KARACHI: An enquiry by the Competition Commission of Pakistan (CCP) has revealed that nineteen poultry feed companies have caused a rise in poultry feed prices due to price coordination.
Poultry feed comprises approximately 75-80 percent of the cost of broiler meat and eggs. Therefore, the hike in feed prices has affected the prices of chicken and eggs, which are the most commonly consumed high protein foods.
The CCP’s enquiry revealed that from December 2018 to December 2020, the feed mills colluded to raise the poultry feed prices by Rs. 825 per 50kg bag, thus making the feed 32 percent costlier for the poultry farmers. Chicken prices rose by 18.31 percent and eggs by 5.2 percent.
The rise in these prices coincided with an increase in feed prices by almost Rs. 100 per bag.
The CCP took a suo motu notice of the concerns and complaints received, through the PM Citizens Portal and the CCP’s own online complaint management system, alleging that some of the leading mills in the country collusively raised poultry feed prices. The complainants also included poultry farmers whose businesses were hit by the costlier feed prices.
In February 2021, the CCP raided two major poultry feed producers and impounded crucial evidence pointing towards price change coordination among the feed companies. The impounded record revealed that officials of 19 feed mills were using an active WhatsApp group where one feed producer would announce its intended price increase and the rest expressing and sharing their willingness to follow suit. Price discussions included the effective date and amount of the rise. These discussions and decisions were implemented on the ground, as evidenced by the official price lists of these companies.
An analysis of poultry input costs shows that maize, which is the primary component of feed, constitutes 55-60 percent in terms of physical usage in feed, approximately 40 percent of the cost. Maize witnessed a bumper crop in 2020 and was abundantly available. Moreover, in FY-2019-20, maize prices fell by 7 percent compared to the previous year and in the first quarter of FY21, were 22 percent lower than 2019-20. On the other hand, soybean meal, another critical raw material, saw higher prices. However, a rise in input prices it has been witnessed cannot be used as a justification to increase feed prices uniformly as each mill has a different cost structure and business model.
Poultry feed mills are each other’s competitors, and any discussion and coordination on prices are prohibited under Section 4 of the Competition Act, 2010. Accordingly, following the findings of the enquiry report, show-cause notices will be issued to poultry feed companies involved in the prima facie violation of Section 4 of the Act.