Citizens' Issues
Yolk for the folk: Cracking open the market for eggs

It is a long way to go for Easter, but eggs are being sold in all sizes, colours, shapes and prices. So how can you grab the best bargain before you shell out for your shells?

If egg prices and options were a standalone indicator of inflation, then the percentile increase in prices of end product as well as inputs would make numbers look like they were on a trajectory matching that of a one-way rocket into outer space, or of a chicken trying to
jump over the moon.

It is not just the cost per dozen eggs landed at your doorstep, but the simply breathtaking way in which many of us have accepted that this most basic of foods has and will continue to see price increases ranging from 30% and more per annum.

In addition, there are, all of a sudden, a vast variety of poultry and other eggs available in the marketplace. In all colours, shapes and sizes, making a vast variety of claims from "near organic" to "extra strength" and "deeper colour yolks". Choose an adjective or more, and stick it with the name, put some sort of hologram or sticker on the eggshell, and voila! Here's another reason to notch up prices. Shops and other outlets seem to have a wide range of choices, prices in some cases going up to two and even three times the "basic" egg rates.

The "basic" egg rate in and around Delhi, which itself has gone up from around Rs30 a dozen to Rs40 a dozen now in the last few weeks, is driving the eventual price of these "new improved" eggs.

And they don't come in just round dozens anymore, or trays of 30, since packaging is now in fours, sixes, tens and even singles. Which makes things even more confusing.

This is a great change from the previous egg wholesaler repertoire, where choices and rates were and often still are restricted to 'desi' (country bird) eggs and 'leghorn' or any other generic layer bird eggs. The big ticket here is 'fresh', with canny retailers and others being able to spot from a distance anything that was laid more than 24 or 36 hours ago, typically the best period in which to consume eggs.

How they do it is still not clear, and in addition, they are able to judge with precision whether the egg was, while in transit, at ambient temperatures or met extremes.

Certainly, no egg retailer worth his albumin would like to sell anything like an egg under the title 'fresh' if it is already over 72 hours old, especially since the supply chain works without refrigeration till it reaches the end customer. Any 'basic' egg touching 60 hours or so is therefore sold at slightly discounted rates to street vendors, who usually manage to boil or cook and then sell for consumption the egg the same evening.

So, chances are that if you are sticking with the 'basic' egg, then what you get from the wholesaler is not more than 3 days old and what you get from the retailer may also be around the same - and that's not bad from the nutrition and health point of view.

But now you move to the 'premium' egg category. And here's where a chance encounter spurred this story - hanging around at Nizamuddin Station to receive a friend, I saw cases of eggs being unloaded from a 2nd Class Sleeper compartment, off a train coming from Pune.

Intrigued, I got talking to the carrier, and discovered all this:

1) The premium egg trade has now evolved an 'angadiya' service that typically carries a few hundred 'premium' eggs by train, anywhere in the country. Often, with help of pantry car employees, the number can also be higher.

2) These eggs are then "stickered" and then repacked, with fresh dates stamped on to the cartons, often in a smudged manner, thereby leaving room to also change the date.

3) Prices are set on arbitrary basis, often as a direct product of what the market can bear and the location of the end retailer.

4) Most interestingly, these eggs are often bigger, segregated during sorting of normal "basic" eggs, and then sold at a premium for size. The organic and extra-nutrition story is usually an add-on, like PR companies taking the credit for whatever was going to happen anyways!

5) Even in the case of a few of the known brand names of premium eggs, a closer look at the label as well as dates is essential. An egg that is 4 or 5 days old, without refrigeration, is simply not of much value to your body.

So, net result - are these premium eggs really worth the premium price?

The answer, as provided by the owner-cum-chef of a restaurant nearby who really values the quality of the eggs he uses, is simple - better to go to the wholesaler, and use fresh eggs. And the wholesaler always has oversize as well as double-yolk eggs, if you value them, at
a slight premium.

Of course, all of us cannot buy a minimum of 30 or 100 eggs at one go, to take advantage of the wholesale prices as well as quality and freshness. And that's where the retailer comes in.

Take the trouble to find out from the retailer how often he gets a delivery of fresh "basic" eggs, and if the answer is at least twice a day, if not more, then you are on safe ground as far as the eggs being fresh is concerned.

And now I am informed that "imported hen eggs", all the way from the Persian Gulf countries, are also available in stores. At an even higher price than the "premium Indian" eggs.

What next in this egg-xiting report?


Wednesday’s Market Preview: Indices likely to open higher

The Indian market is expected to open higher on positive global cues. The US indices closed at their six-month highs as investors were optimistic about the Federal Reserve’s bailout plan. The rally was also supported by strong earnings reports. Tracking the US markets, the Asian pack was also mostly in the green this morning on hopes that the Fed’s announcement will boost the region’s exporters. The SGX Nifty was up 38 points at 6,185 over its previous close of 6,147.

The local market ended its two-day winning streak on Tuesday amid a highly volatile session. The market opened on a positive note, riding on the gains accrued on Monday, even though the RBI's policy announcement played on investors' minds. Nervousness led the indices into negative terrain on quite a few occasions. Rate-sensitive sectors like realty, banking and capital goods felt some selling pressure soon after the Reserve Bank of India (RBI) announcement. Volatility was the highlight of the day as the indices continued to swing both ways. Finally the market ended almost flat with a negative bias.

The Sensex ended 9.94 points (0.05%) down at 20,345. The Nifty shed 1.45 points (0.02%) to settle at 6,119.

The US indices ended at their six-month highs ahead of the much-awaited announcement about fresh stimulus aimed at boosting the economy. Investors speculate that the mid-term polls will go in favour of Republicans, seen as “business-friendly”. Upbeat third quarter earnings reports also supported the rally.

The Dow gained 64.10 points (0.58%) to 11,188. The S&P 500 added 9.19 points (0.78%) to 1,193. The Nasdaq rose 28.68 points (1.14%) to close at 2,533.

Markets in Asia were mostly in the green in early trade this morning tracking their US peers. Investors hope that the positive outcome of the Fed meeting will boost export-dependent economies in the region. The Chinese government’s plan to put curbs on property prices pulled the country’s indices lower. The Japanese market is closed today for the Culture Day holiday.

The Hang Seng was up 0.24%, KLSE Composite added 0.08%, Straits Times gained 0.38% and Seoul Composite surged 1.03%. On the other hand, the Shanghai Composite was down 0.80% and the Taiwan Weighted shed 0.04%. The SGX Nifty was up 38 points at 6,185 over its previous close of 6,147.

Finance minister Pranab Mukherjee on Tuesday admitted the RBI's move to hike short-term lending and borrowing rates will hurt growth in the near-term, but exuded confidence that economic expansion will gather pace later as a consequence.

Mr Mukherjee said the RBI took the decision at a difficult time, when the economy is still witnessing high prices and some slackening of industrial growth.

"This tightening may have some negative impact on the growth rate, but I expect such an effect to be only a short one. In the medium to long-term, the changes announced by the RBI should actually help the Indian economy do better in terms of growth," Mr Mukherjee said in a statement in New Delhi.

Meanwhile, public sector lender IDBI Bank hiked deposit and lending rates by up to 50 basis points (bps), hours after the RBI announced a slew of measures to tighten the monetary policy.

The bank also raised rates on high value housing loans in response to the RBI action to tighten norms for these advances.


"The timing has worked out pretty well for disinvestment"

Chanda D Kochhar, managing director and CEO of ICICI Bank, spoke to Moneylife’s Sucheta Dalal and Debashis Basu on the Indian macroeconomic environment and the thrust areas for the lender. This is the second part of a two-part series 

Sucheta Dalal & Debashis Basu (ML): What about all the money that the government is raising from the equity market through disinvestment? Do you think it is a good idea and will it crowd out private borrowing?

Chanda D Kochhar (CK): It's a good thing because it should be used for productive purposes where it can create a multiplier effect of three to four times. The government will have to ensure that this process actually happens. And no, I don't think it will crowd out private borrowing because the private sector currently does not have too many plans to raise money. A large part of equity raising was done last year by the private sector and I think that they are currently more in the process of finalising their projects and a good flow coming from cash accruals. In that sense I think that in natural terms the timing has worked out pretty well for disinvestment and with the kind of money coming in from overseas. I won't worry about crowding out.

ML: Only the real-estate sector is likely to be in the market for funds, isn't it?

CK: Not really. In fact, real estate picked up money a lot ahead of other sectors. That is what has given them the patient capital that allowed them to complete their projects.

ML: But they are not selling, are they? They are holding on to assets to keep prices high and some are desperate for cash.

CK: They are not selling because they picked up this patient capital or equity money that gave them the kind of confidence to hold on to stock and not bring down their prices. But that is finally not good for the industry. The question is, will they blink and start putting stock in the market at affordable prices, or will they go for another round of equity raising? If you notice, in some places like Delhi, Noida etc., where the projects have actually brought down prices, the flats have sold very fast. Even here, the zero interest, etc., is a way of bringing down prices.

In real estate there are three different segments - residential, retail and malls. As far as residential property is concerned, whatever supply comes up will find its demand. That is going to be in a way a perpetual growth area because there is plenty of pent-up demand. Yes, there are geographic pockets where builders feel they can take the price to whatever level and hold, but that is not an all-India phenomenon. In most of the country, the price increase is led by existing demand so stocks are moving. Builders are also smart enough to know how long they can keep pushing up prices and what is the cut-off where it will begin to kill demand.

In office space, we currently have excess supply. There is at least going to be a two-year waiting period during which existing supply will be used up before you see any increase in prices or rentals. What has happened is the decline in rates has stopped, there is no further slide.

As for retail - or malls - demand is very location-specific. Some are continuing to do okay if there is no competing mall nearby. But in some segments if prices are high and the retailer is not able to afford the high rent and still make some money, there is a problem. So on the whole, the situation is different for each developer in the real-estate space depending on the composition of his portfolio. If he has raised patient capital and is in residential buildings, then life is smooth. But if they are mainly in the office space or have invested in malls where competition is high, there will be pressures.

ML: In terms of people at the ICICI group, there has been a major reshuffle across different entities. What triggered this and what is the game plan?

CK: I have just two thoughts. One is that in the past year, most of the team -almost everyone, had been in that particular job for 8-10 years. So in that sense, we - the Board and I - through that it was time that we all do some other job so that we can bring in a little bit of new thinking, new learning etc.

The second fact is that there have been one or two movements because of opportunities outside and we had to fill the gaps. Quite frankly, ICICI has such a great talent pool that even when you look outside, you finally say that you have the best resource within the group, so why not give this resource the opportunity rather than get someone else. So when you give your own resource a certain job, instead of one change it automatically leads to two changes.

ML: Is there anything that worries you?

CK: In the macro-environment, the biggest worry for us is will we allow ourselves the chance of achieving what we can. My worry is that there is so much we can do on achieving that 7%-8% growth only consumption gave us, plus add to that the growth that investment gave us, so there is no reason why we should not be at a double-digit. The issue is will we take ourselves there or will we say that little bit was lost here and a little bit lost there. We will still have decent levels of growth but will that be optimal and will we take advantage of the opportunity that has come our way?

These are not the years of one-way trends, where things will move either up or down - now you will have commodity prices and capital flows both moving up or down and everything becoming more and more volatile - can the country deal with this volatility?

ML: In your interactions with decision-makers, do you see an awareness of this opportunity and the need to change? We are not so sure… in fact quite negative.

CK: Well, I see a lot of good things also, I see several things moving very, very quietly, and I also see a lot of good intent. At the same time there are some things that make you feel - you do without them and may miss an opportunity. So if the question is, will we grow optimally? We may not, because in some areas we are just causing ourselves delays and problems that we could do without.

(The is the final part of a two-part series)


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