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India's Poultry Industry to See Improvement in Profit Margins

15 May 2014

INDIA - Though volatile realizations, wide supply-demand disparity across regions amid high feed costs remain a concern, the poultry industry is expected to report improved profit margins in the last quarter of 2013-14 and in 2014-15, ratings agency ICRA has said.

According to The Times of India, strong performances in 2010 and 2011 resulted in sizeable investments in capacity expansion, especially in the broiler segment leading to an oversupply situation. "The efforts of key integrators in the poultry industry to control supply through measures like hatching holidays initiated towards the fag end of 2012 resulted in improved realizations in the last quarter of 2012-13," ICRA stated.

Average realizations went up to Rs 80-85 per kg in February 2013 from lows of Rs 40-45 per kg seen in October 2012. Since these measures were not coordinated for a long time, production increased causing moderation in realizations yet again in the first quarter of 2013-14, ICRA said. Average realizations stood at Rs 60-65 per kg during this period.

The average spread between production cost and realization has been slightly better in 2013-14 compared to 2012-13 with realizations improving since December 2013. The industry, however, remains exposed to volatile realizations and demand fluctuations across geographies, the ratings agency said.

Domestic broiler meat volumes are expected to register muted growth in the current financial year on the back of supply control measures adopted by the industry to support realizations. However, growth in value terms continues to remain healthy.

Industry profitability was the best in 2010-11 due to favourable realizations and stable feed prices. It moderated in 2011-12 and deteriorated further in 2012-13, which was one of the worst years for the industry. Though profitability was still under pressure in 2013-14, it was estimated to be marginally better than that in 2012-13 on the back of a strong showing in the last quarter.

Domestic poultry meat production (broiler - carcass weight) is estimated to have remained flat at 3.5 million tonne in 2013, with per capita consumption of 2.8 kg per annum. Table egg production is estimated to have increased from 66 billion eggs in 2012 to 70 billion eggs in 2013, with per capita egg consumption standing at 57 eggs per annum.

The total poultry market size is estimated at about Rs 58,000 crore at the wholesale price level in 2013, indicating value growth of around 8 per cent over 2012.

ThePoultrySite News Desk

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