Chicken Farms Suffer Losses Due to Excess Output, Price Decline

EghtesadOnline: Excess production and price decline have inflicted losses amounting to 11 trillion rials ($79.13 million) on Iranian chicken farms over the past four months, the head of Iran Broiler Breeders Union’s board of directors said.

News ID: ۷۸۵۳۹۵

16 February 2020

Boroumand Chahar-Aeen added that the losses are expected to reach 12 trillion rials ($86.33 million) by the end of the current fiscal year (March 19), Young Journalists Club reported.

“There is going to be a production surplus of 80,000 tons in the current Iranian month [Jan. 21-Feb. 19] as well as in the next one (Feb. 20-March 19),” Financial Tribune quoted him as saying.

The oversupply is partly to blame on high tariffs on chicken exports.

Former agriculture minister, Mahmoud Hojjati, voiced concern last year over the 40% tariff on chicken export, adding that the duty is creating an oversupply inside the country with negative consequences for farmers.

Hojjati wrote a letter to Minister of  Industries, Mining and Trade Rea Rahmani recently, urging him to lift the tariff on chicken exports that he said had been imposed since late August without coordination with related authorities, Fars News Agency reported.

He noted that the tariff should have obtained the approval of a working group regulating the exports of agrifood from Iran.

Hojjati insisted that the Agriculture Ministry had been ignored in the process of levying the duty.

The 40% tariff on chicken exports was enacted in mid-summer after officials expressed concerns about the surging prices of white meat and its impact on food security in the country.

The Industries Ministry ordered Iran’s customs office at the time to charge 50,000 rials ($0.35) for each kilogram of exported chicken.

Iran is one of the biggest poultry producers in the world and a bulk of its output serves to satisfy the increasing domestic demand.

The industry is hugely dependent on government regulation as most of the farmers across Iran still rely on subsidized fuel to run their hatcheries.

“With regard to poultry industry, we have reached a point where we can have exports to other countries and meet the highest productivity standards inside the country to supply the final product at the lowest price,” the former minister said.

The average Producer Price Index for industrial chicken farms in the four-quarter period up to the end of the third quarter of the current Iranian year (Dec. 21) increased by 42.23% compared with last year's corresponding period.

The overall PPI for the sector in autumn (Sept. 23-Dec. 21, 2019), using 2011 as the base year, stood at 537.09.

The index indicates a 10.44% increase compared with the preceding quarter and a 14.14% rise compared with last year's same quarter.

The highest quarter-on-quarter increase of the index among Iranian provinces during the period under review was registered for Gilan with 40.22% and the sharpest decline was recorded in Lorestan with 10.62%.

On a year-on-year basis, Sistan-Baluchestan registered the highest increase with 67.57% and Qom posted the biggest decrease with 5.08%, the Statistical Center of Iran reported.

PPI is a price index that measures the average changes in prices received by domestic producers for their output. Its importance is being undermined by the steady decline in manufactured goods as a share of spending.