The Indian poultry sector faces margin pressure due to successive droughts causing acute feed shortages, necessitating imports of maize and soya after several years. Rising temperatures have also increased broiler mortality rates.
Margin Pressure Despite Price Hikes
Despite price increases for chicken and eggs alongside strict production controls, breeders report continued margin pressure.
Successive droughts force India to import maize and soya for poultry feed
5 Lakh Tonnes Maize Approved — 2.3 Lakh Arrived
Following industry appeals, the government approved 5 lakh tonnes of maize imports with duty exemptions, with 2.3 lakh tonnes already arrived. Soya import remains under government consideration, according to Gajendra Varma, CLMFA executive director.
Maize production declined over one-third due to consecutive droughts. India previously achieved self-sufficiency and exported maize until last year. Major feed-producing states Bihar and Madhya Pradesh experienced significant production drops, noted Sanjeev Pant, senior VP at Charoen Pokphand Foods.
ICRA — Margins Will Persist Under Pressure
ICRA reports maize prices reached record highs, raising average broiler production costs to FY14 levels while realisation remains at Rs 67–68/kg for FY16's first nine months.
"Margin pressure will persist through the near term despite expected Q4 FY16 improvements."
— ICRA, January 2016 report
Revenue Growth Halved
Breeders cannot substantially increase selling prices without damaging demand, stated Harshavardhan Reddy. Ten major integrators saw FY15 revenue growth drop to 11% annually from four consecutive years exceeding 20%.
Long-Term Demand Outlook
The Indian poultry industry currently reaches Rs 67,000 crore — broilers at Rs 42,500 crore and eggs at Rs 25,500 crore. Domestic broiler and egg demand growth projections are 5–7% and 4–5% respectively long-term.