There’s a hue and cry about the
soaring price of pulses, the primary source of protein for Indian
vegetarians. But non-vegetarians, or more precisely eggitarians, too,
don’t have it easy. Prices of their key protein source have been hitting
record levels in recent months, with retail egg prices in some pockets
of the country topping a record ₹5 this July. Domestic egg prices seem
set to soar even higher in the coming months.
Data on
the wholesale prices of eggs from the National Egg Co-ordination
Committee shows that in the major consuming centres, egg prices in the
first seven months of 2016 have ruled 13-17 per cent higher than last
year’s levels. In Chennai, egg prices averaged ₹401 for a 100 this year
compared to ₹344 last year. In Hyderabad, prices averaged ₹359 against
₹305. These two cities are located in the two largest egg-producing
States in India. Trends in other cities have been equally inflationary.
Delhi reported prices of ₹357, against ₹318 and Mumbai ₹399 against
₹346.
Seasonal patterns in egg prices in the last
five years show that consumers should expect no let-up in the coming
months. Every year, egg prices cool off in the summer months of March to
May as consumers cut back on consumption, and begin to soar again from
August/September, usually peaking out in December and January. This
year, prices of this staple have remained elevated even in the summer
months. Wholesale prices in Hyderabad, for instance, ruled at ₹295 this
April, against ₹237 in the same month last year. In Mumbai, prices were
at ₹328 against ₹278.
The year 2015, in itself, was
quite inflationary for poultry products as heat wave conditions led to
the loss of nearly 5 million birds in Andhra Pradesh, the State which
accounts for 30 per cent of India’s total production. Despite recovering
from that crisis, this year has been no better, with an extended summer
in the two southern States reducing egg output and thus leading to
short supply.
Domestic egg prices also tend to
closely track poultry feed ingredient prices, which have been flaring up
in recent months. Poultry feed, which makes up about 70 per cent of the
cost of egg production, is heavily reliant on supplies and prices of
maize and soyameal. Wholesale maize prices, after crashing from over
₹18/kg in 2012 to ₹9/kg by September 2014, have recovered since March
this year, rising to about ₹13/kg in July and prompting the government
to authorise imports. Soyameal has seen an even sharper rebound. After
plummeting from ₹32 a kg to ₹20 in March 2016, this ingredient has since
shot up to ₹29 levels.
Sustained price increases in
these inputs may raise the break-even for poultry farmers and thus keep
egg prices on the boil for the remainder of this year. Over the medium
term, the demand-supply equation will hold sway on prices. Here, the
story of eggs is the same as that of other proteins — one of soaring
demand, not fully met by supplies.
India’s egg
output has grown to 78.5 billion eggs in 2015 from 46.2 billion eggs in
2005, an annual growth rate of 5.4 per cent, but that hasn’t proved
adequate to meet demand.
Global picture
Globally,
though, egg prices are displaying exactly the opposite trends in 2016,
with prices in the US — the world’s largest producer of poultry —
recently bouncing off a 10-year low. Prices have tumbled in the past
year, as the population of egg-laying birds recovered from last year’s
mass culling. The worst ever outbreak of Avian Flu forced US poultry
farmers to cull over 30 million birds in 2014-15 and prompted many
countries to impose bans on US imports, tightening global supplies of
all poultry products.
But the option of meeting
domestic shortfalls in egg production through imports isn’t an easy one,
given persistent fears of contamination from Avian Flu outbreaks around
the world. Globally, consumer preferences are also shifting from eggs
sourced from ‘layer farms’ where thousands of birds are bred in
captivity to those from cage-free hens.
In the past
year, US processed food giants such as McDonald’s, Nestle and Kellogg’s,
apart from retail chains like Costco, Target and WalMart have committed
to sourcing 100 per cent of their eggs from cage-free producers by
2025. The movement is at a nascent stage in India. But as cage-free eggs
would bar the artificial yield-boosting practices of the conventional
layer industry, and retail at a stiff premium to generic eggs, this
trend could also make eggs a pricier staple for consumers.
Source : BusinessLine
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