July 25, 2003
World's Fastest Growing Poultry Market Lacking Foreign Investors
India has the fastest growing poultry industry in the world but has been unable to attract much foreign investments from major global producers.
Although there have been improvements in distribution, and the industry is moving towards greater integration, there are still many challenges facing the poultry producers:
- Shortage of Corn
Locally-produced corn is heavily dependent on weather conditions, especially during the monsoon season. Moreover, growth in production of domestic corn has been unable to meet the growth in demand and higher consumption by animal feed industry.
In order to secure supplies, Indian poultry producers are procuring corn from farmers using contract farming models currently in use in wheat and oilseeds.
- High Poultry Prices
As seen in southern India where prices of poultry are close to 50% lower than other regions, greater integration in the industry will help to reduce costs. The high level of integration in southern India has seen greater production efficiencies and greater control over the distribution chain.
Although consumption growth of poultry meat is the highest among the meat products in India, demand is price elastic. And there is tremendous potential for further growth. In a recent Anthropological Survey of India, 80 percent of India's population is non-vegetarian. Moreover, there is no religious sentiment involved for poultry.
As poultry products become more affordable, the high consumption growth is seen as a continuing trend.
Although global industry players have tried to penetrate the Indian poultry market, high customs duties on imports and the local preference for fresh poultry products were among some of the problems encountered.
Despite projections of higher consumption, further consolidation will still be required to ensure strong healthy growth in the Indian poultry industry.