South Asia’s egg markets are surviving a year of imports

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The South Asian egg market is dynamic and in flux, changing the way farmers will do business in the future.

The egg trade in South Asia got a boost this year as countries like Bangladesh and Sri Lanka opened their borders to imports. While this has rattled local producers, we understand that borders, once opened, are hard to close. So, how do we coexist with imports?

Asian Agribiz spoke to egg producers around South Asia to find out how farmers can learn to live with imports.

1) Build local production 

Eggs, the most affordable source of animal protein, have seen unprecedented price hikes over the last few years, a phenomenon referred to as ‘eggflation’. Sri Lanka faced reduced production and frequent shortages. In February 2023, the country received its first shipment of imported eggs from India.

Since then, local feed costs have eased, and the availability of layer chicks has improved. Restocking is happening, but given that many farmers are small and medium scale, the pace is slow, Zaffar Jeevunjee, Switz Lanka CEO, told Asian Agribiz.

“Poultry has cycles of overproduction and underproduction but with imports, the cycles move into extremes. The unpredictability of imports makes it difficult to plan long-term investments,” he explained.

Imports also created significant price volatility, making it harder for local producers to plan their intakes. Those with deep pockets are better able to navigate price fluctuations. Given this situation, Mr Jeevunjee saw a temporary consolidation in Sri Lanka’s layer industry.

In marked contrast, Pakistan’s layer sector is dominated by larger integrators. Sohail Ahmed, COO of Noor Poultry, told Asian Agribiz they rebounded faster from the crisis faced by the egg sector. Pakistan’s economy also faced some major blows along with the feed crisis. However, with the high egg prices this year, the sector aims to recover losses and build back by 2024. In short, a well-organized sector is more resilient to external pressures.

2) Reduce inefficiencies

In Bangladesh, a minor flood or breakdown in the transport system can cause sudden spikes in egg prices. This can prompt calls for imports, and this time, supply shortages have opened the borders for imports. As the country awaits its first shipment of imports, local producers are working to manage prices through shorter distribution networks.

According to Fazle Rahim Khan, former Managing Director at Aftab Bahumukhi, most layer farms are in rural areas far removed from the main cities. This means many intermediaries are involved in the collection and distribution of eggs from Bangladesh’s small and medium-sized layer farmers, who control over 80% of the market.

To overcome price discrepancies, the poultry industry is negotiating with the government to set farm gate prices and margins between traders and retailers. One of the poultry associations also started selling eggs from their own trucks to bring down local prices.

“Among the major issues are our inefficiencies and unproductive supply chain. We can reduce prices if these are resolved,” said Mr Khan.

Read more:
Sri Lanka to end egg imports after December
India secures long-term egg export contract with Sri Lanka
Madhya Pradesh doubles egg consumption

3) Market predictability for importers and exporters

If ad hoc imports are a bane to local producers, it is also a headache for exporting farms. India’s Namakkal, the source of most egg exports to South Asia, is cautiously embracing the new export markets.

PV Senthil, Managing Director of Kaveri’s Bio Proteins in Namakkal, told Asian Agribiz the sudden demand from Sri Lanka has increased their exports by 3-4%. For a long time, Namakkal’s poultry belt has seen exports drop as other parts of India developed their own layer industries.

In addition, overseas markets shrunk after 2008 due to a lack of disease zoning or compartmentalization in India. This is despite Namakkal itself never having an outbreak of avian influenza.

“Given the drop in exports, our farmers have been operating at 80% capacity. So we can quickly expand to 100% if we get more orders. However, I would be wary of expanding beyond this if export demand is not predictable,” said Dr Senthil.

Unlike markets such as Singapore, which regularly imports eggs, Sri Lanka and Bangladesh are production centers where demand can fluctuate based on local policies.

Dr Senthil noted that in 2008, many farmers, encouraged by export prospects, had expanded capacity only to find themselves in debt when markets closed. “We have to learn from the past and invest wisely,” he noted.

Hence, a predictable export/import cycle or regular information on such market demands would provide better stability for layer producers in both export and import markets.

4) Finally, get help during bad times

“Governments only intervene when farmers are making money, not when they are losing,” remarked a Sri Lankan layer farmer. While this helps consumers afford more eggs, it does not help local farmers ensure food security in the country.

In this regard, associations and farmer lobbies play a crucial role  in gaining concessions from the government. Together, they can lobby for import concessions or tax breaks on raw materials to help them compete better with imports.

For example, in Bangladesh, poultry organizations secured concessions on imported oil cakes, despite pressure from imports.

For countries dependent on imported raw materials, this would offer some relief, especially when competing with exporting countries that produce their own feed raw materials.

In recent years, disruptions in the supply chain and global economic uncertainty have become commonplace. To overcome food availability issues, countries increasingly explore regional trade options, which will introduce new challenges for local animal producers.

South Asian egg producers are no exception, as they now face competition from both local and international rivals for supermarket shelf space.