Let´s take a look at the numbers: Last year, cut-up chicken cost Rs 160 per kg; this year, it costs Rs 250 per kg. Last year, the cost of feed, the largest cost-contributor was 30 percent lower, at Rs 29 per kg. And although over 50 percent of the maize required for feed is imported from India and most of the other feeds--soybean cake, sesame cake and sunflower cake-are also imported, duty and taxes on these feeds have not risen very much.
Furthermore, Nepali poultry companies procure rice polish from markets in the country itself, and more than 75 percent of the bone mill used in feeds is also domestically produced. The price increase can´t be chalked up to higher transportation costs either: the transportation and labor cost in poultry production has not increased by more than 20 percent over last year´s mark.
If labor costs had risen significantly, the difference would have shown up, for example, in the cost incurred in cutting up the chicken and preparing it for consumption. But live chicken last year cost Rs 110 per kg; this year it costs Rs 175 per kg, which means the increase is independent of labor costs.
So what accounts for the sharp rise in price? It´s all about that age-old theory of supply and demand.
“The price of chicken has skyrocketed because there has been a sharp fall in the volume of chicken produced by the poultry farms in the country,” says Tika Ram Pokhrel, president of the Nepal Poultry Entrepreneurs Forum (NPEF), an umbrella organization of poultry producers. And that decrease was the result of the avian flu´s rearing its ugly head in Jhapa, in January 2009.
When that instance of bird flu became news around Nepal, says Pokhrel, who is also a leading hatchery entrepreneur, the production of chicks went down to 600,000 heads per week--from the usual number of 900,000 heads per week. In other words, with the public desisting from eating chicken, poultry farmers also refrained from rearing the birds.
But Nepali chicken lovers apparently abhor a vacuum in their chicken-eating lifestyle. In fact, after the initial scare created by the avian flu, Nepalis actually increased their consumption of chicken: consumption shot up by 15 to 20 percent over the previous year, and that further widened the demand- and-supply gap.
“The supply of live broiler chicken, for example, has nosedived to 160,000 kg per day, against the demand of around 205,000 kg per day,” says Pokhrel.
And as the nation got back to consuming chicken in the usual copious quantities, that resumption, coupled with chicken sellers´ raising their prices in a market where mutton and buff prices had significantly increased, led to the high prices of chicken that we see today. If the poultry farmers were to shed their fear of the market´s not responding, then chicken prices might at least get back on the path to stable prices.
But, says the NPEF, poultry farmers have yet to rear chicken in the numbers they used to. The estimated 2,000 commercial poultry across the country produced only around 4.2 million heads of chicken over the last year, compared to the usual 6 million of normal seasons. And until the poultry owners get back to producing the number of chickens they used to, the price of Nepal´s favorite meat will continue to increase.
prabhakar@myrepublica.com
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