According to The Hindu, decline in the demand for birds coupled with hike in prices of essential ingredients like maize and soybean has forced farmers to sell the birds at around Rs. 50 a kg against the cost of production of close to Rs. 60 a kg. In addition, reports on occurrence of bird flu in some parts of the country, affected sales significantly, thus crippling the industry.

Andhra Pradesh accounts for production of 3.5 crore live birds every month, which is one-third of the country’s production, apart from six crore eggs a day. In revenue terms, poultry’s contribution to the State’s annual GDP is estimated at Rs. 20,000 crore with employment to close to 20 lakh people.

The first blow to the industry came in the form of hike in the minimum support price of maize from Rs. 980 to Rs. 1,175 a quintal and for soybean, from Rs. 1650 a quintal to Rs. 2,200. “The hike in MSP will translate into abnormal increase in the cost of maize per quintal from Rs. 1,100 to Rs. 1,700 in the open market, close to 30 per cent hike at one go,” AP Poultry Federation president D. Sudhakar said.

This was followed by the export of soya cake in large quantities to Iran, owing to the country’s bilateral relations, at prices almost 150 per cent higher than the domestic market. This gave scope for traders to create artificial scarcity and jack up prices of the commodity. Players in the poultry domain claim that the price fell to Rs. 27 a kg at the farm level in the recent weeks and the sale of dressed chicken had fallen to Rs. 80 a kg from about Rs. 120 a kg a couple of months ago.

“This is unviable and resulted in significant erosion of the working capital,” Mr Sudhakar said.

The situation in the egg market, where the State leads the country, is no better. “The National Egg Coordination Committee has declared price of Rs. 3.35 an egg, but this does not guarantee returns to farmers as the cost of production and overheads is higher than the offer price,” Hyderabad Layer Farmers Association president K. Mohan Reddy said.

Industry players are not hopeful of the situation improving during the current year too. They wanted banks to announce one-year moratorium on repayment of the principal and interest on the loans they had obtained besides rescheduling the loans.

The AP Poultry Federation held meetings with Union Finance Minister P. Chidambaram, RBI Governor Duvvuri Subba Rao and Food and Agriculture Minister Sharad Pawar seeking their intervention in recovery of the sector and enhancing working capital limits as there was serious erosion in the amount employed. They also wanted the government to regulate exports and essential ingredients and freeze them at a certain limit.