The extraordinary inflationary cycle of the last 18 months has irreversibly transformed pricing across many industries. Even as the market prices now begin to calm down as a result of demand suppression and loss of purchasing power, domestic demand will probably never look the same again.

Take the example of the poultry industry, where general inflationary pressure – coupled with poor policy matrix – wreaked havoc on consumer demand over the last two years. Now that demand has been particularly subdued (after the record run which saw prices double in less than a year), prices have been on a downward trajectory for at least the past four months. Since June 2023, national average prices have fallen approximately 32 percent across both wholesale and retail markets, which may be the single longest continuous period of price decline in recent memory. But will the good old days ever return?

The recent decline in prices is most likely an outcome of a shift in demand curve, rather than an increase in output (or a return to peak levels witnessed in the past). Although the downward trend in prices is across the value chain, the following rule of thumb may help explain what’s going on. Within the poultry industry, the past ‘peak’ is now the new ‘bottom’.

What this means is that if the top price of ‘live’ chicken in Lahore had ranged close to Rs 325 per kg in 2021, two years later (in 2023) that’s where the lower bound lies. Despite the recent downward trend that’s lasted for more than four months, calendar year average prices for 2023 are still 80 percent higher than for 2021. The case of Day-Old Chicks is no different, where prices no longer fall below Rs60 per chick, when few years ago that would be the highest prices would ever shoot up to.

Despite this, falling consumer demand refuses to change gears. Channel checks indicate that over the past 18-20 months, the fall in consumption has been so severe that hundreds of farms across the country have altogether been shut down. Now even as fall in input prices (feed and chicks) make some room for what is most likely a short-lived calm in prices, the quantity demanded is still too feeble to attract most producers back.

Welcome to a brave new world of falling protein consumption. Where poultry meat prices are now at par with beef, and farm eggs prices at par with that of live chicken. The market may soon find its new mean, but the exuberance of past decade may not be seen again for a long time to come.