Poultry farmers face crisis as rising feed prices outpace production cost

The instability in the egg and chicken market has subsided, but fresh challenges have arisen for poultry farmers, with increasing feed prices amid already high production costs putting many of them at risk of leaving farming operations.

In the aftermath of the Covid-19 pandemic, a substantial number of poultry farms have grappled with financial hardship. This situation has been further worsened as the Russia-Ukraine conflict triggered a significant surge in feed prices. 

Consequently, the price of poultry products has not kept pace with the high production costs, leading to the closure of approximately 59,000 poultry farms since the outbreak, representing nearly half of the country's total, according to the data of Bangladesh Competition Commission.

Adding to the blow, poultry feed growers announced to increase broiler and layer feed prices by Tk2.5-3.5 per kg from November 25. The feed producers had reduced the price by Tk3.5 per kg in three rounds. 

Talking to this newspaper,  farmers said they are now selling broiler chicken at the rate of Tk130 per kg, whereas the production cost of the marginal farmers, according to the Ministry of Fisheries and Livestock, is more than Tk160.

Similarly, each egg of broiler chicken is selling for Tk8-8.5 at the farm level, while the cost of production is more than Tk10.50.

According to Trading Corporation of Bangladesh (TCB) market analysis data, broiler chicken prices fell by 16.67% and egg prices by 21.57% in one month.

Farmers are saying that if the government does not determine the prices of eggs and chicken at the farm level now, the crisis will worsen. If the government delays making decisions, it will create a bigger crisis in the supply chain in the long run, they say. 

Sumon Haoladar, president of the Poultry Association of Bangladesh, told The Business Standard, "The government must intervene to save the farmers because all three or four hands in the supply chain are making profits while only the producers are being harmed."

He went on to say, "If the government announces and monitors the cost of production for farmers, improvement in this situation is possible; otherwise, farmers will withdraw from production, leading to a long-term production shortfall, creating instability in the market."

What feed producers say

Farmers say they are selling eggs and chicken below the cost of production, yet there is renewed pressure with an increase in feed prices. 

On November 24, the Bangladesh Feed Industries Association (BFIA) submitted a letter to the Ministry of Fisheries and Livestock regarding the increase in feed prices. 

Feed producers state that from June to November of the current year, the prices of the seven main raw materials used in feed have increased by almost Tk10 per kg. 

Simultaneously, the exchange rate for LC opening for importing raw materials in August, which had to be done at Tk110-111 per dollar, has risen to Tk122 in November.

Feed producers claim that the cost of feed has increased by an average of about Tk5.50-6.00 per kg solely due to the impact of rising prices of raw materials and the dollar. It's not just imported raw materials; locally produced maize prices have risen from Tk29 to Tk35-36. 

Prices of soybean meal at the crushing industry have increased without any announcement from the industry. As a result, this maize, which was previously sold at Tk65-67 per kilogram, is now being sold at Tk82-84 per kilogram.

Md Nazrul Islam, general secretary of the Bangladesh Feed Industries Association, said, "If the increased expenditure per kilogram of feed is not revised, many feed mills will face financial difficulties, and some may even have to shut down." 

Simultaneously, he added, there is a concern that if the main raw materials for feed, such as maize, soybean meal, along with bran, cannot be imported in a timely manner, there is a risk of disruption in the production of fish and livestock feed.

The Bangladesh Feed Industries Association has made several recommendations in a letter sent to the Ministry of Fisheries and Livestock. The organisation has urged for a continuous review of the prices of raw materials for feed and the production costs, along with an examination of economic values every 15 days. 

Additionally, the association has highlighted that modern importers are opening LCs in banks, where products are being uploaded but the confirmed rate of the dollar can only be known after 180 days. 

The banks are not providing any advance forecasts for the dollar at this location and in this situation, government policy support has become crucial, it said.

At the same time, feed importers are seeking cooperation for the facilitation of importing raw materials from neighbouring countries and ensuring that products at the port do not face any unnecessary delays beyond the scheduled time, in order to avoid additional pressure on importers.