[🇧🇩] Poultry Industry in Bangladesh

[Saif]

Source : https://thefinancialexpress.com.bd/views/columns/breaking-up-oligopoly-in-poultry-industry

Breaking up oligopoly in poultry industry
Atiqul Kabir Tuhin
Published :
Aug 21, 2024 21:58
Updated :
Aug 21, 2024 21:58

At a time when food security is severely under threat, with low and middle-income people forced to cut one essential item after another from their diet due to skyrocketing prices, the fact that a handful of big companies are manipulating the market for exorbitant profits is nothing short of being sinful and criminal.

The commercial poultry industry is a particular case in point, which is firmly in the grip of an oligopoly, with a few large players controlling a significant portion of the market. While the involvement of big farms in poultry, livestock and agriculture sectors is no doubt essential - given their ability to significantly boost production and meet the commercial demand through the adoption of modern methods that small-scale farmers cannot afford- this concentration of market monopolies has major drawbacks. These large farms have frequently been accused of establishing market control that artificially drives up the prices of various essential products.

Recently, Bangladesh Poultry Association (BPA), a platform of marginal farmers, painted a disturbing picture of the country's poultry industry, where a few powerful corporations dominate the market at the expense of both marginal farmers and consumers. The BPA alleged that a few big companies in the sector made an additional profit of Tk 59.20 billion in the last one year through syndication in chicken and egg market.

The BPA stated that due to a syndicate of four to five corporate companies, the prices of feed and day-old chicks have become excessively high in the country, driving up the production costs of chicken and eggs. It noted that in India, the price of feed ranges from Tk 40-50 per kilogram, a day-old chick costs Tk 25-35, the production cost of an egg is Tk 5, and that of broiler chicken is Tk 76-86 per kilogram. In contrast, in Bangladesh, feed costs Tk 60-72 per kilogram, a day-old chick costs Tk 60-100, the production cost of an egg is Tk 10.29, and broiler chicken costs Tk 155-170 per kilogram.

This scenario is particularly alarming because it points to a systematic exploitation of the poultry sector, which is vital for the country's food security and rural economy. Marginal farmers are bearing the brunt of this exploitation, with many being forced to shut down their farms due to continued losses. This has also driven up retail prices, making these essential proteins unaffordable for many households, especially the poor and low-income earners

For millions of Bangladeshi families, egg and broiler chicken are often the last resort to fulfill their essential protein needs due to their relatively lower prices. Unfortunately, this alternative source of animal protein has also become a lot more expensive in the last couple of years, taking a heavy toll on poor and limited income people.

The situation is a double-edged sword. On the one hand, large-scale farms have the potential to enhance productivity, ensure food security, and contribute to economic growth by utilising advanced technology and economies of scale. On the other hand, when these farms dominate the market without adequate regulatory oversight, they can exploit their position to manipulate prices, hold consumers to ransom, prioritise profits over public welfare, and marginalise small-scale producers.

It is crucial, therefore, to strike a balance between encouraging large-scale production and ensuring fair competition. Regulatory bodies must monitor these big farms closely to prevent monopolistic practices and safeguard the interests of consumers and small farmers alike.

Additionally, the import of goods into the country is also largely dominated by a select group of companies. Currently, only certain companies are registered to import products, leading to a lack of competition in the market. This monopolistic environment restricts others from importing goods at perhaps lower prices, which in turn raises the prices.

To foster a competitive and beneficial environment, all types of companies, both small and large, should be allowed to register for importing products. It is also crucial to ensure that these companies can import and market their goods without any undue influence or obstruction. A higher number of importers will create a competitive market, stabilise supply, and ultimately reduce prices that will benefit both consumer and supplier.

According to the Bangladesh Bureau of Statistics (BBS), general inflation reached 11.66 per cent in the first month of the fiscal year 2024-25, a jump from 9.72 percent in the previous month. Worryingly, food inflation was reported at 14.10 percent in July - the highest in nearly a decade and a half.

For the impoverished people, who already spend the lion's share of their income on food just to survive, the situation has reached a critical point. A World Bank survey recently revealed that 71 per cent of people in Bangladesh are grappling with uncertainty about their ability to purchase food.

This dire state of food security is further underscored by another report from the World Food Program (WFP), which highlights that the poor are now spending 58 per cent more on food than they did just two years ago. In 2022, the monthly per capita cost of food for those living below the poverty line was Tk 1,851. This year, the average monthly per capita cost has shot up to Tk 2,923. This sharp rise in the cost of living has forced 68 per cent of the population to drastically cut back on their living expenses and protein intake risking ill health.

The newly formed interim government has an urgent responsibility to investigate unfair practices in the market, hold the manipulators accountable and make essential foods affordable. It must act decisively without delay to curb these abuses, restore fairness to the market, and protect the wellbeing of the nation.​

 

[Saif]

Protecting marginal poultry farms

Bangladesh's poultry market which supplies the cheaper variety of proteins like eggs and chickens to the general consumers often turns volatile. As usual, the blame for any sudden price hike of poultry products goes to the syndicates, meaning, the so-called nexus of the monopolies engaged in poultr

thefinancialexpress.com.bd

Protecting marginal poultry farms
Editorial
Published :
Dec 18, 2024 00:16
Updated :
Dec 18, 2024 00:16

Bangladesh's poultry market which supplies the cheaper variety of proteins like eggs and chickens to the general consumers often turns volatile. As usual, the blame for any sudden price hike of poultry products goes to the syndicates, meaning, the so-called nexus of the monopolies engaged in poultry production and marketing. However, big companies in poultry business deny the allegations arguing that being a competitive market, it is not possible to distort it by any syndicate. Any attempt to that end, they contend, would end up in loss to such a syndicate. Amid such allegations and their denials, the net losers, obviously, are the general consumers, who have been paying through the nose whenever prices of eggs and chickens go up. Others at the receiving end in such eventualities are the small and marginal poultry farmers. As they have to buy poultry feeds and chicks from the large dealers of these items, any price escalation of the inputs drives up the production cost of the eggs and chickens the small farmers produce. As a result, they are often compelled to sell their products at a loss, while, benefiting from the economies of scale, large companies in the poultry sector continue to dominate the market and make huge profits, to great disadvantage of about 90 per cent of small and marginal farmers managing small poultry farms.

It is against this backdrop that a platform of the small and marginal poultry farmers and traders, the Bangladesh Poultry Association (BPA), has reportedly threatened to stop production of eggs and broiler chickens across the nation from January 1, 2025 unless their ten-point demands are met by the government. Notably, their demands include curbing the dominance of the corporate entities over the poultry sector, who, according to BPA leaders, were behind destabilisation of the chicken and egg market. At the same time, they (BPA leaders) were critical of the government for what they said its siding with the poultry corporates instead of resolving the crisis the small and marginal farmers are facing.

Understandably, it is out of desperation that the BPA has issued such an ultimatum, which no doubt demands serious attention of the government. For one cannot lose sight of the fact that livelihood of some five million people engaged in small-scale poultry farming and trading is at stake here. These small and marginal farmers have been the traditional supplier of poultry items to precede the emergence of modern poultry farming, let alone the corporate businesses in this sector. They still play a vital role in maintaining a stable supply chain in this sector, come rain or shine, and thereby contributing immensely to the nation's food security.

Therefore, the government should take steps to protect the small-scale operators in the poultry sector by enabling them to buy inputs like feeds and chicks to continue their business without depending on the large firms. Also, these cash-strapped small and marginal operators should have access to cheap, where possible, interest-free, credit so they could continue with their trade. It is highly concerning that, out of around 150,000 small and marginal poultry farmers in the past, according to some estimates, only about 60,000 are now surviving. In this regard, the BPA, for instance, has long been blaming the 'price manipulation of the feeds and chicks by poultry corporates' for disappearance of small poultry farms. That calls for strict monitoring and being merciless against any excesses committed by the corporate sector in this regard. At the same time, efforts should be there to help create an atmosphere of understanding among all parties in the greater interest of the poultry sector.​

 

[Saif]

The poultry industry became the scapegoat of inflation

Ministers and members of parliament of the previous government relentlessly blamed “syndicates” for increasing the prices of chicken, eggs and other foods.

www.thedailystar.net

The poultry industry became the scapegoat of inflation

The first possible cause of price rises is a shortage. FILE PHOTO: STAR

For the past few years, Bangladeshi consumers have suffered terribly due to price inflation. Ministers and members of parliament of the previous government relentlessly blamed "syndicates" for increasing the prices of chicken, eggs and other foods. Regulatory bodies like the Bangladesh Competition Commission subsequently ordered several large poultry companies to pay fines. These orders were stayed by the High Court; but this sequence of government actions culminated in the Department of Agricultural Marketing dictating ceiling prices for eggs and chicken. In any industry, ceiling prices tend to discourage further investment and may become counter-productive: without plentiful investment and expansion of production and supply, prices tend to remain high.

Absent from the above events was a real economic analysis of why the inflation occurred. Yet inflation is an economic phenomenon with well-understood causes, and it's worth looking at these.

The first possible cause of price rises is a shortage. Whenever there's a shortage of any good, consumers who want it bid up the market price. Economists call such inflationary shortages "supply shocks." In fact, the start of the Ukraine war in 2022 caused an international shortage of both grain and fuel as export of these from Russia and Ukraine were disrupted. Expensive maize and soybeans made poultry feed, fish feed, and cattle feed more costly. Thus, there was an element of supply shock inflation in 2022, which was not the result of syndicates but of the Ukraine war.

The second possible cause of inflation is a bit more technical; all prices rise when there's too much money being printed by the government. Money is exchanged for goods; so, when there's excess money, the value of money goes down, and the prices of all goods increase. For example, if the money circulating in Bangladesh suddenly increases by 50 percent, the price of an egg could be expected to rise from Tk 8 to Tk 12. This is monetary inflation, and it's also not caused by syndicates, but by economic mismanagement. Monetary inflation happens when a government spends more than what it receives in taxes, and decides to fill the gap (technically called the budget deficit) by irresponsibly printing money.

In published data, there is strong evidence that the AL government printed money irresponsibly. The following figures are found in the Monthly Economic Trends dated October 2024, published by the Department of Statistics of Bangladesh Bank.

What we see is that the total increase in currency in circulation was 44 percent over only three years (quite close to the 50 percent of the earlier egg price inflation example). So as per our earlier egg example, we might indeed expect a Tk 8 egg to rise close to Tk 12 over this period. In fact, this is more or less what happened. At the same time, prices of many other commodities including rice and vegetables also went up over the last few years. This widespread price rise across many sectors further indicates that the cause was monetary inflation. Effectively, the government printed money, which caused price to rise and made all Bangladeshis poorer.

Why would the previous government cause inflation and make everyone poorer by printing so much money? The answer is obvious: massive bank fraud which occurred during the previous government. Those weakened banks would certainly have failed, had money not been printed indiscriminately to bail them out. Had that been allowed, millions of families would have lost their savings and the economy would be mired in recession for years.

The politicians responsible for allowing banks to be looted, and then causing inflation by printing money to bail out those weak banks, are not likely to tell the truth about how they have made a mess of the economy. It's more likely that they would try to find a scapegoat to blame for rising prices. Unfortunately for the poultry industry, government ministers found it to be an easy target to blame. Eggs and broiler chicken are the animal proteins most consumed by the masses. Bureaucrats at the Competition Commission were happy to follow ministers' lead. The result is that an anti-business environment has been created in the poultry sector.

The question is how this mess will be fixed. Economic theory dictates that inflation has to be fixed by raising bank interest rates, which fortunately the interim government has already done. Printing money to prop up weak banks also has to stop. To restore a pro-business environment in the poultry sector, the unjustified Competition Commission cases should be dropped. The ceiling prices imposed by the Agricultural Marketing Department should also be increased, or preferably removed, to accelerate investment in poultry. Increased investment in chicken and eggs will raise their supply. This will ultimately lower prices through the economic rules of supply and demand, which always work more effectively and efficiently than government intervention.

Kazi Zeeshan Hasan is director at Kazi Farms Ltd.​