Cost-Price Squeeze Threatens Egypt’s Poultry Sector with Supply Crunch
The ongoing conflict in the Middle East is contributing to a substantial strain on Egypt’s poultry sector, with producers grappling with surging feed costs that threaten to trigger a supply crisis.
As the effects of recent geopolitical tensions settle, Egyptian poultry producers are facing an alarming exit from the market. Surging feed prices and a drop in chicken and egg prices are drastically squeezing their profit margins, according to industry experts who warn of an impending supply crisis.
Skyrocketing Feed Prices
According to the latest reports, feed ingredient prices have soared since the onset of regional conflicts involving Iran, with corn rising approximately 26% to EGP 16,000 (US$301) per tonne and soybeans spiking a staggering 85% to EGP 36,000 (US$677). Additionally, bran prices have surged by 27%, while manufactured feed has climbed about 45%, putting immense pressure on poultry farmers.
Allegations Against Feed Manufacturers
Poultry farmers are increasingly voicing concerns that feed manufacturers are capitalizing on the crisis. Ahmed Nabil, a board member of the General Federation of Poultry Producers, accused these companies of hiking prices daily despite holding sufficient stock to last over three months. This has left producers struggling with inflated costs and reduced feed availability.
“Suppliers are delivering less than half of the necessary feed to farms while hedging against currency fluctuations,” Nabil noted. Meanwhile, current market prices for poultry and eggs have plummeted by approximately 25% in the past month, forcing producers to sell below their production costs.
To illustrate, the cost of producing a tray of eggs has risen to around EGP 116 (US$2.18), an increase compared to market prices that have recently fallen to about EGP 100 (US$1.88).
Impending Crisis for Poultry Producers
The decline in poultry prices combined with escalating feed costs could lead to a severe crisis within the industry. Sameh El-Sayed, the poultry division head at the Giza Chamber of Commerce, shared alarming projections, indicating that farmgate prices for white poultry have dropped to EGP 72 (US$1.35) per kg from EGP 95 (US$1.79) last Ramadan. Under current circumstances, a fair price would hover around EGP 85 (US$1.60).
Should this trend persist, the market could soon confront shortages of poultry and eggs, driving prices to unprecedented levels, according to Nabil.
Global Tensions and Market Volatility
The volatility in feed markets can largely be attributed to ongoing global geopolitical tensions, with discussions surrounding a possible truce in the Iran conflict adding a layer of uncertainty to the situation.
The poultry sector in Egypt stands at a crossroads as producers weigh their options amidst these challenges. The choice to remain in the market or exit could have significant implications for the country’s food supply in the near future.
