July 21, 2011

Growing economy to lift Indian poultry industry

India's INR47,000-crore (US$10,572.49-million) poultry sector is all set to grow as poultry demand has been rising steadily boosted by a union of factors such as healthy GDP growth, rapid urbanisation and contract poultry-farming, according to a study.

The domestic broiler-market demand is set to grow at 15-18% while table-egg demand will grow at 5-7%, Icra, the rating agency, said.

The poultry sector has grown at more than 15% in the past three years. The production capacity has gone up with large integrated players taking up contract poultry-farming. According to data available with the National Egg Coordination Committee, egg production has risen to 266.62 lakh a day in 2010-11 from a meagre 98 lakh eggs a day in 2000-01. South India (led by Andhra Pradesh) produces more than 45% of the country's poultry output while another 20% 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.

However, all is not rosy for the industry. Seasonal uncertainties, geopolitical worries and soaring feed prices continue to mar the industry's prospects. Rising prices of corn, a major ingredient in the poultry feed that forms more than 60% of the production cost, is a cause for concern for the industry. Feed prices, which stood at INR806 (US$18.14) for 75 kg during 2000, are now at a staggering INR1,655.50 (US$37.26). Poultry sector consumes 52% of the country's corn production and any monsoonal vagaries tend to hit the profitability of poultry sector, especially broiler farms which are sensitive to feed-price fluctuations.

Exports, too, have taken a hit since 2006 due to continual outbreak of bird flu in some pockets of the country. Egg exports plummeted to 446.34 lakh eggs in 2010-11 after peaking at 1,019.03 lakh eggs in 2007-08. Table eggs are already off the Gulf menu and the trade is now looking at Africa and Saarc nations, particularly Sri Lanka. But industry sources say with an ever-increasing demand outpacing supply, players are keen on catering on home turf and shifting their focus from wet to frozen market, that is, from live birds to processed/dressed chicken, consumption of which is growing at a slow but steady pace.