The COVID-19 lockdown has impacted the domestic poultry industry, and the poultry meat segment is likely to witness 4-5 per cent decline in revenue in the fourth quarter of 2019-20, according to a report.
The industry incurred large net losses due to sharp decline in demand, realisation and profitability and rumours circulated in social media, linking poultry birds as possible vectors of the virus, further leading to the demand drop and hence realisations, ratings agency Icra said in its report.
"We expect domestic broiler meat demand to be affected in the short-term due to the COVID-19 pandemic leading to a marginal de-growth of 4-5 per cent in poultry meat revenues and table egg demand to moderate by 1-2 per cent in FY21.
"Going forward, industry's transition to a chilled or frozen market would be crucial for increasing value addition as well as international trade where India currently has a negligible presence," Icra Vice President Ashish Modani said.
Over the long-term, broiler volume growth will be supported by low per capita consumption, religious preference for chicken meat, year-round easy availability across the country, increasing disposable income, changing food habits, increasing health awareness and poultry being one of the cheapest sources of protein, he added.
Owing to sharp decline in realisations during the fourth quarter of FY20, players incurred contribution losses and sold birds below their cost price (due to perishable nature of products).
Restricted logistics due to lockdown led to supply glut in the local market, further adding to pressure on realisations and consequently, sizable losses in the last 2-3 months wiped out almost all profit booked during nine months of FY20, he said.
"Also, the liquidity position of several small contract farmers and integrators have been impacted with some going out of the business due to limited financial flexibility. The pressure is likely to sustain during the first half, with industry hoping for recovery towards the end of second quarter of FY21," he added.
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 report said.
The total broiler market size was estimated at 4.7 million tonnex (carcass weight), translating into volume growth of 2 per cent year-on-year during CY 2019.
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 CY2019 was estimated at 109 billion, translating to per capita consumption of 80 eggs per annum and market size of over Rs 45,000 crore, it added.
Disclaimer: No Business Standard Journalist was involved in creation of this content
