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Chicken and Egg Prices Likely to Rise

by 5m Editor
30 July 2012, at 7:58am

INDIA - It is not only the prices of staples, edible oils and vegetables that have been rising. Prices of eggs and chicken (protein food items) may also rise in the coming months.

The Times of India reports that scanty rainfall and higher global prices have led to a huge increase in average prices of poultry feed in the country, which is also an early indicator of the potential impact a drought may have on food inflation.

Average prices of poultry feed - consisting of oilseed cakes, rice bran, grounded maize and soya - rose by 69 per cent year-on-year in July up from 18 per cent in June, due to lack of rainfall and higher global prices, a Nomura research says. These price increases outpaced those during the 2009 drought. Feed is a key input in poultry farming, and this sharp price increase suggests that prices of eggs and chicken (protein food items) may rise sharply in the coming months, the note adds.

If farmers choose to substitute poultry feed with cereals, then prices for cereals could rise as well. Rising feed prices are an early indicator of the potential impact that the deficient monsoons could have on food prices. As delayed monsoons hurt production of vegetables, cereal and oilseeds, we expect WPI food (primary and manufactured) inflation, which is currently 9 per cent year-on-year, to rise into double digits in the coming months. This will keep both WPI (wholesale price index) and CPI ( consumer price index) inflation elevated above the central bank's comfort zone.