Poultry takes hit from soaring feed price, falling demand

"I have decided to keep my farm closed for a certain period as it has not been bringing any profit for me," a Rangpur-based poultry farm owner Md Faruk Hossain said in frustration.

He recently sold 1,500 pieces of broiler chicken at Tk130 per kg while his production costs, including costlier chicks and feed, were a bit higher – meaning that he incurred a substantial loss. "Apart from financial loss, my labour went in vain. I will come back if the feed prices come down again."

Faruk is one of 1,000 entrepreneurs in Rangpur Sadar upazila involved in the poultry business. The rest are also in the same condition; some of them have temporarily closed their farms and many have cut down on production. The situation is almost similar in the rest of the country.

The production of chicken, the most consumed protein in the country, has largely declined over the past couple of months as prices of poultry feed and its raw materials skyrocketed amid the global tension due mainly to the Russia-Ukraine war. Besides, falling demand in the face of commodity price hikes is also a reason, sector insiders said.

Although statistics on the recent state of poultry farming are not available yet, they can be surmised on the basis of the declining production of chicks and feed.

The country used to produce some 2 crore chicks a week, which now has declined to 1.5-1.6 crore, according to the Breeders Association of Bangladesh.

"If the situation continues, the production of chicks will come down to 1.2-1.3 crore within one or two months," said Kazi Zahin Hasan, president of the association.

"The situation has worsened so much that we are now failing to sell chicks at Tk5-10 per piece, which was Tk30 in normal times. We even have to kill them to prevent losses," he added.

Meanwhile, feed producers have cut their production – usually 65 lakh tonnes annually – by 20-25% as their production costs have increased sharply, which is not proportionate to their product prices.

"To some extent, the prices of poultry feed ingredients increased by more than 100% but we cannot increase the feed price proportionately," said Shamsul Arefin Khaled, president of Feed Industries Association Bangladesh.

"When we hiked the price by Tk7-8 a kg, we saw many entrepreneurs temporarily closing down their farms, which was why we were also forced to cut down on our production," he said, adding that the amount of the losses would increase if they continued the same level of production.

With an increase of 25% in feed price to Tk3,150 per 50kg sack, the manufacturers said they compromised on profit margins to cope with the raw material price hikes. Besides, many small-scale manufacturers suspended their feed production.

If the raw material prices increase further, all of them would face a survival fight, they said.

The main ingredients of poultry feed – maize, soymeal and soybean seed – are import-dependent, global markets of which are volatile amid the ongoing war between Russia and Ukraine, the two largest suppliers of food grains and edible oil. The war ultimately caused tension relating to food security for many countries.

Rangpur Sadar Poultry Farm Owners Association General Secretary Md Armanur Rahman Linkon explained how soaring feed prices had a bad impact on egg production and its price.

"Production cost per egg was Tk6.30 just six months ago, which increased to Tk8.30 now. We are selling it at Tk9," he told The Business Standard, adding that production costs of broiler and Sonali chicken, the two most popular poultry chickens, increased the same way.

In the capital kitchen markets, four eggs are being sold at Tk40 now, a kg of broiler at Tk155-160 and Sonali at Tk350.

Entrepreneurs who are producing Sonali chicken and egg are making little profit, sector insiders said, while broiler farms, over 55% of chicken producers, are the losers.

"Amid the rising commodity prices, people are reducing their protein intake, which means demand for our products is on the decline. If we increase the prices of chicken proportionately with production costs, our sales will drop further. So, we cannot do that," said Mashiur Rahman, president of the Bangladesh Poultry Industry Central Council.

On the other hand, low-profit margins are forcing entrepreneurs to turn away from the business. In such a situation, the council has sought some facilities in the upcoming budget to boost the sector that can ensure protein for all at affordable cost.

Among others, it demanded a tax holiday until 2030 for the sector, withdrawal of duties and advance income tax on capital machinery and raw materials, and decrease in corporate tax to 5% from the existing 15%.