Poultry demand falls as buyers cut down on costly onion

KOLKATA: Economists call them complementary goods — products whose demand are related. The text book example is automobiles and fuel. But the most interesting real life example in India now is onion and chicken.


A chicken curry minus onions is almost an oxymoron in India. And since onion prices went up and pretty much stayed up, not only has demand for onions come down, so has that for chicken.

Poultry demand has fallen sharply by almost 15% in the last three months, the period that saw onions prices climb to near 3-digit levels.

Recent data says India consumes nearly Rs 32 crore chicken annually. If onion prices stay firmly high, say those in the poultry business, annual consumption this year may take a hit.

Some in the poultry industry feel since retail chicken prices have fallen on the back of falling demand, a demand rebound may happen. Chicken prices are down in Punjab, Haryana, Delhi, Jammu & Kashmir, Uttar Pradesh, Bihar, Andhra Pradesh and West Bengal — among the major chicken-consuming states.

In these states, retail price of live poultry is around Rs 60 –70 per kg, below the cost of production. In eastern UP prices have crashed to Rs 58 per kg. But the low price bigger demand effect is spoilt not just by high prices of one complementary good – onion – but also by other desirable ingredients in a chicken curry getting costlier.

Ginger, for example. Basant Nayek, production manager of Haryanabased Skylark Hatcheries, said “Ginger prices have shot up…and ginger is used in a chicken curry as regularly as onion. Consumers have therefore stayed away from chicken.”

The retail price for raw ginger has increased to Rs 100 - 150 a kg in most markets, said a trader in West Bengal. Short supply is the culprit. Rock bottom prices last year resulted in farm- ers giving up ginger cultivation. This year, that has meant scarcity.

Onion prices show no short term inclination to climb down. The average onion price at the country’s largest wholesale market — Lasalgaon Agriculture Produce Market Committee (APMC), Maharashtra — increased marginally by Rs 50 a quintal on Monday. The jump from Rs 4,200 per quintal to Rs 4,250 per quintal happened despite the arrival of fresh kharif crop.

Atul Shah, onion trader and director of Pimpalgaon APMC said that prices of onion will remain on the higher side in October. “This trend will continue till Diwali. New crops will then enter the market and will push down prices.”

Since there’s no problem of supply scarcity in the poultry market, the oniondriven fall in demand has spelt bad news for the industry.

Amit Saraogi, deputy chairman, CLFMA of India said the second order effect of pricey onions is beginning to hit the poultry business hard. Distress sales by poultry farmers are not uncommon now.

Whether you want to farm a chicken or cook it, it’s all up to the onion now