Chicken, egg prices rise on supply shortage, higher production costs

The prices of broiler chicken and eggs, staple food sources for protein for many middle and low-income groups, have increased in the country's markets over the past week due to shortages in supply and an increase in production costs.

Over the past week, the price of eggs has increased by 5 percent and broiler chicken by 7 percent, according to the data collected from three kitchen markets in Dhaka and the Trading Corporation of Bangladesh.

Yesterday, each set of four eggs were selling for Tk 50 to Tk 53 whereas each kilogramme of broiler chicken for Tk 175 to Tk 200.

Businesspeople said farmers had incurred huge losses during recent heatwaves, when many chickens died while many others fell sick. Fearing further losses, many farmers then moved away from raising day-old chicks.

At the same time, those who continued to raise day-old chicks did not rear enough to meet the current market demand, they said.

Moreover, demand for broiler chicken always drops ahead of Eid-ul-Azha, which is set to be celebrated in mid-June this year, they said.

Besides, the cost of production has also increased significantly. Consequently, a gap has been created between supply and demand. All these factors have contributed to the price hike, said Mahbubur Rahman, president of the Breeders Association of Bangladesh.

Rahman said prices of day-old chicks have been falling since early May, when each sold for Tk 60 to Tk 70. Now, each day-old chick is being sold for Tk 28 to Tk 32.

Ahead of Eid-ul-Azha, demand for chickens usually falls as the religious festival centres on sacrificing cattle and goats. Due to this, the demand for day-old chicks has also decreased considerably, he added.

Akram Hossain Ripon, a poultry farmer of the Kalma area in Savar, around 25 kilometres northwest of capital Dhaka, said he incurred severe financial losses due to the heatwave that has engulfed the country since the start of April.

He said he had bought 1,000 layer chickens but 160 died due to the heat, causing losses of around Tk 40,000.

Ripon said, "Afterwards I opted for raising another 1,000 day-old chicks, buying them at Tk 62 per piece around 17 days ago. Of these, 250 again died due to heat."

"I am worried over whether I will be able to get back my investment," he said.

He said the price of feed was Tk 3,200 per sack a year ago and it has now increased to Tk 3,500.

The farm faces power cuts for most of the day and night, for which diesel-powered generators must be used, said Ripon.

Moreover, he said the price of medicine has also increased. For instance, one type of medicine that was Tk 200 a year ago now costs Tk 300. The price of another was Tk 500 and has now increased to Tk 700 to Tk 750, he said.

Farmers Lokman Hossain and Rehan Uddin of Kapasia upazila of Gazipur made similar observations.

Kazi Zahin Hasan, director of Kazi Farms Group, said they were selling chickens and eggs at prices declared by the Department of Agricultural Marketing.

He said at present demand was high but supply relatively low. During the recent heat wave, production of chicken and eggs fell, because in hot weather chickens eat less feed, he said.

Low supply pushed up the market prices, he added.

"There is another reason why prices are high. For two years, Bangladesh Competition Commission has been harassing poultry companies with baseless accusations of collusion," he said.

This harassment by the government has discouraged investment, he added.

Investment is needed every year as demand increases every year. As there has been low investment over the last two years, production of chicken and eggs is now lower than demand, he said.

The rise in prices of the US dollar has had a huge impact on feed costs, he said, adding that high electricity and fuel prices raised production and transportation costs.

Since the government is fixing low prices of chicken and eggs, compliant farmers can no longer generate large enough profits to justify the risky business of poultry farming. If the prices are not raised, many farmers will stop production, he added.

On the other hand, people are withdrawing their investments. A large company which was in this business for 30 years has recently sold its assets. Some smaller companies are also trying to sell their assets, he claimed.

Mohammad Akram Hossain, general manager for feed and breed sales of CP Bangladesh Company, said the production of layer birds has decreased over the last couple of years in Bangladesh due to disease outbreaks and bad weather.

So, automatically there is a shortage of eggs in the market and now the price has become higher than before as supply is lower than demand, he said.

In the poultry sector of Bangladesh there is a lack of data centring demand and supply, for which proper estimates cannot be reached. For this, prices of broiler chickens fluctuate, and it is not due to collusion of the companies, he said.

Investments have decreased this year compared to last year due to economic uncertainties. If the situation does not improve, it will decrease in the future, he added.

Kayser Ahmed, managing director of Diamond Egg, one of the largest producers and marketers of eggs, said those who set the prices of eggs do not themselves produce eggs.

They do not know the real picture and how much it costs to produce an egg, he said, adding that he has reduced production due to the high costs.

At this time last year, his farm was producing 15 lakh eggs per day and now it has come down to 6 lakh eggs.

"We have reduced production due to low profits. I laid off a lot of employees. At this time last year, 1,700 people worked on my farm. About 70 percent of the staff has been laid off," he said.

Experts say each person in Bangladesh consumes 136 eggs every year whereas the number goes as high as 400 in developed countries.

Moreover, the per capita consumption of chicken meat is just one-third of that in developed countries, they said.

Low per capita income is responsible for protein or nutrition deficiencies and a lack of awareness plays a big role here, said Faridul Alam, vice-chancellor of the Bangladesh University of Health Sciences.

Now, 60 percent of the country's people want to eat at least one egg every day but market supply is not attuned to it, for which sellers can increase the price if they wish, he said.

Again, many people's income is not consistent with expenditure needs, for which they eat less protein and also why they are malnourished. Due to this, their mental, intellectual and working efficiency is low, he added.

That is why production needs to be increased and then the price will come down, he said.