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

COVID-19


New Delhi

The recent COVID-19 lockdown has impacted the domestic poultry industry severely with the fourth quarter (January to March) being the worst in recent times, according to investment information firm ICRA.

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

While realization 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 the closure of the business.

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

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

In terms of industry dynamics, India is currently the fourth-largest poultry producer 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 a marginal proportion of the overall market. The total broiler market size was estimated at 4.7 million tonnes (carcass weight), translating into volume growth of two percent 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 a 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 percent in poultry meat revenues and table egg demand to moderate by one to two percent in FY21.


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