Crisil sees 10% growth in poultry industry: What's pushing up egg, chicken prices?

Improved prices for eggs and broiler chicken, coupled with steady consumption demand, are expected to lift India's poultry industry revenue by around 10% this fiscal, even as producers grapple with weather-related disruptions and higher feed costs, according to Crisil Ratings.

The rating agency on Thursday said operating margins are likely to recover by 50-70 basis points after falling 50 basis points in the previous fiscal, while credit profiles of poultry companies are expected to remain stable due to modest capital expenditure and limited incremental debt.

The assessment comes at a time when egg and chicken prices have jumped across several markets following prolonged heatwave conditions and delayed, uneven monsoon rains that disrupted production.

According to a Business Standard report, wholesale egg prices in Pune touched a record ₹760 per 100 eggs on July 22, while retail prices climbed to ₹110-120 per dozen in several localities.

Wholesale egg prices in major centres such as Mumbai and Chennai have also risen to around ₹7.5 per egg, while chicken prices have increased as heat stress reduced bird availability and slowed production, the report said.

Crisil's analysis showed that the egg segment, which accounts for 58-60% of the poultry industry's value, is expected to record revenue growth of 9-11% this fiscal.

Consumption is projected to rise 4-6%, while average prices are expected at ₹5.6-5.8 per egg.

The broiler segment is expected to post revenue growth of 8-10%, up from about 5% last fiscal.

"A short summer and early monsoon resulted in a surplus and, consequently, a nearly 20% year-on-year decline in broiler prices last fiscal. This led to lower placement of birds towards the end of the fiscal, which, in turn, drove up prices in the first quarter," Crisil Director Jayashree Nandakumar said.

She said forecast El Nino conditions are likely to reduce bird weights, resulting in tighter supplies and average broiler prices of ₹120-125 per kg this fiscal compared with ₹115-120 per kg last fiscal.

According to the Business Standard report, prolonged heat stress reduced egg production by 5-7% and increased chick mortality by 7-10% in several poultry-producing states.

The report said higher temperatures lowered feed intake among birds, reduced egg output, slowed weight gain in broilers and forced farmers to spend more on cooling systems, water and veterinary care.

Feed costs, which account for nearly two-thirds of poultry production costs, are also expected to remain elevated.

"While maize prices are expected to rise moderately due to El Nino conditions, soybean de-oiled cake prices are likely to remain stable given adequate supplies this fiscal. The remaining 10% of feed components, primarily vitamins and husk, are imported and will become costlier due to higher logistics expenses caused by the West Asia conflict," Crisil Associate Director Rishi Hari said.

He said average feed costs are projected to rise 3-5% to around ₹77 per kg this fiscal.