Corporates, poultry giants expand foothold in egg market

Bangladesh's egg market used to be largely ruled by thousands of small retailers and wholesalers, but the composition of sellers has been changing for the past several years with the emergence of large corporates and poultry industry giants.

They are gradually expanding the size of their baskets by including the popular protein item, which has raised concerns among small farmers and egg producers.

It has also led to analysts calling for major reforms in terms of market management, identifying dominant players and fixing investment ceilings to ensure fair competition.

Take the example of Pran-RFL Group, a leading food and plastic producer in Bangladesh. The company produced 20,000-25,000 eggs per day when it started commercial production in September 2022.

But now it is producing and marketing nearly two lakh eggs daily, said Kamruzzaman Kamal, director of marketing at Pran-RFL Group.

"Due to a rise in health consciousness, urbanisation and improved standards of living, a large market for eggs has been created. That's why we have entered," he added.

Similarly, Diamond Egg Ltd, which signed up for layer poultry farming in 2012, now produces about 15 lakh eggs daily, up from three lakh daily at the start of operations, according to its Managing Director Kayser Ahmed.

Alongside Pran-RFL Group and Diamond Egg Ltd, roughly 20 large firms -- including poultry industry major such as Kazi Farms, Paragon Group, and pharma maker Renata's subsidiary Purnava Ltd -- are selling packaged eggs in a market still dominated by unpackaged eggs.

Curiously, no estimate of egg sales by large companies is available.

Egg sellers said Bangladesh requires nearly four crore eggs per day and that small layer chicken farmers supply most of it.

But the presence of branded eggs is increasing, that too at a premium.

A visit to four supermarkets revealed that branded eggs were selling for at least Tk 25 higher per dozen than unpackaged eggs, which were selling at a maximum of Tk 160 per dozen, according to Trading Corporation of Bangladesh (TCB) data.

Kazi Zahin Hasan, director of Kazi Farms Group, said unbranded eggs were mostly produced by small farmers and did not offer any assurances regarding quality.

"Some consumers buy branded eggs because they want a reputable company to assure them of the quality of the product they are buying," he said, adding that Kazi Farms was increasing investment in the sector in response to rising demand.

Md Sirajul Hoque, director of the animal health division at Renata, said that demand from high-end consumers had led to them producing Omega-3, vitamin E and vitamin B9-enriched eggs.

Hoque said the prices of such eggs were higher than normal eggs due to higher costs of production.

At the other end of the spectrum, Khandaker Md Mohsin, secretary general of the Bangladesh Poultry Industries Association, said many egg farmers were forced to shut down shops over the past three-four years due to increasing production costs and an inability to fight off competition.

Corporates were filling the void left behind, he added.

"In the last decade and a half, the use of modern machinery has increased in the poultry sector. That increased production, but the number of unemployed people also increased," he said.

"The way corporates are delivering products to consumers, there will be a time when there will be no one in the supply chain between the producer and consumer. There will only be retailers," Mohsin added.

A layer chicken farmer from Sreepur upazila in Gazipur said that local brokers of big wholesalers collected eggs from him. But as costs of production increased and profit margins fell over the past two years, he has scaled down production.

Amanat Ullah, president of the Tejgaon Egg Merchants Association, an association of wholesalers in Dhaka, said a portion of their customers had switched to packaged eggs, negatively impacting their business.

Amanat said wholesalers in Tejgaon used to buy and sell about 3 lakh eggs daily a decade ago. That number has now been reduced to around 80,000 eggs per day, he said, adding that the number of egg traders dipped from 120 about two decades ago to around two dozen at present.

"They have not been able to keep up with the way corporate companies produce eggs and manage supply chains in a well-structured way. That's why they have lost a part of the market," he said.

Pran-RFL's Kamal said claims made by marginal farmers were incorrect.

"The acceptance of corporate companies is increasing day-by-day due to their ability to provide products to customers according to demand," he said, adding that it was not possible for marginal farmers to deliver products to customer through organised supply chains like large firms.

As a result, profit margins for farmers have decreased and many are unable to survive competition, he added.

Fakhrul Islam, chairman of Rahmania Organic Agro, informed that they ventured into this sector around 2011 and had also increased investment. Currently, his brand sells about 4,000 boxes of organic eggs every day across the country. It was around 2,000-2,500 boxes in 2011.

He said that buyers were unaware of when loose eggs were produced and how long they would last. But in the case of packaged organic eggs, the information is mentioned on the box.

WHAT DO ANALYSTS SAY?

Anwarul Haque Beg, professor and chairman of the department of poultry science at Sher-e-Bangla Agricultural University, said it is good news that corporate companies were investing more in the egg market.

However, he was alarmed by the number of small farmers decreasing day by day.

He opined that the government should frame a policy for contract farming because some corporations were preying on the poverty of farmers.

Otherwise, after some time, there will be no balance in the market, Beg added.

Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said a major reform was needed in terms of market management.

Apart from looking into the supply chain, he believes that reforms could lead to a deeper understanding of why prices of commodities such as eggs often fluctuate.

Due to a rise in health consciousness, urbanisation and improved standards of living, a large market for eggs has been created. That's why we have entered.

— Kamruzzaman Kamal Director of marketing at Pran-RFL Group

"Unfortunately, there is no competitive structure in the supply chain in Bangladesh. If there are a large number of producers in the supply chain, there will be competition in the market," Moazzem added.

He also said big poultry firms were engaged in almost every stage of the poultry value chain, from layer farming and feed production to the retail stage.

As such, they could play a role in controlling the market, he added, stressing the need to recognise dominant players in the market and monitor their activities regularly.

"In the current overall situation, it is time to set a ceiling for sector-wise investment to allow new investors and ensure competition," Moazzem said.