(Bloomberg) -- Rumors in India that birds could spread the coronavirus are taking their toll on sales of poultry in the world’s second-most populous nation.

The speculation is circulating on social media, according to B.S. Yadav, managing director of Godrej Agrovet Ltd., India’s biggest compound animal feed company. Industry-wide weekly sales have plummeted at least 47% to 35 million to 40 million birds in the past three to four weeks, while prices have slumped almost 60%, he said.

“The damage is so severe that whatever we have done in the past seven months will be wiped out if the decline in sales continues for next one to two months,” Yadav said. “Rumors will take a long time to die.”

India’s 1 trillion rupee ($14 billion) poultry industry provides direct and indirect employment to 5 million people and supports more than 25 million farmers. With an annual production of 67,000 million eggs, India ranks second in the world.

“Surplus is building,” Yadav said, adding that the birds will be sold at lower prices. “Integrated companies and farmers are losing money because of rumors about the coronavirus, which has nothing to do with chickens.”

Prices Slump

Chicken prices at farm gate have fallen to 30 rupees to 35 rupees per kilogram, compared with 80 rupees to 85 rupees about three weeks ago, according to Yadav. The cost of production is 75 rupees, he said.

Farmers are cutting back on production and culling parent birds. If consumption normalizes, there may be a shortage in the next couple of months and prices could rise sharply, Yadav said.

Profits before tax at the chicken business of Godrej Tyson Foods Ltd., a joint venture between Godrej Agrovet and Tyson Foods Inc., have eroded by 10% to 11% in the past 3 to 4 weeks, Yadav said.

India’s chicken meat consumption is seen flat at 4.9 million tons in 2020, according to USDA data.

--With assistance from Subramaniam Sharma.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net

To contact the editors responsible for this story: Anna Kitanaka at akitanaka@bloomberg.net, Atul Prakash, Abhay Singh

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