Covid-19 lockdown has severely hit the poultry industry with Q4 : ICRA
The recent Covid-19 lockdown has impacted the domestic poultry industry severely with Q4 FY2020 being the worst quarter in recent time, said ICRA on Friday.
The industry incurred large net losses due to sharp decline in demand, realization and profitability. Rumours circulated in social media, linking poultry birds as possible vectors of the virus, further lead to the demand drop and hence realizations. While realization has recovered from lows of March 2020, overall volume is likely to remain modest in Q1FY21 thereby putting pressure on overall profitability.
As per ICRA Research, as of date, the liquidity condition of industry participants continues to remain stretched, especially of smaller integrators and contract farmers, with few entities witnessing / likely to witness closure of business.
Giving more insights, Mr. Ashish Modani, Vice President, ICRA says, “Owing to sharp decline in realisations during Q4 FY2020, players incurred contribution losses – they sold birds below their cost price (due to perishable nature of products). Restricted logistics due to lockdown led to supply glut in local market, further adding to pressure on realization. Consequently, sizable losses in the last 2-3 months wiped out almost all profit booked during 9mFY2020.
Also, the liquidity position of several small contract farmers and integrators have been impacted with some going out of the business due to limited financial flexibility. The pressure is likely to sustain during first half, with industry hoping on recovery towards end of Q2FY2021.”