Malaysia's Egg Shortage Sets Indian Hatcheries on Path for Record Exports

· The outbreak of highly pathogenic avian influenza, commonly called bird flu, has curtailed supplies of eggs and chicken in many countries around the globe, pressuring already high food prices and triggering trade restrictions from countries that import poultry.

India is set to export a record 50 million eggs this month, boosted by sales to Malaysia, where there have been acute shortages as soaring feed prices caused by the Ukraine war forced many small-scale farmers to cut output, industry officials said.

Middle Eastern countries, including Oman and Qatar, are the main buyers of eggs from India, but over the past few months, Indian hatcheries have received large orders from surprising quarters as output fell in some of the world's top suppliers.

The biggest such unexpected order came from Malaysia, which used to export eggs to Singapore and other Asian countries.

To secure egg supplies as prices rose to record highs, Malaysian Minister of Agriculture and Food Security Mohamad Sabu earlier this month visited Namakkal, in the southern Indian state of Tamil Nadu, where several leading hatcheries are based.

"For the first time, Malaysia is buying large quantities of eggs from India, and it seems that India's egg exports to Malaysia will remain strong during the first half of 2023," Sasti Kumar, joint managing director at Namakkal-based Ponni Farms, one of India's leading egg exporters, told Reuters.

India shipped 5 million eggs to Malaysia in December, and will ship 10 million in January and up to 15 million in February, according Kumar.

The outbreak of highly pathogenic avian influenza, commonly called bird flu, has curtailed supplies of eggs and chicken in many countries around the globe, pressuring already high food prices and triggering trade restrictions from countries that import poultry.

The imports from India have helped Malaysia bring prices down from the record highs seen in late December. Having suffered a shortfall of 157 million eggs in November, the market gap was down to just one million in December, the Malaysian minister said in a statement earlier this week.

Malaysia's egg production would recover in a few months as the government has increased a subsidy, said Tan Chee Hee, president of the Federation of Livestock Farmers' Association of Malaysia.

Meantime, prices in India have shot up to a record 565 rupees ($6.96) per 100 eggs, up by nearly a quarter on year ago prices and adding to domestic concerns over food price inflation.

Exports are rising amid robust local consumption during the winter months, said Prasanna Pedgaonkar, general manager of poultry-focused Venky's (VENK.NS).

At the same time, Pedgaonkar said, domestic supplies have fallen by around a tenth as small-scale Indian farmers, like their counterparts in Malaysia, have curtailed production after incurring losses in the past two years due to the high price of feed and the impact of the pandemic.

India's domestic prices could eventually make exporting eggs less profitable, in which case foreign buyers will have to look elsewhere, said C Panneerselvam, an exporter also based in Namakkal who sold one million eggs to Malaysia last month.

But for the time being, demand is not abating.

Countries such as Singapore and Sri Lanka could be next in line to buy from India in coming months, said Kumar of Ponni Farms.