Iranian poultry industry braces for wave of bankruptcies
Growing financial losses for poultry farmers in Iran may trigger a wave of bankruptcies in the industry and lead to a severe shortage of chicken meat in the coming months, warned head of the Khuzestan Poultry Farmers’ Union, Mohammad Hossein Zamani Rad.
In an interview with IRNA, a local news outlet, Rad revealed that the financial health of the Iranian poultry industry has dramatically deteriorated: “Losses suffered by poultry farmers have expanded in recent months, and many poultry farmers are facing the risk of bankruptcy and closure of their businesses.”
He estimated that last year, Iranian poultry farmers suffered a combined loss of as high as IRR 250 trillion (US$5.9 billion). Price control imposed by the government has squeezed the financial resources of most poultry manufacturers. “A large part of liquidity in the broiler meat production segment has been lost, as the farmers were forced to sell chicken at a price below production costs,” Rad said, adding that, with no resources, the industry will battle to last much longer.
The Ministry of Agricultural Jihad has set the retail price of broiler meat at 76,670 Iranian tomans (US$1.8) per kg. According to Rad, this figure is unreasonably low, especially given that production costs in the poultry industry jumped by nearly 50% over the past few months.
Expensive feedstuff imports
Production costs are rising primarily owing to the depreciation of the Iranian currency. Since the beginning of the year, Iran has been steadily losing value against the hard currency due to mounting economic difficulties and geopolitical tensions. As Iranian poultry farmers heavily rely on imported soybeans and corn, the currency fluctuations hit the industry hard.
“Poultry farmers are the only losers in this situation,” Rad said, emphasising that the government controls only the retail broiler price, allowing soybean and corn to be traded under normal market terms.
In a bid to avoid even bigger losses, many farmers will avoid filling their hatcheries in the next few months, Rad projected. As a result, the market may face a threat of a severe supply shortage, Rad warned.
Outages add pressure
In addition, constant power outages also put pressure on farmers. “Virtually every poultry farm in Iran is now equipped with a diesel engine. If it suddenly breaks down, the entire production can be lost,” Rad added.
The Iranian poultry industry is running at 30-40% of capacity utilisation ratio, Mohammad Ali Kamali Sarvestani, advisor to the Iranian Broiler Farmers Union, has recently estimated.
