COVID-19 jolts poultry industry in Q4 FY20, de-growth of 4 to 5% projected

The industry incurred large net losses due to sharp decline in demand, realisation and profitability. Rumours circulated in social media, linking poultry birds as possible vectors of the virus, further lead to the demand drop and hence realisations.

While realisation has recovered from lows of March, overall volume is likely to remain modest in Q1 FY21 (April to June) thereby putting pressure on overall profitability.

As per ICRA research, the liquidity condition of industry participants continues to remain stretched, especially of smaller integrators and contract farmers with few entities likely to witness closure of business.

"Owing to sharp decline in realisations during Q4, players incurred contribution losses. They sold birds below their cost price due to perishable nature of products," said ICRA Vice President Ashish Modani.

"Restricted logistics due to lockdown led to supply glut in local market, further adding to pressure on realisation. Consequently, sizable losses in the last two to three months wiped out almost all profit booked during first nine months of previous fiscal," he said in a statement.

In terms of industry dynamics, India is currently the fourth largest poultry producers in volume terms though per capita consumption is still one of the lowest in the world.

Domestic poultry industry can broadly be divided as broiler meat and table egg with other poultry meat forming marginal proportion of overall market. The total broiler market size was estimated at 4.7 million tonnes (carcass weight), translating into volume growth of two per cent year-on-year during CY19.

At a per capita meat consumption of 3.4 kg per annum, the total broiler meat market size was over Rs 85,000 crore in terms of retail price. The domestic table egg production for CY19 was estimated at 109 billion eggs, translating to a per capita egg consumption of 80 eggs per annum and market size of over Rs 45,000 crore.

ICRA expects domestic broiler meat demand to be affected in the short-term due to the COVID-19 pandemic, leading to a marginal degrowth of four to five per cent in poultry meat revenues and table egg demand to moderate by one to two per cent in FY21.

(To view our epaper please click here. For all the latest News, Mumbai, Entertainment, Cricket, Business and Featured News updates, visit Free Press Journal. Also, follow us on Twitter and Instagram and do like our Facebook page for continuous updates on the go)

Free Press Journal

www.freepressjournal.in