Indian poultry industry faces profitability dip in 2025-26 amid rising feed costs

INDIA – The Indian poultry industry is set to witness a decline in operating profitability in the financial year 2025-26 due to rising feed costs, despite an expected revenue growth of 8-10%, according to a recent report by Crisil Ratings.

The rating agency anticipates a 50-basis-point drop in operating profitability next fiscal year, primarily driven by the increasing prices of maize and soya-based feeds. These two key ingredients make up nearly 90% of the total feed cost for poultry farmers.

In its analysis of 30 poultry firms, which generated approximately Rs 10,000 crore (approximately US$1.1 million) in revenue in the 2023-24 fiscal year, Crisil Ratings highlighted that profitability had improved in the past two years due to lower feed costs. However, this trend is expected to reverse as feed prices climb.

Jayashree Nandakumar, Director at Crisil Ratings, pointed out that soya prices had declined in the previous fiscal years due to bumper crop yields. 

However, a likely reduction in soya acreage is expected to push prices upward in 2025-26.

Similarly, maize prices, which account for 60% of total feed costs, are projected to rise due to increasing demand for ethanol production. 

“These factors will weigh on industry margins despite strong revenue growth,” Nandakumar stated.

Revenue growth driven by strong demand

Despite the expected dip in profitability, poultry firms are likely to see revenue growth of 8-10% next fiscal year, in line with this year’s performance. This growth is attributed to both volume expansion and improved pricing.

India’s per capita poultry meat and egg consumption remains significantly lower than the global average, signaling room for growth. 

“Changing dietary preferences, higher disposable incomes, and rapid urbanisation are key factors supporting a projected 4-6% volume growth in the medium term,” the report noted.

With strong demand and increased feed costs, overall realisation in the industry is expected to rise by 4-5%. 

According to Rishi Hari, Associate Director at Crisil Ratings, the average price per kilogram of broiler chicken is likely to grow by 3-5%, while egg prices per dozen are expected to increase by 2-4% year-on-year.

Although higher feed costs will weigh on profitability, experts assert that the industry’s stable credit profile, modest capital expenditures, and steady demand growth indicate a resilient outlook for poultry companies in the coming years.

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