Chicken is getting expensive again, and poultry farmers say the reason lies partly in how cheap it became a few months ago.
Prices at the farm gate have climbed to DH16-17 a kilogram, occasionally touching DH18, after crashing as low as DH6-7 before Eid al-Adha. By the time a chicken reaches the consumer, transport, distribution and fuel costs take the price beyond DH20 to around DH21-22.
For farmers who were selling birds for a fraction of that only months ago, the turnaround was set in motion at the bottom of the market.
“This increase we have seen in recent days is the result of the price decline recorded in the preceding weeks and months,” said Abdelkhalek El Mekhtoum, vice-president of the National Association of Poultry Meat Producers.
At DH6 or DH7 a kilo, keeping the sheds full no longer made much sense.
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Some growers had paid around DH10 for each chick, then watched the selling price of the finished bird collapse. Feed, medicines, vaccines and energy still had to be paid for.
“The losses were considerable,” El Mekhtoum said.
Farmers responded the way producers usually do when the market turns against them: they raised fewer birds. Some stopped altogether.
Weeks later, those empty or thinner sheds are showing up in the market.
“We were raising far fewer chicks than before. After a certain point, that inevitably affected prices,” he said.
The poultry trade has seen the script before.
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When chicken becomes expensive, growers put more chicks into production. Supply catches up and can overshoot demand, sending prices down. Loss-making farmers then pull back, fewer birds become available several weeks later and prices start climbing again.
“One day, the price drops to 7 dirhams, and the next it can climb to 20 dirhams,” El Mekhtoum said.
Somewhere around DH13-14 a kilo, he argues, would leave the market on firmer ground.
Getting it to stay there is the difficult part.
A grower putting chicks into a shed today knows what much of the production bill looks like. The chick alone costs about DH10, before feed, vaccines, medication and energy are counted.
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What he does not know is what chicken will fetch when those birds are ready for sale several weeks from now.
At current costs, El Mekhtoum estimates a farmer could end up spending DH15-16 to produce a kilogram of chicken. A farm-gate selling price of DH16-17 leaves almost nothing in between.
Another slide towards DH10 would put the same farmer deeply into the red.
That uncertainty helps perpetuate the cycle: today’s selling price influences how many chicks farmers are willing to raise, and those decisions determine how much chicken reaches the market weeks later.
Consumers get the other end of the swing.
“They don’t benefit from it either: one day they buy chicken for 8 dirhams a kilo, and some time later they are paying 20 dirhams,” El Mekhtoum said.
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The latest rise happens to have followed the September 23 legislative elections, but producers see little connection between the two.
“The elections are not the cause of this increase,” he said. “They simply came at a time when prices were already going to rise following the losses we had previously suffered.”
Nor does he put much of the increase down to weddings and other celebrations, estimating that they account for no more than 10pc of demand.
July and August make his point: weddings were plentiful, chicken was not expensive. Prices fell as low as DH11 a kilo during the summer months.
The supply squeeze that followed the earlier rout began showing through in September.
For El Mekhtoum, breaking the pattern starts further back in the production chain, with the number of chicks being put on the market.
Too many chicks can eventually mean too many chickens and another price crash. Too few can set up the next shortage.
“Chick production needs to be balanced,” he said. “We need to produce the number of chicks that actually matches demand.”
That would require better consumption data and forecasts that allow breeders and growers to judge how many birds the market is likely to absorb several weeks down the road.
Until then, every turn of the cycle carries the seeds of the next one.
“When prices rise, they eventually come back down two or three months later,” El Mekhtoum said. “And when they fall, the reverse happens a few months afterward.”
