Sunny side down: Egg prices have jumped 40% this month. Blame it on low production

K Valli, a 58-year-old domestic worker in Chennai, now thinks twice before buying eggs for her family. This is because prices of the poultry product – an affordable source of protein, vitamins and minerals – have jumped almost 40% since the beginning of November, going up from Rs 4 or Rs 5 a piece to Rs 7 or more.

In Chennai, eggs are now selling at around Rs 7 a piece. In Delhi, they cost 50 paise more. The daily rates fixed by the National Egg Coordination Committee, an association of poultry farmers with 25,000 members, show a steady rise in prices through November across cities. In Hyderabad, it went from Rs 4.2 a piece to Rs 5.3 on November 17. This was the highest price for eggs in the city in four years, reported The New Indian Express.

Poultry farmers say the increase in prices is because of low production, which in turn is the result of rising costs of raw material and reduced investment.

With many Indians now cutting down on the number of eggs they are buying, sales have dipped as well. “I usually buy four to six eggs a day for my grandchildren,” said Valli. “But over the past month, I have been buying just two or three a day.”

Production down

According to AK Sharma of the Poultry Federation of India, the steady increase in egg prices is because of low production as a result of high meat prices in the market. He explained that every poultry farm has batches of egg-laying birds, or layers, in various stages of their life cycle. The older birds are usually sold for their meat. But with meat prices staying high, many poultry farmers are selling a larger number of their egg-laying birds, as a result of which their egg production has shrunk.

Sanjeev Chintawar of the Telangana Poultry Federation said it is normal for egg prices to rise in winter, driven by higher demand due to the cold weather. But he, too, said the jump in prices this month has more to do with reduced production.

He reasoned that production was low because rising input costs had prevented poultry farmers from investing in a new batch of chicks. “For the past four years, the industry has been performing poorly,” Chintawar said. He pointed out that farmers had had to borrow large sums of money from banks because of the cost of raw material, including poultry feed and medicines, going up. On the other hand, their profits had remained low with the average wholesale price of eggs staying below Rs 4 through most of this year. And while input costs decreased marginally this year, farmers still had to clear their loans from previous years.

This chart shows that egg production has remained muted for several years after a steep fall in 2014-2015 and is only now making a slow recovery.

Debt burden

Poultry farmers suffered heavy losses in 2014-2015 when poor rains hurt the production of soya and maize, which is used as poultry feed. V Subramaniam, vice-president of the Tamil Nadu Poultry Federation, said farmers were yet to fully recover from the setback.

“For a poultry farm that makes around Rs 3 crores to Rs 3.5 crores a year, production is being downsized by Rs 35 lakhs each year,” he said. But demand for eggs has gone up by around 10% every years, he added.

Subramaniam’s farm in Namakkal, one of the country’s poultry farming hubs, owes Rs 3 crores in arrears since 2014.

He said many farmers are trying to keep afloat by borrowing from banks and moneylenders. But in Namakkal, only 20% of poultry farmers received loans from banks while the rest have had to borrow directly from the raw material suppliers, who are charging interest between 30% and 40%, he pointed out.

“Since each batch of chicks bought by a farmer begins to lay eggs only five months later, poultry farmers are unable to repay these loans soon enough,” he added.

No gain from high prices

Even the rise in egg prices does not seem to have helped the industry.

Poultry associations said that while the business did initially benefit from the increase in prices in the past month, they are now feeling the effect of the drop in sales. Consequently, the National Egg Coordination Committee’s rates have also begun to drop by around 20 paise in the past few days in many cities.

“Our business has been hit very badly because of this [dip in sales],” said Subramaniam. He blamed retailers for inflating prices.

Meal schemes for children hit?

Meanwhile, the high prices have given rise to concern over the distribution of eggs at anganwadis – rural centres for mothers and children that provide basic health and nutrition services, including meals. The New Indian Express reported that the supply of eggs to 4,768 anganwadis in Chittoor district of Andhra Pradesh had been hit.

In Tamil Nadu, the Opposition alleged on Monday that the government had stopped providing eggs for the Noon Meal Scheme, under which the government gives lakhs of poor children a hot meal every day. “The present government has failed to purchase eggs under the Noon Meal Scheme for children,” Dravida Munnetra Kazhagam working president MK Stalin is reported to have said. “This is highly condemnable as nearly 69 lakh children from the age of two years are benefited by the scheme.”

But Chief Minister E Palaniswami refuted the allegation and said eggs were still being distributed to all schools, according to The New Indian Express. “Over 16 lakh children in anganwadis get eggs twice a week while 53.3 lakh school students benefit from the scheme five days a week,” he said. “Eggs would be distributed under the scheme without interruption even if prices soar.”