Bairaha Farms Sept. sales down on soaring chicken prices

• Fresh chicken prices up 28%, broiler chicken prices surge 60% in October from a year ago  

Bairaha Farms PLC saw its sales languishing in the three months to September, partly due to the sluggish consumer demand resulted from a multitude of reasons and the higher base effects in the same period last year when the country saw some robust pent-up demand after the first virus wave. 

The large-scale chicken producer reported Rs.1.37 billion sales for the July-September quarter, up 4.6 percent from the same period last year.

Consumer demand which recovered from July through mid-August weakened thereafter when the softer form of lockdowns had to be re-imposed to contain the spread of the virus again, causing many to lose incomes. 
Meanwhile, the soaring consumer prices and loss of sales from the institutional sector such as hotels and restaurants weighed on the momentum in the second half of the quarter. 

According to retail prices published by the Census and Statistics Department, the price of a kilogram of fresh chicken hovered between Rs.660.0 and Rs.682.50 during the quarter, compared to Rs.595.00 and Rs.602.0 in the same period last year. 

Broiler chicken was sold at between Rs.456.0 to Rs.580.0 a kilogram during the quarter, up sharply from Rs.430 during the same quarter in 2020. 

According to the latest retail prices available on October third week, the prices have further risen with fresh chicken prices rising to Rs.706 a kilogram and broiler chicken sold at Rs.690.0 a kilogram, up by as much as 28 percent and 60 percent respectively from a year ago levels. 

Meanwhile, Bairaha Farms saw its direct costs increasing by 3.6 percent to Rs.1.11 billion in the quarter, slightly below the pace at which sales rose in the same period. While the soaring retail price for chicken may have helped the company, its margins have come under pressure as the growth in gross profits narrowed from a quarter ago.
Feed cost which accounts for two thirds of total poultry rearing cost has been a perennial issue facing the poultry sector players in the country due to import controls and the selective issuance of licenses mostly to the political cronies, driving prices higher even than imported feed. 

The weaker rupee has also sent the imported feed cost further higher in recent times. What is different this time is the global commodities prices also going up exponentially adding further to the woes of manufacturers in many sectors.     

  
This soaring feed cost has already pushed many small scale poultry farmers out of business. 
Bairaha Farms to a larger degree has the capacity to fend off this pressure as it operates in the complete poultry supply chain via its joint venture and subsidiary companies as it is involved in chicken processing, parent breeding, broiler day-old chicks production, broiler farming, and value-added meat manufacturing.

Bairaha Farms owns a 50 percent joint venture, Fortune Agro Industries (Pvt) Limited, established in June 2016,  which runs a feed mill, to minimise the undue volatility in the supply caused due to the sporadic issuance of permits for corn imports. 

The company along with its other joint venture entity, Windsor Real Estate Limited in 2019 completed the acquisition of lands, buildings and silos from CIC Grain Private Limited for Rs.340 million for the purpose of storage and drying of maize.

Despite the slowdown in the top line, the company reported earnings of Rs.9.74 a share or Rs.155.86 million for the July-September quarter, compared to earnings of Rs.7.82 a share or Rs.125.09 million in the same period last year. 

For the six months to September, the company reported earnings of Rs.15.92 a share or Rs.254.65 million, on revenues of Rs.2.75 billion, up 12 percent from a year ago.