Certain people are fond of saying that poultry companies control the prices of chicken and eggs. This is not true. Chicken and eggs are produced by thousands of farmers. No one can control the chicken price or the egg price. The prices are high when demand is higher than supply.
The Department of Agricultural Marketing has declared that the maximum wholesale price of eggs should be Tk11.01 per kg. Kazi Farms is compliant with the government’s ceiling wholesale price.
On September 18, 2024, Kazi Farms sold eggs at our wholesale centres at Tk11.01 per egg.
The retail price of an egg in Dhaka is about Tk157 per dozen, which is about Tk13.08 per egg. Traders bought eggs from Kazi Farms at Tk11.01 per egg, and sold the eggs to retailers, who in turn sold the eggs at Tk13.08. The retail price of eggs is high because there is a shortage. Production is low because many egg farms were flooded, and their hens drowned.
Small egg farms are selling egg at between Tk11.50 and Tk12 per egg, and are not compliant with the ceiling price declared by the Department of Agricultural Marketing. About 80% of the eggs are produced by small farms; only about 20% are produced by companies. So forcing companies to sell eggs at a low price does not reduce the retail price; it simply increases the profit margin enjoyed by the traders and retailers who buy from companies.
During a shortage, a higher market price gives egg producers an incentive to produce more eggs. Over the last two years, many egg farms sold their hens and stopped production. They were making losses because the cost of feed was high.
Most of the raw materials used to make feed are imported, and have become more expensive, because the Taka has depreciated by about 40% over the last two years. The high cost of feed forced many farms to shut down. However, today’s high egg price will motivate many farms (which are still shut down) to buy layer chicks and resume production. That will reduce the shortage, and will reduce egg prices.
So the government should allow egg producers to sell eggs at a higher price until production increases. That is how a shortage is naturally resolved.
On September 18, Kazi Farms sold live broiler chickens at Tk155 per kg (at our contract farms). The Department of Agricultural Marketing has declared that the maximum price at which broiler farmers should sell is Tk169 per kg. Kazi Farms is compliant with the broiler ceiling price.
The retail price of a broiler is now about Tk180 per kg in Dhaka. The retail price has gone up, indicating that demand is increasing. Broiler farms made heavy losses during the student movement when restaurants were closed, and many broiler farms are still running at a loss. It is fortunate that the broiler price has increased, or many broiler farms would have gone out of business.
For the last two years, the Competition Commission and the Directorate of National Consumer Rights Protection have harassed poultry companies with baseless accusations of price manipulation. This harassment has discouraged investment, which has contributed to the present shortage of eggs. The government should stop harassing the poultry industry. Investment is needed to increase supply; this investment won’t happen as long as harassment continues.
Kazi Zahin Hasan is one of the owners of Kazi Farms, residing in Dhaka.