Broiler output seen up on poultry meat demand

India's broiler production is expected to grow by 16 per cent to 2.2 million tonne in 2006, due to increased availability of feed and a growing demand for poultry meat with more affordable prices and rising consumer income as contributing factors, according to a report by the US Foreign Agricultural Service.

A trend toward forward integration in poultry operations, growing farmer preference for birds with higher dressing yields, and price stabilisation measures initiated by the industry are also factors supporting production growth.

The broiler industry's forward integration, which had been confined largely to southern India, is now spreading into northern parts of the country due to higher profits for entrepreneurs, stable income for growers, and better production controls.

Under this system, growers receive day-old chicks, feed, medicines, other services, and the assurance that their birds will be purchased at a contracted price.

Input costs are deducted from the payment to the grower, and they are given an incentive bonus if the feed conversion rate (FCR) or mortality rate is better than the contracted level.

This has encouraged a number of small farmers to enter the poultry business in order to supplement their income with a stable return on their investment, said the report.

In 2004, heavy losses incurred in north India due to the avian flu prompted poultry growers in this region to embrace vertical integration to revive the industry.

These farmers have now started paying increased attention to FCRs, nutrition and quality standards for feeds. In some areas, vertical integration was extended up to the retail level to improve profitability and to make poultry meat more affordable to consumers.

It also helped entrepreneurs to control meat production through better-coordinated efforts aimed at overcoming problems of seasonality of consumption. Only, about eight per cent of total poultry meat production in 2004 was processed, as consumers still prefer fresh meat.

However, with rising incomes, changing lifestyles, and increased promotional efforts to popularise processed meat, its share is estimated to increase to nine per cent in 2005.

Many of the poultry integrators already have built, or are building, processing facilities to produce chilled and frozen meat and products for the institutional and the retail segments.

Some are looking at export possibilities to Asian and Middle East countries by reducing costs and introducing strict bio-security measures.

The consumption of compound feed continues to grow alongside rising awareness among growers about its nutritional qualities and feed conversion efficiency, and was at 4.8 million tonne (estimated) in 2004.

According to trade sources, comparatively lower prices for soybean meal led to its increased usage in 2004, estimated at 1.5 million tonne, up 15 per cent over 2003.

Corn prices remained high due to lower production, with prices currently at $141 per tonne. Industry sources estimate corn requirements by the compound feed sector to reach 15 million tonne by 2010.

It is estimated that poultry meat consumption in 2005 would touch 1.9 million tonne, or 1.8 kg per capita. Lower retail prices, resulting from expanding vertical integration, have stimulated consumption.

Integrators have established wholesale and retail-price leadership in their markets, mostly in south India, by reducing the number of middlemen and forcing wholesalers and retailers to reduce their margins.

In other regions, particularly in the northern region, where the traditional wholesale traders still dominate the markets, the marketing margins and retail prices are considerably higher than in the south.