Small poultry farmers need low-cost loans to stay afloat

When the country's poultry industry started to recuperate slowly from the pandemic-induced downturn, the Russia-Ukraine war halted the progress, sharply curtailing people's purchasing ability and demand.

The oversupply of poultry products caused the prices to plummet, while the cost of production soared due to skyrocketing prices of feed, pushing small and marginal poultry farmers out of business as they failed to fetch profits.

Many poultry farmers have lost capital and closed their businesses over the last two years. If the small farmers cannot be retained in production, the supply will suffer a big blow in the coming days.

Under the current circumstances, working capital must be provided to keep them afloat and arrangements should be made so that they can easily access the government loan at a 4-5% interest rate.

If small farmers withdraw from production, big farms like ours that produce chicks will gradually lose buyers – a situation we are currently observing. It costs Tk38-39 to rear a chick, but we are selling it at Tk4-5. We are going through a terrible situation.

We are not getting the expected price for chicks, and those who are producing broiler chickens are also not getting their desired price. Everyone is trading at a loss. In other words, the entire supply chain is in a crisis – from the hatchery to the farmer.

The main issue is that we do not have a clear estimation of our local demand and supply, which is resulting in over-production. We are not exporting poultry as our processing sector is not very big and we cannot stock chicks, eggs, and chickens beyond a certain period. Hence, production and sales must be continued regularly.

We have been urging the government for several years now to make a proper estimation of demand. But that has not happened yet.

The prices of feed ingredients have gone up by 60-70% since the pandemic hit the country. Maize, which used to cost Tk24-25, is now Tk37-38. Prices of raw materials shot up but the prices of the end products did not increase. Then, how will the farmers survive? There seems to be no scope to minimise losses.

We are not able to export poultry products due to several reasons. Firstly, we are not able to compete with other exporting countries such as Brazil and Thailand when it comes to the cost of producing a one-day chick.

Due to the high cost of raw materials, the cost of feed is going up. A major component of feed is soybean meal, a byproduct of soybeans, which is held by only a few companies. These raw materials cannot always be imported, as it requires a lot of capital. So, the price of the final product cannot be competitive in the international market.

There are some other reasons too and processing plants are one of them. The plants have to be improved and commercialised. Otherwise, there will be a crisis with the traceability system, which locates a product through various stages of the supply chain.

According to the rules of the World Organisation for Animal Health, a country cannot export poultry products if a disease is detected in that country. However, there is an exception to this rule. If a country produces poultry products by zoning and the zone is disease-free, then export is permissible. But no such initiative has been taken in our country yet, even though we have repeatedly requested the government for it.

There is a way for farmers to cut production costs. Small farmers typically rear a small number of chickens. If educated young farmers raise a large number of chickens, they can buy feed directly from the company, bypassing dealers and the cost of production can be reduced by at least 10-12%.

Besides, if the farms maintain biosecurity, the death rate of chickens can be reduced while boosting productivity and production. It will also bring down the cost.

Big poultry businesses are also in a quandary as they have to bear the brunt of bank loans. They should be given longer times for loan repayments at reduced interest rates.

Another issue is that the hatchery owners cannot take loans due to a lack of insurance which is a big problem. Hatcheries should be provided with sufficient funds.

Finally, coordination should be maintained among those who are importing grandparents and producing baby chicks (grandparent poultry breeding produces a higher quality of poultry in the same genetic line).

There is a demand for maybe 13-13.5 million chicks a week in the country. The importation of grandparents should be allowed to meet this demand. In addition, import decisions should always be made through a moderate amount of adjustment, instead of any abrupt move.

The author is the managing director of Aftab Bahumukhi Farms