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KARACHI, Jan 7: The exorbitant but ‘systematic’ increase in the price of poultry feed from October 2006 to November 2007 suggests that a cartel of feed millers has been behind it.
It is feared that if the upward trend continues, it will not only make the price of chickens and eggs beyond the reach of common buyers but will also force small farmers, who cannot withstand the growing cost of production, to leave the field clear for big entrepreneurs.
The concern, supported by the data prepared by the Society for the Advancement of Poultry Sciences, was raised by several farmers while talking to Dawn.
According to SAPS data, the feed prices for layer starter, layer grower, broiler finisher and broiler starter for a 50kg bag were Rs650, Rs607, Rs669 and Rs672 respectively in 2006. The data shows a gradual increase in these prices in the following months on specific dates. For instance, the price of pre-breeder mash, was Rs667 on Oct 13, 2006. There was a gradual Rs20, Rs40, Rs30, Rs20, Rs20, Rs25, Rs25, Rs25, Rs35, Rs40 and Rs40 increase in the following months on specific dates. In the months of November 2006 and March 2007, the price of pre-breeder mash was increased twice.
The price of layer mash was Rs632, broiler starter crumbs Rs679, layer crumbs Rs644 which increased to Rs942, Rs974 and Rs954 respectively. The trend was similar in the prices of other chicken feed, too.
The data shows that the feed price increase caused a rise in the cost of production of a day-old parent stock chick price which has jumped from Rs110 to Rs145 while the price of a day-old is fluctuating between Rs5 and Rs10 and their cost of production has crossed Rs14 per chick.
Commenting on the situation, SAPS general secretary Dr Shakaeb Ahmad said: “What is astonishing is that the chicken feed prices have shown an increase of 40 to 51 per cent from June 2006 to October 2007 whereas it should have been 18 per cent, considering the progressive inflation rate in the country.”
Price manipulation
He said it was surprising that all feed companies enforced the increase of a price at the same time and date, irrespective of their quality. “It seems as if everyone has a perfect mutual understanding,” he said, adding that in the feed industry there were tycoons who had huge storage godowns which were filled in the crop season when prices were usually low and the produce was sold later at exorbitant rates.
“At present, table eggs are being sold at Rs60 to Rs70 per dozen while chicken meat is being sold at Rs120 to Rs150 per kilogram. Such price hike overburdens producer and consumer financially and consequently causes a drop in the demand for chicken meat and eggs,” he pointed out and observed that this was why chicken and egg market prices could not be raised at will beyond a certain level.
“Otherwise there will be a few buyers. But the majority of adversely affected people are common farmers. Having limited resources and farm capacity, they cannot withstand the increasing cost of production. Ultimately, it results in curtailment of their production while many suffer the loss of their investment and go out of business.”
Artificial shortage
Many poultry farmers that Dawn spoke to agreed that a cartel must have been active behind the gradual and ‘systematic’ raise in prices of chicken feed.
“There is no doubt about that. In just one year we have seen a progressive trend in the chicken feed prices in specific dates and this is happening when the government has recently set up a ‘competition commission’ with the sole responsibility to check formation of cartels and eliminate restricted trade practices,” Mohammad Azhar, a poultry farmer said, adding that feed millers created an artificial shortage of feed ingredients while storing huge quantity of raw material to manipulate prices.
It is pertinent to mention here that there are around 2,500 poultry farms in and around Karachi, majority of them run by small farmers. Generally, a farm has a capacity of around 3,000 birds. There are seven to 10 big farmers who have around 100,000 birds.
Talking about the increase in cost of production, Shakeel Ahmed Siddiqui, who has been in the poultry business for about 20 years, said that besides the current inflation and rise in chicken feed prices, vaccination cost, labour, water and electricity charges had also been increased.
“Though there are many farms in Gadap area, water availability is scarce. Water tankers have become costly over the years and so are the charges of electricity and other utilities,” he said, adding that the persistent rise in cost of production reduced the profit margin of small farmers and he was forced to close down his business ultimately.
“The closure of businesses triggers an increase in rates. In this situation, only those with huge stocks survive. A vital poultry business can only be facilitated if new competition laws are strictly enforced and feed prices are controlled,” he said.
Sources in the Pakistan Poultry Association also confirmed the existence of a cartel behind the feed price increase but refused to give any official statement. They said the government had signed a lucrative deal with a Thai company which had been allotted land in the interior of Sindh for poultry production while no measures were being taken to address the grievances of small farmers.
When asked how the government could provide relief to small farmers, PPA representative Abul Maroof Siddiqui said: “One major step could be reduction in the profit of middle men. Besides, the government should make investment in the poultry sector and provide loans to farmers on easy terms under a certain criteria.”
