Rise In Prices of Feed Ingredients Put Chicken Farmers in China in A Tight Spot - CHINA - In recent period, chicken egg prices in China have been edging higher amidst the surging prices of feed ingredients. Layer farmers in China awaiting a windfall in the chicken egg market in the aftermath of the bird flu outbreak have been denied the chance of increasing their earnings.

Instead, the rising prices of feed ingredients have put the chicken farmers in China in a plight.

In end March, prices of chicken eggs in a certain supermarket in Zhangcheng city of Liaoning province have risen to nearly RMB5 per kg. With the bird flu outbreak fully under control, demand for chicken meat and chicken eggs peaked in March. Although many chicken farmers in China have expected to profit from such a turnout, the surge in prices of chicken feed over the previous two weeks has weaken the earnings of these farmers.

Illustrating the plight of these farmers: Huang Village in Ganquan Township, Haicheng city of Liaoning province, is the largest chicken-farming village in the township, with at least 3,000 chickens per farming household. When a big truck arrived at the Huang Village to collect chicken eggs in the morning of March 24, farmers loaded their chicken eggs into the truck. The mere mention of higher chicken egg prices brought not delight but expressions of helplessness.

One of the chicken farmers, Mr Li Longhai lamented, "While prices of chicken egg have only increased marginally of late, chicken feed prices have already soared over the last two weeks. A ton of chicken feed has increased by more than RMB100. We have expected to increase our earnings after the bird flu outbreak, but now, we will be happy if we don't make any losses!"

Pointing to his more than 20,000 tons of corn, farmer Mr. Han from Guanfansi village in Ganquan Township, said, "Corn prices have increased once every three days over the last two weeks. It has escalated from the original RMB0.90/kg to RMB1.10/kg. I foresee further increases."

A modest increase in chicken egg prices accompanied by a surge in chicken feed prices has been uncommon in the past years. A feed company's manager in Gengzhuang town in Ganquan Township, Mr Sun revealed, "Every year at around this time, we will import corn from overseas. However this year, the corn from Heilongjiang province was too soggy and the quality not good enough for use in chicken feed. A large part of the local corn has been sold off earlier, resulting in a shortfall and thus, the rise in prices."

Relative to the hike in feed prices, the increase in chicken egg prices has been slow. Said Mr. Sun Huajiang, who has come from Dandong area of Liaoning province to collect the eggs, "Prices of chicken eggs have risen by RMB0.30-0.40 per kg in the aftermath of the bird flu outbreak. One kg of chicken eggs in Dandong area now costs about RMB4.80 per kg. However, the folks have found the increase in egg prices unacceptable and refused to buy eggs. As such, chicken farmers are still unable to make any money."

As feed prices increase, prices of young chicks have also risen correspondingly. While it used to cost a layer farmer about RMB17 to buy a young chick and raise it till maturity for laying egg, it now costs RMB25.

Chicken egg prices in China, depressed during the bird flu outbreak period, are expected to pick up in the aftermath of the bird flu outbreak. While a further price increase in egg prices is possible, a hike in feed prices has not been anticipated. Layer farmers in China are currently caught in a dilemma: if they do not continue investing in layer farming, the opportunity for making more profit will be lost, if prices of chicken eggs eventually increase. Conversely, investment involves market risks.

Source: eFeedLink - 2nd April 2004