Domestic poultry industry likely to post healthy FY21 profits says, ICRA

The domestic poultry industry is predicted to post healthy profits during FY21 after a near washout in profits in FY20, rating agency ICRA said on December 7.

The rating agency said that domestic poultry industry bounced back smartly since June 2020 after grappling with a harsh period in the last two months of FY20, amid rumours of chicken consumption's linkage to COVID-19 resulting in a sharp decline in broiler demand and realisations.

ICRA further said that the healthy rebound since Q2FY21 will enable players to post healthy profits during FY21 after near washout in profits in FY20.

The trend, the rating agency said, is probably going to be well supported by improved realisations and modest feed prices.

Ashish Modani, Vice President, ICRA said, “Most of the players had reported net losses within the previous financial year with several smaller players going bankrupt, due to fall in consumption, high feed prices and modest realization." 

"The change in industry scenario for the better since June 2020 has resulted in realisations being at an all-time high currently, this lends support to profitability. Also, premature culling of chicks, as well as lower chick placement during Q1 FY2021, restricted supplies within the market, which helped in improvement in realisation across all regions during H1FY2021,” Modani added. 

In terms of input costs for a poultry farm, the note cited that feed forms 70 per cent of its variable costs with the balance comprising day old chicks (DOC) cost (20 per cent), and medicinal care, labour and power costs making up for the remainder.

Besides, the note said that within feed costs, by volume, maize forms 60-63 per cent while soy meal forms 25-27 per cent, with the remainder being rice bran oil, de-calcium phosphate and other micronutrients.

"The COVID-19 related impact on demand resulted during a sharp decline in maize prices below Rs 13 per kg during Q4 FY2020 and therefore the prices remained soft during H1FY2021," Modani said.

Currently, maize prices are hovering around Rs 14-16 per kg which is below the minimum support prices (MSP) of Rs 18.5 per kg as also below the last years' weighted price of Rs 20-22 per kg.

Source: IANS