indicate an upcoming slowdown in demand for bird meat. For DOC farmers, this means having to tend after an ever-growing flock even as demand evaporates. Remember, day-old chicks can either be sold to broiler farms or culled, as the cost of raising a DOC would otherwise exceed its market price. Faced with having to cull their crop, DOC farmers are happier to sell off their flock at throw-away prices, resulting in a price crash from the peak of Rs80 to Rs15 in a matter of days.

After active advocacy by national poultry and solvent extraction associations, by late Dec 2022, GoP found a loophole to resolve the issue by getting Federal Tax Ombudsmen’s office to intervene. As news of soybean cargoes began to trickle in, the DOC market began to indicate a recovery. Between week one of December and January, DOC prices skyrocketed from Rs15 back to Rs85, indicating a renewed demand from broiler farms in anticipation of normalization in poultry feed availability. However, the recovery wouldn’t last for too long.

The federal government’s decision to use the FTO’s office to bypass the issue of GMO trade regularization received flak from observers, including this section. (For more, read: Soybean cargo: an unfortunate hack, published on December 12, 2022). Overwhelmed by the criticism, the food security ministry went on an overdrive, not only challenging FTO’s jurisdiction but also scaring the customs and port authorities into blocking the release of cargo all over again. Soybeans were soon going to be short in the local market, leading to a rise in feed prices. As feed prices rose back, DOC prices were caught back in the middle.

A month on and there is still no official word on the status of soybean cargoes. Market intelligence suggests some importers were able to secure their cargoes between the time the FTO order was issued and overturned. Meanwhile, the food security minister – possibly the only organic farming activist who is also a libertarian at heart – didn’t lose the opportunity to declare poultry feed as cancerous, also telling consumers to stop eating poultry to get local market prices to come down crashing.

Despite the minister’s best intentions, that has not happened so far. According to PBS, broiler prices have crossed the Rs400 per kg mark for the first time in history. In fact, measured by troughs, poultry prices have risen by 36 percent per annum over the past three years, thanks to astounding policy decisions by the federal governments, both the incumbents and the last one.

The poultry industry may have been the only segment within the agriculture sector that has not only performed well for the producers over the last 10 years but has also delivered to consumers in the form of lower prices. (For more, read “Let them eat poison”, published on January 06, 2023). Thanks to the wisdom of our overlords, today it too is now at the brink of collapse. Congratulations to the policymakers on a job well done.