Changing Food Habits Hold Hope for Poultry Sector24 May 2013
INDIA - Buoyed by changing socio-economic conditions such as rising purchasing power and changing food habits, the country’s poultry sector is likely to continue its growth in the long term, rating agency ICRA has said.
According to The Hindu Business Line, the Rs 47,000-crore industry has been growing at 8-10 per cent annually and although the sector has a negligible presence on the exports front, it is betting big on the growing domestic market.
ICRA expects domestic broiler meat demand to grow at 8-10 per cent and table egg demand to grow at 4-5 per cent in the long term on back of increasing urbanisation and rapid growth of quick service restaurants.
According to the rating agency, key challenges faced by the industry include high feed costs, inadequate cold chain and transportation infrastructure, high vulnerability to disease outbreaks and highly volatile realisations affecting cash flows.
Higher feed costs tend to squeeze the profitability margins of poultry farmers and companies alike, said P. Selvaraj, Chairman of National Egg Coordination Committee (NECC), Namakkal zone.
Feed costs account for one-third of the total cost of production.
“The second half of the calendar year 2012 was tough for the industry due to soaring input costs with key feed ingredients such as maize and soyameal touching record levels.
Poultry sector consumes 52 per cent of the country’s maize production and any vagary in the monsoon tends to hit the profitability of poultry sector, especially broiler farms, which are sensitive to feed price fluctuations,” the report pointed out.
According to data available with NECC, prices of layer feed increased to Rs 1,539 for a 75-kg bag in April against Rs 1,344.33 in the same period last year. Broiler feed prices too rose to Rs 2,094.50 (2,023.33).
To make things worse, the industry was faced with an oversupply and sporadic instances of ‘bird flu’ in certain States.
Strong investments made in 2010 and 2011 had resulted in capacity expansion in broiler segment and led to a glut. This significantly affected profitability of poultry farms.
NECC data pointed out that the egg production stood at 3.54 crore in April this year against 3.19 crore during the same period last year.
South India (led by Andhra Pradesh) produces more than 45 per cent of total poultry output while another 20 per cent comes from the western region (led by Maharashtra).
Tamil Nadu leads in poultry consumption in the country, thanks to inclusion of eggs in various mid-day meal programmes.
India ranks fourth globally in broiler meat production and the US Department of Agriculture has projected broiler meat output of the country at 3.42 million tonnes (3.1 million tonnes) for April.
On the domestic consumption front, the country ranks sixth with consumption at 3.41 million tonnes (3.15 million tonnes).
On the export front, the country has taken a hit since 2006 due to continual outbreak of bird flu in some pockets of the country.
Egg exports, which peaked at 1,019.03 lakh in 2007-08, have plummeted to 383.37 lakh in 2012-13. Exports for this fiscal till April stand at 179.48 lakh eggs.
Table eggs are already out of Gulf menu and the trade is also facing cheaper competition from Brazil, Morocco and Algeria.
But industry sources say, with higher domestic consumption matching supply, players are keen on catering to the home turf and shifting their focus from wet to frozen market – i.e., from live birds to processed/dressed chicken – consumption of which is growing at a slow but steady pace.
Farmers in the country have moved from rearing country birds in the past to rearing hybrids which ensure faster growth of chicks, higher eggs/bird and consequently sustainable profits to the poultry farmers.
Transition from a predominantly live bird/wet market to a chilled/frozen market is crucial for the future expansion of domestic poultry industry.
Developing efficient distribution system with large investments required in cold chain infrastructure and increasing market acceptability of frozen chicken are going to be the key industry drivers in long term, said the ICRA report.ThePoultrySite News Desk