Poultry Meat Gets Costlier

Poultry price hike troubles the people, Hurts protein need of the feeble, True culprit hides amid the endless squabble.

Rising poultry meat prices caused lots of trouble to ordinary people. Before the COVID-19,poultry meat was sold at Tk 130/140 per kilo.Before Ramzan,the price skyrocketed to more than Tk 300/kilo,a record in the country. Rising dollar prices and input costs are attributed to price hike. Since the start of Ramzan,price is hovering around Tk 190/200 per kilo. Industry insiders point to fall in demand for chicken at the restaurants for the drop in chicken prices. They caution price may rise again after Ramzan as restaurants will resume their operation in full swing. It is indeed a bad news. Many students will sit for country's biggest public examination, the school certificate examination, in May. It is a big event for households here. Would-be examinee is subject to special attention during this time. From rich to poor,every household pays special attention to these students by providing them protein like milk,egg and meat. As poultry meat is cheap,they depend a lot on it. Many lower income group may not afford poultry meat for their children if the price crosses again Tk 300/kilo. Think how they feel about it.

The Consumer Rights Commission and the ministry intervened a lot and held talks with the big poultry farmers and dealers as the crisis deepened. The govt even said it would allow import of poultry from neighboring country if the situation would not improve during the Ramzan. Big poultry farmers keep saying that their farmgate price* is around Tk 170/kilo. Dealers and middlemen on the other hand blamed big poultry farmers for practicing discriminatory prices in chick purchase : higher prices for no-contract farmers and lower for contract farmers.But association leaders brushed aside the allegations arguing that there are many farmers in the industry and it is impossible to form a cartel. At the farmgate level,price is cheaper. But at the wholesale/retail level*,price is higher. Clearly middlemen/dealers have to take responsibility for higher prices for the poultry. Just a day ago I watched a report where tomato growers in Satkhira and Bagerhat are seen dumping tomato on road side as prices fall to Tk 3/kilo. Meanwhile,in Dhaka ,Tomato is being sold at Tk 40/kilo. Clearly ,there are some problems in our distribution and marketing system.

Dutch embassy in Bangladesh commissioned a study on poultry sector of Bangladesh. The study revealed that all the farms produced 525 million broiler chicken annually. There are 300/500 farms that have on average 15000 birds and 18000 contract farms that have the capacity to raise around 3000 birds¹. Apart from that there are small and household level farms that raise chicken under open sky. The big farms and the contract-farms jointly account for 62% of the total broiler meat production. Any successful cartel requires that organizational cost be lower and punishment be lower among other things. With so many contract farmers ,it is impossible to enforce such a cartel. And why the big farms shoot their own feet by taking a stance that ultimately allows entry of chicken from neighboring India that has cost-effective solution to rear chicken. People will switch to eat fish and egg if poultry meat stays out of their reach. In that case ,revenue loss will compound problems of the poultry farmers who are indebted to banks,cooperatives and dear ones. The big farms are subject of regular audit by the chartered accountants. Govt ,Competition Commission can check those audit reports to see how much they earn and how they do that. It is not easy to make windfall gain in poultry farming.

However, there is a possibility to influence the pricing of poultry meat.There are 15 big farmers.Interestingly, they also on the list of top 15 Breeders and Hatchers. These farms also furnish chicks to other farmers. It is not known how many of them in feed business. I do not know whether they acquire any hatchery or breeding farm. But their sheer capacity is influencing the input market price. Similarly, it is not known whether these farms have already purchased other farms. But news reports say nature of contract they place before other farms does not allow them to sell their products at their will in a profitable way.Subcontracting farms' profitability shrinks significantly. There is some kind of “tie-in” in that contract.That means nature of the contract to some extent shapes the poultry meat prices. Close scrutiny of the contract between big farms and other farms is needed. Back in 2012,Bangladesh introduced Competition Act 2012. It prohibits "combination" (cartel/alliance) that adversely effects competition in a commodity market(section-21)².Bangladesh Competition Commission may intervene here.

Govt may also intervene to set up hatchery and breeding unit across the country so that marginalized poultry farmers get chicks and poultry feeds at affordable price. If govt can intervene in telecommunications market then it can also take initiatives to ensure protein for the poor. I think it is not pragmatic to report on commodity prices at retail level. Many western media broadcast prices at wholesale level. Dissemination of retail price and breakdown of production costs through media to some extent sets the “narrative” against the consumers and validates unreasonable price hike.

Onion,soybean oil,rice and poultry market witnessed volatility. It is not just to put blame squarely on the big poultry farmers. There is anarchy in the wholesale market and a proper probe could unearth the fishy thing in this industry. And the Competition Commission may nip in the bud any means to influence price and to erode competition. At the end of the day, welfare is ensured when competition is free and devoid of any dubious means.

Notes And References

1. "Poultry Sector Study Bangladesh", Larive International B.V. and LightCastle Partners Ltd,May,2020.
2. Protijogita Ain 2012(The Competition Act 2012)

[*Update: This piece has been updated by me at 21:07 Bangladesh Standard Time(BST) on April 03,2023 and the update includes sperating "farmgate price" from the "wholesale price".]