Recently, the Directorate of National Consumer Rights Protection (DNCRP) alleged that poultry companies had fixed the price of broiler chicken at an abnormally high level.
A few weeks later, the same directorate alleged that companies had fixed the price of chicken at an abnormally low level.
Both of these accusations are unwarranted. The price of chicken goes up and down because of supply and demand.
Chickens which are sold today were purchased as chicks a month ago. The chicks hatched after eggs were incubated for three weeks at a hatchery. The hatching eggs were produced by parent stock chickens which were grown for at least six months before they started production.
So today's production of broiler chicken was planned about eight months ago. As a production plan takes eight months to implement, and the demand fluctuates, it is not surprising that supply and demand often do not match.
In one week, there might be more demand than supply, and the market price might be high; the next week, there might be more supply than demand, and the price might be low.
Thousands of small farmers sell chicken every day; no one can fix the price in such a competitive market.
The poultry industry always has to guess what the demand will be eight months into the future, and has to prepare to supply that demand. No one can predict the future.
This is why over the last year chicken prices have sometimes risen and sometimes fallen -- even on occasion to far below cost.
The chicken price roller coaster started when Russia invaded Ukraine in February 2022. Since then, maize and soybean prices have been high. As poultry feed is mostly made from maize and soybeans, feed costs first went up in May, June, and July of 2022.
Many poultry farmers suffered losses and shut down over those months.
When broiler chicken farms shut down, the supply of broilers was reduced, and the market price of broilers increased. That's why broiler prices went up in August, September and October of 2022.
Followers of international news might recall many early predictions that the war in Ukraine would end by winter. Expecting peace, and lower feed costs, poultry companies planned higher broiler chick production in December 2022 and January 2023. (Remember, these plans were made several months earlier.)
However, the war didn't end, and feed prices stayed high. This resulted in over-supply and big losses for the poultry industry in November, and December of 2022 and January 2023.
Again, losses prompted many broiler farms to shut down, resulting in a shortage in February 2023. That's why broiler prices went up again in February 2023.
On March 23, a meeting was held at the DNCRP. The government requested large poultry companies to cap the price at which chicken is sold from their farms during Ramadan. The companies present at the meeting agreed to a maximum price of Tk 195 per kg (at the farm).
My company, Kazi Farms, did sell at the agreed maximum selling price on March 24, and will respect that agreed maximum price until the end of Ramadan.
On March 25, demand for broilers started falling, and the market price fell below the agreed maximum price, making the agreed maximum price irrelevant.
On March 26, broilers were sold at Tk170 to 175 per kg at our contract farms in some districts.
On March 27, Demand fell further, and broilers were sold at Tk145 to 160 per kg at our contract farms in many districts. The reason for the sudden fall in price is simple: demand fell.
In the absence of a consumer survey, no one can say for sure why demand for broiler chicken fell. One can speculate that consumers are spending less money on broilers, and spending more money on traditional Ramadan foods like dates and chickpeas.
The DNCRP has alleged that poultry companies manipulated the chicken price by selling at a low price, and forced small farmers to sell at a loss. This allegation is unwarranted and also unreasonable.
Our poultry hatcheries and feed mills exist because small farmers all over Bangladesh buy our chicks and feed. We have never intentionally forced small farmers to make a loss. No sane businessman would attempt to bankrupt his own customers.
Kazi Farms sells only about 6 or 7% of all the broilers sold in Bangladesh; this figure includes all the chickens grown at our contract farms. A company having such a small market share cannot influence the market price of broilers.
Our broilers are sold through a transparent auction process. In an auction, the price is not determined by the seller; it is determined by the bids of the buyers.
War in grain-exporting countries like Ukraine and Russia pushed up the prices of feed materials, which is why most broiler farmers lost money over most of the past year.
The fact is that the poultry industry has done nothing wrong. It has simply responded to fluctuating market demand and input prices.
Government agencies, who have no first-hand experience of how the poultry market works, should first seek to know the facts before accusing law-abiding companies of wrongdoing.
The writer is one of the owners of Kazi Farms Limited.