The poultry sector is the second-largest sub sector of agriculture in Pakistan yet the poultry industry is not stable in terms of price. A lot of price volatility has been observed in this sector over a very short span of time.
As per the chicken prices pattern, usually, broiler’s price goes up each year in March and April by 15 to 20 per cent. This is due to the prevalence of conditional volatility as it assures that previous volatility and shocks that exist in a city market may affect the present fluctuations in food prices.
But the scenario has been revered during Covid-19, as this sector faced some decline in its growth and price. The lockdown started in March 2020 and the shutdown of economic activities has generated massive economic challenges: an increase in the misery of the poor, unemployment, and food insecurity. Resultantly, severe difficulties for poultry farmers, hatcheries, feed mills, and labour and supply chain markets have emerged.
Contrary to false social media reports, the Rani Khait disease in poultry cannot be transmitted to people and can be easily handled if the birds are properly vaccinated
The poultry farmers have had to curb their production quantity because of reasons such as the non-availability of inputs, labour and transportation, and closure of retail markets and restaurants. Due to transportation hindrances, necessary medicines and vaccines that must be given to broiler breeds could not reach the poultry farms. Ultimately, poultry farmers helplessly saw an unbearable increase in the bird’s mortality rate.
One of the main reasons was the rumours that Covid-19 spreads by eating broiler meat and eggs. This led to a sudden dip in the demand for poultry meat. Resultantly the poultry meat prices fell by around 50 – 70 per cent during early 2020 in the country.
As the government relaxed lockdown protocols and concerned departments came out to uplift this sector by launching campaigns to create awareness about the false stories of Covid-19 being spread by poultry meat and related items, the demand for chicken meat rose. Consumers panicked when they saw a hike in prices of poultry products because the poultry farmers who had previously decreased their production quantity didn’t have much supply to accommodate the accelerated demand of consumers. In turn, chicken prices skyrocketed immediately.
Another important factor that contributed to the price hike was a massive increase in the prices of poultry feeds, their concentrates, and their shipping costs to Pakistan. So, to sustain profitability, poultry farmers and poultry associations decided to increase the prices of chicken.
This price volatility doesn’t stop here. Recently, a highly contagious viral disease namely, Newcastle Disease (ND), also called Rani Khait, affected the poultry industry of Pakistan. This disease raised the mortality rate of the birds by 25pc. As witnessed before, false rumours on social media were spread about this disease being harmful to the people who consume chicken meat. The spokesperson of the Animal Sciences Institute, National Agricultural Research Centre, Islamabad, informed the public that this disease can’t be transmitted to humans. They further informed that this is an endemic disease that can be easily handled by the proper vaccination mechanism of poultry birds.
But as videos containing misinformation are being circulated on social media sites indicating the danger, consumers are still afraid to buy chicken. This time, poultry farmers are in a panic situation because demand for chicken fell by more than 50pc, and as a result, in just two weeks, the price of live chicken fell from a previous high of almost Rs 340/kg to between 240-275/kg (a slight variation in prices always remains across different cities of Pakistan).
This is the reason why the poultry farming business is expensive and risky in Pakistan as it is being operated purely on traditional lines without any use of modern marketing mechanism. Such a situation creates uncertainty in the market, and as a result, farmers are unable to plan their businesses.
Currently, Pakistan’s daily meat consumption is only 17 grams, while World Health Organisation recommends 27 grams for the daily requirement of animal protein for human consumption. Sufficient animal protein consumption helps humans boost their immunity, which is the good shield against Covid-19 and other diseases. Improvement in poultry meat intake is possible only when there is price stability in poultry products across the country.
In a nutshell, government and its allied departments must play their role to take strong legal action against people who spread misinformation that causes a decrease in poultry consumption and poultry production.
Furthermore, the government must ensure proper implementation of pricing strategies so that prices of poultry chicken and eggs not go beyond consumer’s purchasing power. Two types of price control measures can be opted by the government to provide ease of business to poultry investors and the best purchasing prices for consumers as well.
One is to implement a floor price strategy, which would lead to poultry farmers earning better profits because if the supply of poultry products is high, even if demand is negligible, consumers will have to pay a certain amount as imposed by the government to protect poultry farmers.
The other one is a price ceiling that can be imposed to protect consumers from producers or sellers who charge unjustifiably higher prices for their products. If the government puts in efforts to control the price volatility crisis, poultry in the industry can grow at a high pace. Pakistan can also alleviate poverty from rural areas, increase halal meat exports and achieve food independence in a much better way.
The writers belong to the Department of Agribusiness & Applied Economics at the Muhammad Nawaz Shareef University of Agriculture, Multan
Published in Dawn, The Business and Finance Weekly, July 19th, 2021