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Seizure of market intervention will help revive poultry sector: PPA




  • The seizure of market intervention by government functionaries recently helped the poultry sector to register revival of its growth trends; this was stated by Pakistan Poultry Association (PPA) in a communication to Federal and Provincial Governments. 

    Artificial intervention by different Government functionaries would distort the market permanently. The market on its own is so strong that its direction cannot be diverted by intervention, eventually the market intervention will cost the consumer very dearly and, of course, many of the producers would be out of business. “The price value of products in a free market economy is the only source that issues a directive to the producer to increase or decrease its production. A high price yielding higher profits signals a need to expand production; a price that is bearish is indicative of over-production and signals the producer to reduce production,” stated PPA in the letter also issued to the press on Tuesday. 

    The association stated that the poultry sector is moving progressively to the production level of 2011-12 and may even surpass the levels as seen historically. It is to be noted that the total national production of broiler (table birds) produced by the hybrid intensive poultry production during the year 2012 was 1.2 billion. The production declined by 20 percent in 2013 to 816 million. The total national production of table eggs during 2012 stood at 11.2 billion. 

    “Since poultry products, Day Old Chicks, Broilers and Table Eggs are perishable generic products, they are sold as a commodity. The prices are truly governed by demand-supply in a free market mechanism. The demand is highly elastic; a decrease in price widens the consumer base and an increase in price narrows the consumer base,” stated PPA. PPA further added that both broiler and egg demand are influenced by the prices of supplementary food items like beef, mutton, pulses, etc, and also reacts to fluctuating climate changes and Islamic calendars. For instance, during the month of Muharram, Safar and Zil Hajj chicken meat demand goes down and during the month of Sha’ban, Shawwal and Rabi-ul-Awwal the demand goes up. Demand also changes with the percentage increase in per capita income. Egg demand decreases during summers and with the school closures and increase during winters. 

    The association stated that it is quite welcoming that market intervention, which is counterproductive for the sector, has come to an end. During the year 2012, the cost of Day Old broiler chick as presented by the Commissioner Animal Husbandry, Government of Pakistan to the High Court of Peshawar was worked out at Rs 31.27 against which the selling price was Rs 20/chick, thus causing a loss of Rs 11.27/chick to the broiler day old chick producers. 

    The PPA was of the view that the cost of production was much higher as the costing of the Ministry did not include financial costs, admin and overhead costs, nor mortality suffered due to epidemic disease outbreaks, which occur almost every year, were taken into account. 

    The cost of Broilers as submitted by the Ministry had worked out to Rs 132.50 against which the average selling price was Rs 144.60 causing a loss of Rs 12.10/Kg. Likewise the Association contested the cost of production on the above grounds. The impact of heavy losses resulted into closure of a number of both Parent Stock farms and Broiler farms. 

    During 2013, the association adds, a number of farms had closed down because of losses, which attracted market interventions by the Peshawar High Court and other government functionaries, which adversely impacted the revival of the closed farms. 

    The PPA challenged the order of the Peshawar High Court, which had fixed the prices of poultry products, before the Supreme Court which held the order of the High Court in abeyance and finally the Peshawar High Court withdrew its orders of price control and, fortunately, other functionaries also gave breathing space to the poultry producers. 

    Copyright Business Recorder, 2014

     

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