The price of broiler chicken has increased to more than Rs 400 per kg lately, largely due to supply chain constraints, and a complete breakdown in the supply of animal feed, that eventually leads to production of chicken, and eggs – whichever comes first remains up for debate.
Adjusting for seasonal, and supply-shock related spikes, the price of broiler chicken has consistently remained in the range of Rs 150 to Rs 200 per kg over the last 10 years, as it became the affordable, and sought-after animal protein given increase in prices of other animal proteins. After adjusting for inflation, and in real terms, the price of broiler chicken has also stayed within a range, and as of December 2022, it remains lower than December 2013, despite elevated supply shock driven price levels.
Even though a significant proportion of animal feed for the poultry industry is imported, in a competitive market, little influence of government in setting arbitrary prices, lower barriers to entry and exit has led to creation of a thriving market for poultry. Although the industry remains susceptible to external shocks, such as diseases that may wipe out flocks across the board, the supply continues to increase in-line with increasing demand. Furthermore, the ability to scale up production has allowed market participants to benefit from economies of scale, eventually resulting in lower prices for the final product for the consumer.
Despite significant broad-based and food inflation across the board during the last 10 years, the increase in price of broiler chicken remains considerably lower than other items. It may also be noted here that in the case of other animal protein, such as mutton or beef, the price has continued to increase, and real prices have moved upwards, whereas for chicken, the real prices have either declined, or remained stable adjusting for any supply shocks. Beef and mutton supply is scattered, and cannot leverage any economies of scale.
Due to absence of any disease free zones, and lack of information regarding vaccination, beef and mutton never really scaled up, due to which they could not benefit from any potential gains in productivity, and efficiency. Before the depreciation of the Pak Rupee, the beef and mutton produced locally was not even competitive, while also not meeting base level quality requirements for export markets. There exists a case to enhance efficiency in production of animal protein, such that the country can start exporting the same, while also reducing prices of other animal protein in real terms.
The country’s population will continue to grow, and so will demand for protein as increasing income levels will increase demand for protein, as it becomes a greater part of the nutrition pie. The productivity and efficiency gains in chicken that have led to stable prices in real terms can also be replicated for other proteins, while also opening potential avenues for export. There exists a strong case for indigenising animal feed sources as much as possible to enhance competitiveness for the final product.
There also exists a case for development of more resilient supply chains, whether that is through development of disease-free zones, or through enabling tracking of proteins, and setting and enforcing vaccination, and other phytosanitary standards. A resilient supply chain is not just restricted to infrastructure, but also to the resilience of financial infrastructure, as can be seen in prevailing circumstances where inability of market participants to import basic inputs led to a ripple effect in supply chains, eventually leading to higher protein prices for the consumer.
There needs to be a deeper focus on how food security needs to be ensured, and through what levers. Food security should not be just about ensuring availability of product, but also its affordability, and the productivity gains that can be unlocked. If we want to feed our population, we need to rethink food supply chains, and productivity – without which we will be forcing the population towards a more intense sustenance and nutrition crisis in the times to come.
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well i would say that it has become a real headache to have any pocket friendly protein options anymore for the gymgoers like me. The other option left is imported powder protein supplements which costs at least 14k for 4lbs for a cheapest brand. So here we are.
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