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Livestock & Feed Bussiness Worldwide: August 2016
 
Transformation and opportunities in the Indian and Chinese broiler markets
 
by Eric J. BROOKS
 
  
With 2.6 billion people, India and China account for 35% of the world's population.
 
As their once impoverished masses achieve middle class income levels, their needs will define world agribusiness. And where else is this truer than in their respective poultry industries.
 
Sustaining 722% more people than the United States on roughly the same arable land acreage, India and China are increasingly feed scarce relative to their mass population's rising consumption.
 
The only way to ensure that their resource inputs meet the rising protein needs of their population is by encouraging the consumption of the most feed-efficient, resource-conserving livestock possible, which happens to be poultry.
 
But while the massive populations of these two countries make them the third and largest chicken meat producers in the world, their market dynamics are very different from other top suppliers, which are export-oriented.
 
As the accompanying graphic shows, while India does not participate in the world poultry market and China is at most a minor player, these billion-person markets consume almost all the poultry they produce.
 
Consuming a combined 16.9 million tonnes of chicken meat, Indian and Chinese poultry markets exceed that of Brazil by 77% and America by 10%, respectively.
 
Hence, while America and Brazil may grow more chickens, over the long run, with their faster growth rates, the total consumption advantage of the Indian and Chinese markets relative to those of the top chicken exporters will only grow over time.
 
It could be decades from now but a day is coming when China, and later India, will overtake America as the top poultry producer and consumer.
 
For now, these two countries are taking radically different development paths.
 
As another graphics below shows, China's broiler market developed earlier and more quickly, but has stumbled badly in recent years.
 
Beset by a cultural bias for red meat consumption and a succession of both natural and man-made crises, China in the last decade saw its poultry production flatten out and per capita consumption decline, surprising everyone.
 
From a 4% average annual increase at the turn of the century, China's broiler meat production growth has fallen below 2% in the current decade.
 
While this need not be a permanent state of affairs, the Chinese government's trade policy on grandparent stock is profoundly denting the quantity, quality and productivity of its broiler inventories.
 
At the same time, despite the Chinese market's domestic woes, it remains an active, though second tier player on the world poultry market.
 
Although trade amounts to a mere 3% of its broiler meat output, it both exports and imports slightly under 400,000 tonnes of broiler meat a year.
 
While this makes China the fourth largest exporter after Thailand, for a country this vast, its broiler trade is essentially a market fine-tuning exercise: essentially, China imports excess parts such as cooked white breast meat, while importing in-demand items such as chicken feet.
 
By comparison, with its growth starting from a lower base, India's broiler market is not only growing faster but also proving to be more resilient, thanks to the country's strong cultural bias for poultry meat.
 
Indeed, despite growing feed input shortages, rising debt and a highly inefficient distribution network, India's broiler sector has surprised everyone.
 
From a 10% growth rate at the turn of the century, India's chicken meat sector continues to grow at a near-8% rate, although analysts had expected it to slow down to below 7% at this time.
 
In fact, India's poultry meat consumption has sustained this rapid growth rate over a seven-year period, which has seen a profound deceleration in the country's economy and consumer income growth.
 
It implies that once the current world economic downturn is over, if India's integrators and policymakers manage their challenges, the country's broiler sector could sustain its unexpectedly high growth rates well into the late 2020s.
 
India has a strong cultural bias for chicken meat consumption and was lucky enough to endure 90 bird-flu outbreaks with no significant human transmission cases, all the while avoiding Chinese-style chicken meat food safety scandals.
 
But while it has more promising long term growth prospects than China, it has some dark clouds on its poultry meat horizon.
 
Recent WTO rulings have made it clear that while India remains a self-contained, self-sufficient poultry market, it cannot hide from an increasingly competitive world broiler trade forever. Meant to promote self-sufficiency, protectionist government feed policies are putting a strain on the wallets of Indian consumers and, increasingly, even its integrators.
 
Moreover, while Indian culture favours poultry consumption over that of most other proteins, an enduring preference for wet markets, supply chain deficiencies and disease management could undermine not only Indian poultry's long term growth but also its ability to sustain itself on the world market.
 
 
The full article is published on the August 2016 issue of LIVESTOCK & FEED Business. To read the full report, please email to inquiry@efeedlink.com to request for a complimentary copy of the magazine, indicating your name, mailing address and title of the report.
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