Poultry association, cartels hand in glove

ISLAMABAD: Around 85 percent of the total input cost for broiler chicken was artificially increased or controlled by a cartel in the poultry industry. As many as eight hatcheries of poultry industry were involved in fleecing consumers through cartelization and price manipulation of day-old broiler chicks.

As per the announcement by Competition Commission of Pakistan (CCP) on Thursday, an inquiry recently concluded by the commission revealed that a nexus of eight hatcheries enjoyed bonanza by price fixing of a day old broiler chicks from 2019 to June 2021.

The inquiry was initiated after the competition commission received several complaints from broiler breeders on Pakistan Citizens Portal, alleging cartelization in the poultry sector, which led to price increase of day old broiler chicks.

In this connection, the CCP inspected premises of the Pakistan Poultry Association (PPA) and a company involved in the racket. A forensic analysis of the evidence impounded from these premises revealed that an official of the hatchery played a key role by announcing mutually-agreed prices of day old broiler chicks. The rates were conveyed to other hatcheries and PPA daily through SMS and WhatsApp. The evidence collected by the CCP indicated that the rate of day-old broiler chicks announced after mutual discussion on social media applications between the hatchery players prevailed in the market for all the hatcheries.

It may be mentioned that the official appointed as the focal person for coordinating rates quoted to another hatchery the price as Rs82.5 for three days. When the CCP checked the market rate for those three days, their rates were the same as quoted by the focal person.

The Pakistan Poultry Association was also hand in glove as its official was also a part of the WhatsApp group of the manipulators who fixed rates through SMS and was aware of the pricing discussions and announcements.

The CCP stated the price-fixing arrangement between competitors clearly violates Section 4 of the Competition Act, 2010. The month wise The monthly average prices of a day old broiler chicks fluctuated sharply during 2020-21, between the range of Rs20.46 per chick to Rs79.74 per chick. The jump in the price of day old chicks reflected in the price of chicken meat as well.

The other major cost component is poultry feed, which accounts for 68 percent of the total cost of production of chicken. In May 2021, the CCP also found a nexus between poultry feed companies and issued show-cause notices to them. The inquiry team concluded that 85 percent of the total input cost for broiler was artificially increased or controlled by a cartel in the poultry industry. The feed companies have obtained stay orders from the Lahore High Court against the show cause proceedings.

It is also interesting to mention that most of the hatcheries involved in the cartelization are vertically integrated and involved in the entire poultry supply chain, from breeding to the production of poultry feed.

Following the findings of the inquiry report, the commission will issue show-cause notices to poultry companies involved in the production and sale of day old broiler chicks for violation of rules.