Poultry Players Eye High Realisation Via Lower Volumes05 June 2013
INDIA - Large, organised poultry meat producers have set their eyes on making 2013 a year of growth on value rather than volume. This follows a year - 2012 - of low value realisation, thanks to low selling prices, high operational costs and rising input costs.
However, this change of strategy will mean growth in the domestic poultry (broiler) meat sector will remain muted during the current year, according to Business Standard.
Last year, operational costs went up significantly following a 25 per cent rise in the price of maize and more than doubling of soymeal prices, from Rs 22 a kg before June 2012 to Rs 45 a kg in August 2012.
As a result of controlled production of meat and 'hatching holidays' initiated by key integrators late last year, the price of poultry meat appreciated by as much as 65 per cent and even doubled in certain region during the first four months of 2013.
"Last year, prices were very low and we have seen input costs going up significantly, in the range of 50 per cent and above. Soya and maize prices increased by 75 per cent and 60 per cent, respectively, in the last one year. There are other factors like fuel cost and staff salary that added to our cost of production going up. But, prices did not increase at the same pace," Ardibudiono, head of marketing at Japfa Comfeed India Pvt, a subsidiary of Indonesian poultry meat and feeds maker Japfa, said.
He said production were low this year and prices was good. The company is hopeful of achieving better performance, he added.
The poultry meat sector grew 17.2 per cent to 3.4 million tonnes (mt) in 2012, compared to 2.9 mt in 2011.
Domestic poultry meat production (broiler - carcass weight) was less than a million tonnes in 2000. Per capita yearly consumption has increased from 0.8 kg to 2.8 kg during the last decade, according to a report by Icra.
The Indian poultry industry has been growing at around 8-10 per cent annually over the last decade, with broiler meat volumes growing at more than 10 per cent.
In 2012, the prices of poultry meat had crashed to as low as Rs 40 a kg, mainly due to volume growth.
To make matters worse, broiler realisations nosedived in the last quarter of 2012 on the back of oversupply and sporadic instances of 'bird flu' in certain geographies.
"Commercial poultry players are opting to cull the birds and also destroying eggs and not allowing birds to grow in a big way this year as they want to control volumes. All this, so that they can recover the losses they incurred last year due to high volume growth as retail prices did not increase in many regions," Ravi Kabra, senior analyst with Icra, said.
In 2013, the volume growth could be in the range of one to two per cent, he said.
During 2013, the average price of meat increased from Rs 40-45 a kg in June 2012 to over Rs 75 a kg in the first quarter of the current calendar year. In Bangalore, the prices shot past the level of Rs 100 a kg and are currently ruling at Rs 110 a kg for unbranded meat and up to Rs 160 a kg for branded meat.
The average price of live bird sold by Japfa has gone up 36 per cent to Rs 68, as against Rs 50 last year.
Icra, in its latest report on the poultry sector, said the industry is set to grow 8-10 per cent in the long term on the back of favourable socio-economic factors, like higher purchasing power, changing food habits and increasing urbanisation.ThePoultrySite News Desk