India's Poultry Market is Booming26 July 2013
INDIA - In a review of the country's poultry industry, Dr T. Kotaiah writes that, between 2003 and 2012, the human population of India has gone up from 1.06 to 1.2 billion and is growing.
Fortunately, the economy of the country has been healthy and the purchasing capacity of the average Indian is on the rise, writes Dr Kotaiah. Furthermore, the food requirements of the country are growing. Consumption of non-vegetarian food goes up with increasing purchasing power. Most Indians are now in a position to buy chicken and eggs at reasonable prices. The open market policy of the government opened access to the best of the products in the world and also created pressure on local producers in terms of quality production.
The policy of self-sufficiency pursued for the last 60 years by the Government of India has been paying off and India does not import the basic food ingredients like food grains. Grain production of the country is on the rise although it represents just 2.5 per cent of agricultural output. India is self-sufficient in grains and is also exporting. The export of grains is resulting in the price rise of the grains within the country, which is benefiting and encouraging arable farmers to stick to agriculture activity and improve.
The animal production industry has to put up with the prices but the rising price of grains and oilseeds is creating enormous pressure on the livestock sector by increasing the cost of production. Only two of the livestock sectors are commercialised in India: the dairy sector consisting of buffaloes is under tremendous pressure between rapidly increasing input costs and slow increase of the price of milk while the poultry sector is most promising in terms of organised production and efficiency. The industry is maintaining the growth of eight to 12 per cent annually in spite of increasing input costs and not that fast improvement of the poultry products. The prices of eggs and chicken are also on the rise.
If we examine the rise in prices of eggs compared with layer feed prices, we can see the squeeze between the increased in feed prices against the rise in egg prices. Similar is the case with the broiler feed prices and the farm-gate broiler prices.
Feed - now representing 70 per cent of the total cost of production - is going up at a faster rate than the prices of eggs and chicken meat. The production rise is still phenomenal in spite of the above situation. Besides feed, the cost of other inputs like labour and power has also gone up.
The poultry industry can be divided in to two distinct entities and the mitigation strategies are different for both.
India is the third largest producer of table eggs in numbers after China and US. It has recently overtaken Mexico, which was the third largest egg producer.
Commercial layers in India are predominately white (>95 per cent). Few brown layers introduced could not maintain the market share due to higher feed intake and no price advantage for brown eggs.
Layer birds bred and adapted to Indian climate, feed and the market situation holds the largest share. International brands like Bovans, Lohmann and Hyline are also present in the market. The grandparents (GP) of the multinational brands are imported and multiplied.
Layer chick placements remained constant for three years between 2004 and 2006 due to bird flu but have been going up steadily since. The placement of layer chicks was about 140 million in 2002 which rose to 220 million by 2012.
All commercial layer birds are in cages. Three-tier California cages in raised floor houses are common. Due to environment issues and the pressure of expansion, closed housed with multi-tier cages, mechanised egg collection, automatic feeding and manure-drying are being examined for their economic viability. The individual house capacity is usually 100,000 birds.
Around 70 per cent of the layer farming is in the southern states. The lower land prices and grain prices as well as less variation in seasonal climates are the reasons for the distribution. Separate brood/grow facilities situated in the closed vicinity is the order of the day. The growing areas are used on 'all in, all out' basis. Layer flocks are mostly in multi-age group farms.
The number of vaccinations for the layers have been going up with growing awareness of new diseases and new variants of the same disease. Many vaccines are imported but there are vaccine manufacturing companies in India. Bivalent Marek’s vaccines are prevalent, yet “Rispens” is not permitted for use. India does not vaccinate against highly pathogenic avian influenza (AI) but rather practices a 'stamping-out' policy in case out outbreaks. There is government monitoring system for AI guided by OIE regulations.
Least-cost formulations are used to feed layer birds and there is a constant search for cheaper, unconventional feed materials. Feed prices fluctuate during the year, with the grain becoming cheaper during the harvest and more expensive again just before the beginning of the crop season. Many layer farmers concentrate on bulk purchase of grains in season to save costs. More than one grain is being used. Most layer feeds are low-energy rations, having around 2,400 kcal of energy.
The eggs are being sold in numbers. Grading, packing and branding is not widespread. Few attempts to sell them as graded and value-added eggs have not been very successful due to limited cost-effectiveness in pricing and volume of sales.
Layer farming is concentrated around few areas and lot of eggs move from place to place within the country. Various state governments are moving to enhance the local availability of eggs by giving incentives to farming. Exports of table eggs went up during 2002-2004 but is not increasing due to trade restrictions from the buying countries. India has half a dozen egg powder plants exporting egg powder. Many state governments are implementing midday meal schemes and serve eggs in the menu for the school children. Eggs are also served as a part of the hospital food. Eggs and bread is the popular “fast-food”, which enhances the consumption of eggs enormously.
With good farming practices, production is up to 320 eggs per hen housed in a 365-day laying cycle. The average production of hen is calculated at 300 eggs per hen housed.
Per-capita consumption of eggs has gone up from 36 in 2002 to 48 in 2012.
To increase the availability of eggs in the rural areas, backyard poultry backed with “mother units” is being encouraged by the governments as an alternative system of poultry production to augment egg production while addressing the health issues in poultry.
India is the fourth largest broiler producer after China, US and Brazil.
There has been a phenomenal increase in broiler production between 2002 to 2012 in spite of the crisis that arose out of bird flu scare in 2004-2006.
Parent breeder placements are estimated to be 30 million in 2012 against 1.5 million in 2002. They are concentrated in a few pockets and there is a heavy movement of hatching eggs to less productive areas. There are more than 500 breeding farms in the country housing the broiler parent stocks. The numbers went up sharply from 2007 to 2010 due to raising demand in chicks. The numbers have since stagnated due to reduced chick sales. The numbers are being compensated by enhanced capacities by few breeding units who grow their own chicks as a part of their downward integration. The stagnation could be a short gap after sharp rise due to changing trends in placements.
Most of the broiler breeders are in cages with artificial insemination. Best of the breeding flocks produce up to 200 hatching eggs and 160 chicks. Excellent health standards are maintained and there are 'all in, all out' breeder flock units. Two-tier California cages in open-sided raised-floor houses are common. Due to the raising concern about the environment, trials on closed houses with multi-tier cages are being put up as an alternative cost-effective housing system. Power availability/cost, success in manure handling and artificial insemination result in multi-tier cages will decide on the future systems.
Most - 93 per cent - of broilers are marketed live in India and so there is limited opportunity to transport birds to distant locations. Hence, local integrators are coming up with huge volumes of parent stock and broiler rearing. The biggest of them have more than one million parent stock producing more than one 100,000 chicks a day.
All multi-national brands of broiler chicks are available in India produced from imported grandparents. Aviagen has established a great grandparent (GGP) farm in India. There are local pure line breeding programmes running in India, producing birds scientifically in open-sided houses with lower energy feeds. Indian-bred birds dominate the replacements.
All the commercial broiler chicks are raised on deep litter on 'all in, all out' basis. In 2002, 80 per cent of the chicks produced were sold as day-old chicks and the farmers were rearing them. In 2012, the number of chicks sold has come down to 50 per cent and the rest are reared by the companies who hatch them as a part of integrated production. The trend shows that the shift in rearing may continue.
Due to large-scale rearing of broilers, reduced production cycle and marketing live birds, the live broiler market has remained speculative. Single flock-growers lose money when the prices are down and cannot realise the benefit of high prices prevailing for few weeks. Larger scale rearing companies are going in for contract farming to utilise the same facility to increase their volumes. The small growers are becoming a part of the big company which is proving to be healthy growth of the industry.
Broiler feed, which used to be all mash, is being processed in to crumbles and pellets. Efficient feeds rather than least-cost formulations are favoured. Feed conversion ratio and overall cost of production are considered more important than the cost of feed alone. Broiler rearing companies are establishing large feed processing plants. Most of the pre-starter and starter feed is steamed and crumbled. FCRs are coming down - from 2.0 in 2002 to 1.75 in 2012, with the best of the flock recording 1.5 at 2.0kg bodyweight.
Broiler farms are open-sided; controlled houses are not even five per cent of the total volume. The main reason being the live bird market into which the birds reared under climate-controlled houses do not fit in besides the high capital costs and power requirements involved.
Live broiler markets fluctuate seasonally. Summer prices are high due to reduced production and availability under open-housing system. Festive seasons record low prices due to reduced consumption as some sects abstain from eating meat during this time.
Only seven per cent of the broilers are further processed into chicken products. This volume is not going up due to lack of cold chain availability and traditional consumption habits. People still like to buy a live bird slaughter and cook in their own way.
The outlook for poultry production in India looks bright. The growth of layer business is estimated at six per cent and broilers at 12 per cent annually. Government policies to augment domestic grain production and ensure the availability to the poultry sector without exporting the grains directly will encourage the industry to grow.
India may not be an exporting country for eggs and chicken but the industry can assure feeding the more than one billion human population with quality eggs and chicken at cheaper prices than anywhere else in the world.
Dr T. Kotaiah, Managing director of Indbro Research & Breeding Farms Pvt.Ltd., has been an industry watcher for four decades. He can be contacted at firstname.lastname@example.org .