Scope and strategies for investments in Indian poultry industry:
Poultry has an crucial place in India as the eggs and chicken meat are important and rich sources of protein, vitamins and minerals. Poultry provides rich organic manure and is an important source of income and employment to millions of farmers and other persons engaged in allied activities in the poultry industry. Chicken is the most widely accepted meat in India. Unlike beef or pork , it does not have a religious taboo. The prices of chicken meat are lower than those of mutton or goat meat . Many Indian families , especially the educated people in urban areas , have begun to accept eggs as a regular supplemental part of their vegetarian diet .The forecast surveys indicate that as the present younger generation goes to the adulthood, the acceptability and demand for eggs and chicken meat in next 2-3 decades is likely to increase many-folds very rapidly.
In the last two to three decades , poultry has made tremendous strides particularly in the private sector, with the result that India is now self-sufficient with regard to requirements of high quality breeding stocks, modern poultry equipment, availability of medicines and vaccines and technically qualified skilled manpower.
The annual gowth rate is 8-10% in egg and 12-15% in the broiler industry. With the annual production of 33 billion eggs, India is the fifth world’s largest egg producing country. It also produces 530 million broilers per year. Poultry provides employment to about 1.5 million people. The annual per capita consumption in India is only 33 eggs and 630 grams of poultry meat. This is much lower as compared to the world average of 124 eggs and 5.9 kg meat. The National Committee on Human Nutrition in India has recommended per capita of 180 eggs (about one egg every two days ) and 10.8 kg meat .To meet this target , it is estimated that by year 2010, the requirements will be 180 billion eggs and 9.1 billion kg poultry meat while the estimated production may only be around 46.2 billion eggs and 3.04 billion kg poultry meat .This shows that there is a tremendous scope for growth With rapid urbanization , and increasing demand from the present 250 million economically strong ,consumer market base (which is likely to go up to 350 million by year 2010 ), there is bright future for this industry in India . It is estimated that, at present, Indian Poultry Industry contribution to the GDP is about Rs 80 billion which is likely to reach Rs. 300 billion by the Year 2005
Future poultry requirements.
As per the 1992 Livestock census , India had 284 million fowls ( Including both Desi and improved layer and broiler birds). It is estimated that India presently has about 115 million improved layer and 620 million commercial broiler population. By year 2005 , this is likely to reach to 250 million layers and 2110 million commercial broilers . This means that the parent female layer breeding stocks have to increase from 1.41 million to 3.12 million. In the same manner, the broiler breeder female stocks have to grow from 5.80 million to 20 million. This again indicates a tremendous potential for hatchery growth .All this will require intense efforts to provide proper infrastructure support sustainable broiler and egg industry in breeding, feeding , management, health control , and infrastructure for collection, processing, preservation and marketing of eggs and poultry products with a view to increasing the food security and improving the overall economy of the country .
The National Egg Coordination Committee projected a poultry plan for year 2015, keeping in view the target of 180 eggs and 9 kg chicken meat. Per capita annual consumption and considering an average growth of 10 % and 15% for egg and broiler industry respectively .For this purpose the country would need a capital investment of about Rs.148000 million A district wise growth and marketing plan, with a thrust on local rural marketing has been suggested instead of concentrating on the urban markets .
Work done in India for poultry development
The Central and State Governments Educational and Training Institutions, Farmers and The Private Sector poultry industry have contributed significantly for this achievement . In the Govt. Sector , the emphasis initially was on poultry training, breeding and health care. Post graduate programmes in Poultry Science were started at many centers. Programmes for selection and improvement of genetic stocks were taken up at Central and State Govt. farms. Random Sample Test Units were started to evaluate the genetic stocks and some excellent work was done on manufacturing of vaccines and providing diagnostic services. Subsequently the focus was on implementation of plans for assisting small farmers for poultry production.
The private sector contributed significantly to produce high quality commercial breeding stocks , poultry equipment ,compounded feed ,health care products and disease diagnostic facilities . Good genetic stocks, equipment and machinery, medicines and vaccines and skilled man-power are available. There is a need to improve processing, preservation and marketing of eggs and poultry products .
Regional imbalances with regard to poultry production as well as consumption of eggs and poultry products are prevalent in India. The northern, western and southern states have progressed well but the Eastern and North eastern states have lagged behind. This is mainly due to lack of infrastructure facilities and absence of backward–forward linkages.
In India, both intensive and traditional systems of poultry farming are followed, but intensive system is rapidly increasing due to increasing land and other input costs. It is estimated that in India , about 60% of poultry meat and 56% of eggs are currently being produced in the intensive system. It is further estimated that there are about 60000 farms under Intensive system ( some of them having more that 100000 birds) while there are about 100000 small farms scattered in rural areas practicing more extensive production systems , having flock sizes ranging from 25 to 250 birds. In case of layers the cage system is rapidly replacing the deep litter system. However in broiler farming, the deep litter system is more prevalent.
A farmers’ organization – National Egg Coordination Committee (NECC) -has done a good job in last 10-15 years by collecting information on supply and demand position of eggs on daily basis and declaring region-wise wholesale egg prices. This has helped to prevent undue exploitation of farmers. Agro-corpex India limited has been functioning in different states for direct trading of eggs of farmers. Fast-food joints of well known International companies like “Kentucky Fried chicken“, “McDonalds”, "pizza hut" and "Subway" etc have been started.
As a result of various courses and training programmes organized by the Governments and Agricultural Universities , technical manpower is available . Some of them lack in providing hands-down-training Some of the Institutes in the private sector such as Dr. B.V. Rao Institute of Poultry Training and Management have removed this lacuna to a considerable extent .
Credit facilities from commercial and cooperative banks and Regional Rural Banks and refinance facilities from NABARD during the last 2-3 decades have been provided to all aspects of poultry production and marketing. Besides providing financial resources NABARD has also given valuable guidance in preparation, appraisal and monitoring of schemes .It has formulated several new innovative schemes and has been successful to obtain financial support from reputed International Financial Institutions.
A separate data on ground level credit for poultry is not maintained by the banks. The figures mentioned below are for ground level credit disbursed by banks for Animal Husbandry Sector (Dairy, Poultry, sheep, goats pigs). However data on refinance disbursement by NABARD for poultry sector is maintained. The figures are as follows:-
In RS million
|Ground level credit disbursed for A. H.Sector||19960||21770||25990||31840||NA*|
|NABARD Refinance for poultry||1217||1133||710||700||762|
Source: NABARD Annual reports 1998-2003. NA*=Not available
Recent poultry sector study conducted by NABARD in 2000 has indicated that banks are giving loans mainly for establishing farms for egg or broiler production and to a small extent for hatcheries for production of parent stocks. There is a need to diversify the lending to other allied activities of poultry industry particularly for the following:-
- Breeding of foundation stocks including pureline and grand parent stocks and hatcheries
- New technology in poultry housing viz environmental control houses, automatic feeding and watering systems, sprinklers and foggers for cooling, gas brooding, feed pellet production, water treatment plants, pollution control systems etc.
- Vertical integration systems for broiler production, processing and marketing
- Commercial egg and broiler production
- Duck and Quail production
- Poultry marketing through egg and broiler carts
- egg labeling and packaging stations,
- egg processing for value addition
- Poultry meat processing plants of different capacities.
- Poultry fast food joints
- Poultry feed manufacturing plants
- Production of "Specific pathogen free (SPF) eggs for vaccine production
- Manufacturing poultry vaccines, medicines and diagnostics
- Poultry diagnostic laboratories
- Private veterinary practice/clinics
Two major feed ingredients required for poultry feeds are Maize and soybean meal . It is estimated that the current poultry requirement of maize is about 4.88 million metric tons which is likely to grow to 7.74 million metric tons by the Year 2004. Large portion of maize is now being diverted to other industries like manufacturing of starch, corn flakes etc. Importation of maize is a short term measure. A long term plan and campaign on “grow more maize” backed by incentive prices for farmers is required. In case of soybean meal , prices fluctuate depending upon supply and demand position for its exports .At farmer’s level , extension education to prevent wastage of poultry feed is necessary. If a farmer can manufacture his own feed, the savings can be obtained to the extent of about Rs 2000 per ton. To achieve this objective, it is necessary that banks provide financial assistance to medium large-sized poultry units to purchase feed grinder /mixer. Central Avian Research Institute Izatnagar has developed a computer software on“ least cost feed formulations” in which quality feed using locally available cheaper feed ingredients can be prepared by the farmer.
Variable quality of poultry feed:
More Feed analytical Laboratories are required for testing of feed ingredients and compounded feed for "quality" including presence of harmful contaminants and problems like 'aflotoxin' infestation etc.
A recent NABARD study has identified several problems responsible for reduction in productivity of birds due low poultry health. There is a need for establishing and vigorously following strict bio-security measures on the poultry farms. All breeding stocks have to be regularly screened for the presence of carriers of Salmonella organisms. It is necessary to create well-equipped disease diagnostic and surveillance laboratories at state levels and in the heavily concentrated poultry pockets in the country. Private sector can play a big role.
- Regular monitoring of demand and supply position of eggs and declaration of price by the NECC has improved farm gate prices of eggs. Similar efforts are required for the live birds/ processed meat.
- Infrastructure facilities using modern equipment and machinery for processing preservation and marketing of eggs and poultry meat are required.
- Instead of concentrating all marketing efforts in the big urban centers, it is necessary to improve infrastructure and develop rural markets where there is a good demand.
- Efforts are necessary to improve consumer education on use of eggs and poultry products in human diet.
- A campaign to introduce eggs in “ the mid-day meal programme ‘ of school children will be useful .
- In India, consumer preference is increasing for “clean”, “safe”, “hygienic” “nutritious” and “properly packed, labeled and presentable” food items including eggs and poultry meat. Introduction of modern state art technology in processing, packaging, labeling, preservation of eggs and poultry meat and meat products is required to improve " quality" for domestic and export markets. With economic liberalization and free trade under WTO, the domestic products have to maintain "quality" to face the stiff competition from imported foreign poultry foods.
- The Bureau of Indian Standards (BIS) has prepared standards for safety certification of foods. It has recently launched a scheme for HACCP ( Hazard analysis and critical control point ) for food industry to obtain IS 15000 certification .Soon, this certification may become mandatory for all major food processing plants.
Government aided schemes:
- There are several schemes of central and state Governments. to assist the small farmers for poultry production .In many schemes, non-availability of timely and efficient inputs and services and poor backward and forward linkages are the major bottlenecks.
- Schemes to develop rural markets and to remove regional imbalances need to be worked out. Electronic and print media need to be harnessed for more effective communication with people to increase their nutritional awareness regarding value of eggs and poultry products and for surveillance and guidance to farmers for control of poultry diseases.
- Policies and systems for on-going and post-project evaluation of the development schemes need to be established by the central and state governments. Refresher training for developing the capacity and skills of the Government staff has to be an integral part for all Government aided programmes.
Harnessing cooperatives and voluntary organisations
- Dairy development through cooperatives has taken strong roots in India. However, except some parts of Maharashtra, this approach has not much succeeded in poultry. But they have shown that this is another viable medium for rural development through poultry farming. A scheme called establishment of "a mother unit" by the cooperative to provide all inputs and marketing support for the farmer and establishing small production units with several small producers called “satellites” is an interesting example which can be implemented , wherever possible .
- Small-scale and village industries have successfully used the services of Voluntary organizations (NGO) . Since rural poultry production is mostly in the hands of women , special emphasis is now being given to form Self Help Groups ( SHG) of women members. Training is given to develop their skills and then SHG are linked with banks for providing group loans and to introduce the habit of thrift saving by the women beneficiaries in the rural areas. Special assistance is available from NABARD and Government of India for this purpose.
Rural poultry production
While the industry is being modernized , it must be remembered that , even now , considerable volume of eggs are being produced by village poultry maintained by very poor farmers, tribals living in remote forest and hilly areas under very adverse and difficult situation . Their needs as regards suitable breed, feed, disease prevention and marketing will have to be looked into by the Government agencies to maintain sustainable production and provide them with some supplementary income for livelihood. Suitable research on appropriate needs and policies to implement such programmes for village poultry will have to be continued.
Vertical integration of poultry industry :
This system is well established in developed countries and has to be introduced in India if the progress has to continue in the next millenium. The scheme has been introduced recently in few places by private sector hatcheries or feed millers. They provide chicks and feed to the producers and purchase the live broilers at a cost depending upon the body weight. Some incentives for high feed efficiency and good livability are provided. However, in most cases, the purchased birds are sold to the wholesale dealers who often dictate the price and full benefits of the scheme are not available to the farmers. The scheme needs to be supported by providing infrastructure for meat processing,packaging, preservation and marketing with value addition of products and maintaining a cold chain till the product reaches the consumer. The private sector companies including foreign investors have a great opportunity to invest in these schemes, in collaboration with the Indian entrepreneurs.
Low volumes for exports:
According to a Kuwait based broiler Company, the demand in Gulf (West Asia) is 60000 tons of frozen chicken per month. In Kuwait ,the firm sells 1000 metric tons per month. One of the challenging problems faced by the Indian exporters so far is that the export demands are in huge quantities while the quantity available for export per lot from India is very small due to fragmented small sized farms with little or no facility for processing ,refrigeration and marketing with infrastructure for maintaining a cold chain during the transportation of products
Potential for value added products
Poultry has a potential for producing following value added products:-
Whole egg powder, albumen flakes, yolk powder, natural yellow pigment from yolk, lecithin, conalbumin and avidin from eggs used in pharmaceutical industry. Lysozyme, di-calcium phosphate from shell and shell membranes, chicken soup, chicken essence , nuggets, kababs, hot-dogs, frankfurters etc. Giblets, liver , and liver extract , deboned meat for airline industry, Feather meal , poultry byproduct meal from inedible portions as a source for poultry feed etc..
There are good investment opportunities in all above new innovative ventures.
Fiscal support from the government
In the past few years, the private sector poultry industry have been demanding fiscal support from the Government of India in several aspects with a view to improve the domestic growth and export markets. They include:-
- freight subsidy and cash incentives for exports ,more pressurized air cargo space ,better handling facilities at airports and sea ports , subsidy on packaging material , lower interest rates and longer loan repayment terms by banks on infrastructure facilities created for exports
- reduction of import duties on certain essential feed ingredients , life-saving drugs vaccines ,equipment and machinery for poultry processing and rendering high-tech laboratory equipment etc .
Policy level support from the government.
The important support asked from time to time by the poultry industry includes:-
- providing status of ‘agriculture’ to ‘poultry’ in all states of India ( only a few states have implemented ) ,
- exemption from land ceiling act
- enlarging scope of 'mid-day meal scheme for school children' to include eggs in the diet of children.
- ‘Grow more Maize campaign
- creation of National Poultry Development Board
Poultry product imports to India
As a result of WTO agreement ,India lifted quantitative restrictions on import of 150 items of consumer goods .Non tariff trade barriers ( Licensing for import of food products) have also been lifted .As a result of this change , the local industry will have to face a serious challenge from the imported foods including eggs and poultry products.
Recently Government of India has announced bound rates of 100% on imported poultry meat with a view to provide level-playing field for the domestic industry. Some quantity of chicken meat has already started being imported by some five star hotels in India. The cost of production/transportation and selling prices of table eggs produced in India are still competitive and there is no immediate threat from import of table eggs.
Poultry exports from India
The world scenario on export and import of poultry products showing the major countries and the volumes traded ( converted in rupee equivalent terms) are reported as under :
( Rs millions)
( Rs million)
|Brazil||6280||CIS ( Russian Fed)||5030|
|Thailand||5840||Other middle East Countries||14380|
|Other European countries||5020||Others||13150|
It will be noted from the above table that the middle east (Gulf) countries are one of the major importing countries. Considering comparative lower cost of poultry production and availability of cheaper skilled labour in India as compared to the developed countries, nearness of India to Gulf countries and a very large ethnic Indian population in these countries , India has a specific advantage to develop its poultry exports to these countries provide “high quality’ and superior product-presentation is ensured for Indian poultry products .
Although some efforts have been made to increase Poultry exports from India, the trade is very small in comparison to the global trade ..At present the exports are mainly in table eggs , hatching eggs,frozen eggs ,egg powder , and to a small extent for Live poultry
(one day old chicks ), poultry equipment and machinery etc. As of 1998-99 the poultry exports were worth Rs 637.10 million although there is a potential to increase it to Rs. 3 to 4 billion. The products, quantities export values for the years 1997 to 1999 are shown in annexed Table.There are five egg powder manufacturing plants in the country with total capacity of 15000 tons per annum. They all have faced a major problem due to the fall of price (USD 4.00 to 2.5 per kg ) in the international market and imposition of heavy import duty (USD 0.80 per kg ) by the European Union .A major .market promotion effort is needed to encourage use of egg powder in Bakery products. In India and we will have to look for more diversified and value added products from processed eggs.
According to APEDA, India's major markets for poultry exports are as under :-
Live Poultry : Sri Lanka ( 50%), Bangladesh ( 32.5%) , Nepal ( 8.2%)
Hatching eggs : UAE ( 38%) , Oman ( 26.8%), Kuwait ( 5.4%)
Table eggs : UAE ( 72.8%) ,Kuwait ( 8.3%) , Oman ( 8.3%)
Egg Powder : Japan ( 16%) , Poland (14.5%) ,UAE (8.9%), Belgium (5.54%)
Frozen Eggs : UAE ( 83%) , Oman (5% )Kuwait (3.9%)
In 1984 , Govt. of India , Ministry of Commerce had constituted a committee to conduct market survey for export of poultry products to the Gulf countries i.e. Kuwait, Saudi Arabia and United Arab Emirates .Possibilities of export of hatching eggs , one day old chicks and table eggs were identified .The recommendations were made to provide cash incentives ,and freight subsidies to exporters, more pressurized air-conditioned space and non-A.C. cargo-space for perishable goods in the air-crafts, and better handling, storage and veterinary inspection facilities at major airports. There is an urgent need to create these facilities to boost poultry exports from India .
Infrastructure facilities for grading , processing , packaging preservation , and marketing with cold chain facilities will have to be developed Better veterinary inspection ,disease screening and certification facilities are required at major airports. With the onset of WTO agreement ,more strict ‘quality’ and ‘hygiene’ standards ( e.g. SPS measures) are being prescribed by countries intending to import poultry products. For example, in addition to testing for the presence of “Salmonella”, screening of broiler meat for other organisms like “compylobacter”( causing food-borne illness in man ) is being insisted by certain countries For developing exports ,more refrigerated air cargo space will have to be provided to encourage poultry exports . It is proposed to establish National Poultry Development Board as an autonomous body to help develop infrastructure facilities for this purpose.
According to the poultry private sector , India exports about 800 reefer containers of table eggs (0.413 million eggs per container) to the gulf market. Eggs come to Gulf market from India, Holland and USA .Dubai is the major market with a preference for white shelled eggs. Muscat is another market but the imports are seasonal (6 to 7 months).Oman, Baharen and Quatar are other small markets Saudi Arabia, Yemen Syria and Iran are almost self sufficient in requirement of table eggs. In Dubai, our major sales are in the institutional market i.e. hotels, restaurants and caterers. Retail stores prefer eggs from Europe and USA. Indian eggs are perceived as of lower quality and are quoted for USD 2 to 3 less per carton ( 360 eggs ) than the eggs from Europe and USA. We need to improve skills in getting higher productivity per bird and reduce cost of production of egg ,develop “quality”, maintain consistency in the supplies and create awareness for a ‘brand’ name for our products .This is only possible if we take care of proper washing
(cleaning), grading ,branding packaging, preservation and transportation of exported table eggs .There is a scope to invest for creating this facility.
The present requirements of importers in Gulf are that the table eggs should have 50-55 gram weight, clean and uniformly thick shell with no visible cracks, have a spotless yolk (yellow colour preferred),and should be free from Salmonella and other contagious disease infections .They should be stamped with date of production , country of origin and date of expiry, using food grade quality ink.
Recently another problem faced by Indian exporters is that the RTO authorities levy a very heavy fine ( Rs 10000 ) if the weight of a reefer laden container exceeds 34 metric tons ( out of which maximum 16.0 metric tons of actual goods weight is allowed). Maximum utilization of container space takes 1148 cartons of 360 eggs each. But the cumulative weight comes to 19 metric tons which exceeds by 3 tons and hence the penalty of about US$ 235 per container which negates the profitability of exports. Both central and state Governments need to look into this problem seriously and help the exporters to overcome it .
Assistance by APEDA for poultry products exports from India:
- Agricultural and Processed Food Export Development Authority (APEDA) is promoting agro-exports since 1986. Financial assistance is available to exporters, growers, trade associations, Government agencies etc. For poultry exports, following incentive schemes are available :-
- Feasibility studies, surveys , consultancy and data-base upgradation.
- Infrastructure development
- Export promotion and market development
- Packaging development.
- Assistance to promote quality and control of Quality
- Upgradation of meat plants.
- Organization building and HRD.
- Generating relevant research and development.
- Air-freight subsidy for export of hatching eggs @ Rs 6 per kg, or 25% of IATA rates , or 30% of FOB rate, whichever is less for countries of North Africa, South East Asia and CIS countries .
According to the private sector hatcheries ,firstly the subsidy should be available for exports to all countries. Secondly, the subsidy amount needs to be increased or air freight costs to be reduced .They claim that the cost of producing a hatching egg is Rs 12.37 and airfreight is Rs. 2.25 i.e. total Rs 14.62 per egg. After getting subsidy of Rs 0.40 , the expenditure comes to Rs 14.22 per egg ( Rs 14.62-0.40). The selling price is about 26 to 28 cents (US) per egg or about Rs 11.60 to Rs 12.00 which is not remunerative
APEDA has initiated following steps towards development of poultry exports:-
- Standards have been laid down for export of egg products
- Standards for export of poultry meat have been sent for Government notification.
- Standards are being framed for export of eggs .
- Feasibility studies are being launched to create integrated infrastructure facilities for export of eggs at major production centres.
Assistance by Ministry of Food Processing , Government of India .
- Assistance for following relevant schemes is available :-
- Development of infrastructure facilities .
- Setting up/expansion/modernization of food processing industries
- Development / modernization of meat processing.
- Development of poultry/egg processing
- Research and development in food processing
- Person power development in food industry.
- Development /improvement of marketing, quality control , storage and transport of meat and meat products .
- Generic advertisement on processed foods and marketing assistance.
- Strengthening of backward linkages in food processing industry.
- Promotion of food processing industry.
- Strengthening of nodal agencies
- Setting up of demonstration units / pilot projects.
- It will be seen from above information that the demand of eggs and poultry meat are increasing. The people have a capacity to buy products. The 'quality' of products has to be improved. India has technically qualified manpower, a strong private poultry sector and financial credit institutions.
- There is a considerable scope in investments in all aspects of poultry namely breeding, feeding. Housing and management, health control and processing and marketing of products both for the domestic as well as export market.
- The foreign investors should seek collaborations with Indian entrepreneurs.
- The foreign research and development institutes need to collaborate with Indian counterparts like ICAR, CARI, Agricultural Universities etc.
- The international donors need to collaborate with Government of India, NABARD, APEDA etc.
Credits : FAO