The shortage of poultry feed at government-regulated prices has forced broiler chicken producers to procure at least half of their requirement at higher, free-market prices, the deputy head of Iran Chicken Farmers Union said.
“Corn and soybeans are the main feed grains of poultry diets, the supply of which at regulated prices is less than demand. As we speak, each kilogram of corn is sold at 24,000-25,000 rials [$0.14] at free market rates and a kilogram of soybeans is sold at 45,000 rials [$0.26]. The government-regulated price of corn is 15,000 rials [$0.08] per kilogram and that of soybeans is 24,500 rials per kilogram [0.14],” Habib Asadollah-Nejad was also quoted as saying by ILNA.
According to Hassan Abbasi Maroufan, Government Trading Corporation of Iran's commercial affairs deputy, the Central Bank of Iran did not allocate subsidized currency at 420,000 rials per dollar for four months but since early April, it has resumed the subsidization of livestock and poultry feed imports.
“A total of 1,350,000 tons of feed have been distributed ever since: 600,000 tons by the private sector and 750,000 tons by the government have been given to chicken and livestock farmers. However, we know this amount is not sufficient to meet market demand, which is 1.8 million tons. Hopefully, we’ll supply more by next week,” Fars News Agency quoted him as saying.
“The government provided 18% of the market demand for animal feed in the year ending March 2018; 24% in the year ending March 2019 and 34% in the year ending March 2020. Over the past 52 days, the share of Government Trading Corporation of Iran in supplying animal feed to producers increased to 70%.”
On chicken prices regulated by the government, Asadollah-Nejad said, “Last week, Market Regulation Headquarters called on producers and the Agriculture Ministry not to allow the prices of day-old chicken and chicken to exceed 7%, but the new prices of chicken have yet to be set. The reasonable price of a kilogram of chicken to be purchased from producers, given the total production costs, must be at least 110,000 rials [$0.64] and consumer prices should be around 150,000-155,000 rials [$0.88-0.91].”
Chicken prices saw the sharpest month-on-month deflation in the first Iranian month (March 20-April 19) among 24 commodities examined by the Statistical Center of Iran every month. Its consumer prices decreased by 9.9% during the month ending April 19 compared with the month before and 19.7% compared with the same month of last year. A kilogram of chicken was sold at 116,231 rials during the month under review, SCI reported.
Industrial Chicken Farms Inflation at -7%
The average Producer Price Index for industrial chicken farms in the fourth quarter of the last Iranian year (Dec. 22, 2019-March 19) decreased by 7% compared with the corresponding quarter of the year before.
The overall PPI for the sector in winter, which ended on March 19, using 2011 as the base year, stood at 498.66, indicating a 7.16% decline compared with the preceding quarter.
During four-quarter period ending March 19, PPI increased by 19.36% compared with the similar period of the year before. The index grew 42.23% in the four-quarter period ending Dec. 21, 2019.
The highest quarter-on-quarter increase of the index among Iranian provinces during the period under review was registered for Chaharmahal-Bakhtiari Province with 57.83% and the sharpest producer deflation was recorded in Gilan with 48.49%.
On a year-on-year basis, Chaharmahal-Bakhtiari Province registered the highest increase with 96.37% and Gilan posted the biggest deflation with 43.24%.
Surplus Production
Poultry farmers have been grappling with a production surplus lately, amid the decrease in demand for chicken following the outbreak of the new coronavirus.
“Chicken farmers have suffered more than 21 trillion rials ($127 million) in losses during the past five months due to the production surplus,” said the head of Broiler Breeders Union’s board of directors, Boroumand Chahar-Aeen, recently.
He expects the current trend to continue in view of the ongoing circumstances, saying the losses are bound to pile up further.
According to the official, the decline in purchasing power is also one of the reasons behind the surplus production, Young Journalists Club reported.
According to Mehdi Yousefkhani, the head of Tehran’s Union of Fowl and Fish Sellers, there has been a 50% decline in chicken consumption in Iran following the virus outbreak.
Chahar-Aeen noted that there is usually a chicken production surplus of at least 30,000 tons every month.
Iran produces 2.4 million tons of chicken per year, he said, adding that production capacity stands at over 3 million tons.
Meanwhile, duties on exports of chicken have been abolished until May 21. The removal of export tariffs is aimed at helping producers cushion their losses by shipping at least part of their surplus production.
The severe shortage of animal feed, including soybean and corn meal, poses a challenge for poultry farmers, and millions of day-old chickens were culled recently, raising much debate and criticism.
Following the release of a footage on social media showing the destruction of the poultry, the Day-Old Chicken Producers Association wrote a letter to its members banning the cull of day-old chickens, saying any violations will be prosecuted.
As Akbar Golshahi, an official with Iran Veterinary Organization, told Fars News Agency that 1.2 billion day-old chickens are produced in Iran per year.
Whopping Demurrage Charges
Extra costs of demurrage, the charge that the merchant pays for the use of the container within the terminal beyond the free time period, are piling up on livestock and poultry industry.
Over 90% of the animal feed Iran’s livestock and poultry industry need are met through imports and the costs of demurrage are bound to be reflected in the price of the end product due to the government’s inability to provide needed foreign currency on time.
“More than $600 million have been paid in demurrage fees on animal feed cargoes since March 2019 to date,” Mohsen Hafez, the head of the Association of Animal Feed Suppliers, was quoted as saying by Persian-language daily Shargh earlier this month.
“Currently, at least 16 chartered ships have not moved out of the southern ports of the country for unloading within the allowed free time offered by the shipping line. They have to pay demurrage charges for an average of 74 days, which equal $1.5 million,” he added.
