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Poultry market likely to see double-digit growth in 2015 |
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HYDERABAD: India's poultry sector is likely to see double-digit growth in 2015 because of stable feed prices and encouraging rural demand, notwithstanding local and global challenges including a recent outbreak of bird flu and threat of chicken-leg imports from the US, say analysts and industry players. The domestic poultry sector had suffered during the past few years due to continuous increase in feedstock (mainly soya and maize) prices and oversupply of poultry products, coupled with untimely rains and drought in various parts of the country.
India is the second largest egg and third largest broiler-chicken producer in the world — 65,000 million eggs and 3.8 million tonne of poultry meat a year. The market is estimated to be worth about Rs 90,000 crore. Per capita chicken consumption in India has been on the rise, with eating habits changing predominantly in the metro cities.
At present, urban markets account for about 80% of demand, but analysts and industry players project rural demand to pick up significantly, thanks to lower chicken prices, improving prosperity and changing lifestyles, helping the sector post at least 8-10% expansion.
Pointing out that profitability of Indian poultry sector saw significant improvement in third quarter driven by good broiler prices and softer feed prices, analysts at Rabobank said the current price ofRs 50-70 per kg for live birds should trigger better demand among rural population. "Improved demand and lower feed costs hold promising prospects for the industry in the near term," Rabobank said in a recent report. India's soymeal prices are above global rates, making exports challenging.
That should keep domestic prices under check, said the Rabobank report. It expects local maize prices to stay at lower levels. Annually, the domestic poultry industry consumes around 12 million tonne of maize and 4 million tonne of soymeal. Together, these account for some 85% of total poultry feedstock.
Kailash Gandhi, managing director of KRG Strategy Consultants, which tracks the agriculture and allied sectors, said the poultry sector suffered losses over the past two years, largely due to an abnormal increase in input costs. Poultry farmers could not pass on the burden to consumers owing to muted demand, he said. "Further, in spite of the industry resorting to hatching holidays often last year to contain supplies, there was oversupply that led to pressure on broiler prices. Given the positive trends of rural demand pickup and stable input costs, we now expect the industry to see some 8-9% growth next year."
Meanwhile, imports may not happen in the immediate future, though the World Trade Organisation had ordered India to import American chicken. The USA Poultry and Egg Export Council doesn't expect India to start imports in the immediate future, its president James H Sumner told ETin late October. This is because of the likelihood of New Delhi challenging the WTO order and India's limited system to store and distribute frozen meat, he had said.
With reduced risk from imports flooding the markets and improving demand, poultry players are upbeat. S Balasubramaniam, general manager at Venkateshwara Hatcheries, the country's largest poultry company, said the industry is seeing reasonable prices and a fair balance between demand and supply. Anticipating live bird prices to remain at Rs 65-75 a kg and help the industry grow 8-10%, he said: "The rural demand is picking up, which can also support the overall demand in the coming years. Lower prices would support demand expansion."
D Ram Reddy, managing director of Sneha Farms, a leading player in southern India with a market share of more than 20% in Andhra Pradesh and Telangana, said the revival of the economy is expected to stimulate growth of the industry by at least 10%. AP and Telangana account for a third of India's poultry production. In a bid to reap the benefits of growing demand, the Rs 1,500-crore Sneha Farms has firmed up plans to expand into Karnataka and invest at least Rs 50 crore on a feed plant.
Source : economictimes.indiatimes.com
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