It is anticipated that, following a disappointing year in 2020, India’s domestic poultry industry will enjoy healthy profits in 2021, according to rating agency ICRA.
A rebound in demand coupled with modest feed prices will help enable poultry players to post healthy profits going forward. The ICRA has therefore revised the credit outlook from “negative” to “stable” for the poultry sector as profitability bounces back to pre-Covid levels.
A rebound in demand coupled with modest feed prices will help enable poultry players to post healthy profits. Photo: Timolina
A tough 2020
In June, Poultry World reported on the situation in India where speculation and rumours on India’s social media platforms over a possible avian link to the deadly coronavirus dented poultry sales and put the industry in a tough position. At that time, millions of small poultry farmers across the country were reeling after poultrymeat sales crashed by 80% following false claims that chickens are carriers of the coronavirus. This resulted in first estimates that India’s poultry industry has been losing US$ 1.5 million a day. The crisis severely destabilised the sector. Poultry World further reported in September that Covid-19 and the consequent lockdowns had pushed India’s poultry sector into losses of around US$ 4 billion between February and April 2020.
Change for the better
According to Ashish Modani, VP, ICRA, most of the players had reported net losses in 2020 with several smaller players going bankrupt due to fall in consumption, high feed prices, and modest realisation. “The change in industry scenario for the better since June 2020 has resulted in realisations being at an all-time high currently, this lends support to profitability. Also, premature culling of chicks as well as lower chick placement during Q1 FY2021 restricted supplies in the market, which helped in improvement in realisation across all regions during H1FY2021.”
In terms of feed, maize prices are currently hovering around Rs 14-16 (US$ 0.14-0.22) per kg which are below the minimum support prices of Rs 18.5 (US$ 0.25) per kg as also below the last years’ weighted price of Rs 20-22 (US$ 0.27-0.30) per kg. The Indian poultry sector produces about 4 billion broilers and 93 billion eggs a year, and, excluding the results from 2020, has been growing at between 6-8% per annum.