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India – Poultry and Products Annual Report 2011

9 December 2011, at 12:00am

Indian broiler production growth is estimated at 10 per cent per year, with 2012 production reaching a record 3.2 million tons, according to the USDA Foreign Agricultural Service.

Indian broiler production growth is estimated at 10 per cent per year, with 2012 production reaching a record 3.2 million tons. Layer production growth is estimated at six per cent annually.

Indian processed poultry production is not expanding at the rate of the live-bird market due to cold-chain capacity issues and meat retailing constraints. The processed poultry market is thus mainly oriented to serving hotel, restaurant and institutional consumers. Indian poultry and egg consumption continues to grow and is expected to double by 2015. However, given India’s preference for vegetarian proteins, poultry consumption is not expected to grow to the levels seen in other countries.

India continues to prevent imports of poultry meat and eggs on the basis of restrictive avian influenza regulations and other sanitary import requirements but import estimates remain at zero. India has reported four outbreaks of avian influenza in 2011 but industry sources have reported that this has not resulted in significant economic or production consequences. India consumes nearly all the poultry meat it produces and exports are minimal.

Production

Broilers

Growth in the broiler industry is characterised as robust but volatile, with an estimated annual average growth of 10 per cent. Strong growth, like that experienced in the Indian dairy and pulse markets, is driven by India’s expanding middle class and its increasing demand for more plentiful and less costly proteins.

Despite a strong demand situation, production fluctuations occur, both due to cycles of over-production as well as external factors such as avian influenza (AI). For example, following AI outbreaks in 2008, production dropped off significantly due to decreased consumer demand as well as production cost increases attributable to global inflation. Production rebounded in 2010 and has continued to grow at an average of 10 to 15 per cent.

Given these factors, Post forecasts calendar year (CY) 2012 production of broiler meat at a record 3.2 million tons, 10 per cent more than the estimated record of 2.9 million tons in CY 2011. CY 2010 broiler meat production is revised up to 2.6 million tons (11 per cent over 2009) to reflect industry recovery from AI.

Indian broiler production is highly organised, with the formal sector contributing nearly 85 per cent of the total output. According to industry sources, approximately 60 to 65 per cent of the organised sector is integrated, with the remainder operating as independent producers. The industry is concentrated mainly in the states Tamil Nadu, Andhra Pradesh, Maharashtra, Karnataka and West Bengal. While the production side is highly integrated, formal poultry processing and retailing are limited. Although no official data exist, industry sources state that live birds make up more than 90 per cent of total poultry sales, with processed product making up the remainder.

Processed poultry products

Growth in the processed poultry segment faces challenges, and industry sources cite multiple factors when explaining the dominance of the live-bird market in India. For example, Indian consumers consider live poultry to be disease free, fresher and more hygienic than processed chicken. Industry sources attribute this preference to consumers’ lack of confidence in handling procedures and the local cold chain.

In addition to inadequate cold chain infrastructure, poultry producers face few retail options for poultry products due to consumers’ price sensitivity (industry sources indicate mark-ups as high as 25 per cent), customer resistance to commingled vegetarian and non-vegetarian products, and the general perception that live poultry is superior in quality. Given these circumstances, processed poultry production is small and growing at a significantly slower rate than the live-bird/broiler market, with the majority of its output being consumed by the hotel, restaurant, and institutional (HRI) sector. Thus, as overall poultry production increases, the processed poultry market’s total share continues to shrink.

Layers

Growth in the Indian layer industry, like in the broiler industry, is being driven by increasing demand for higher-quality, lower-cost protein. Export opportunities for Indian egg powder products in the Middle East, Africa and Asia are also fuelling growth.

Unlike broiler production, the layer segment tends to be less volatile, although it has faced setbacks due to disease outbreaks. For example, industry sources report that layer production dropped off in CY 2008 following avian influenza detections. Production levels rebounded the following year with an estimated eight per cent growth rate. Currently, industry sources indicate that the layer industry is growing at an estimated 6 per cent annually, with per capita CY 2012 egg availability forecast at 57 eggs per annum, as compared to 51 eggs per annum in CY 2009. As a result, post forecasts CY 2012 egg production at 71 billion, up 6 per cent over 67 billion eggs in CY 2011. CY 2010 egg production is estimated at 64 million tons.

Production Policy

The poultry slaughter and processing sector, formerly regulated by the Ministry of Food Processing Industries (MOFPI), is now regulated by the Food Safety and Standards Authority of India (FSSAI) through the Food Safety and Standards Regulations (FSSR) 2011. The FSSR were enforced nationwide with effect from 5 August 2011, repealing the Meat Food Products Order (MFPO), 1973. They contain standards and regulations for meat and meat products, including porcine, bovine, caprine, and ovine meats, as well as fish and poultry. The FSSR requires registration and licensing of poultry processors and other food operators in the poultry value chain. It also enforces sanitary maintenance and controls at all stages of poultry products production. These standards equally apply to domestic and imported meat and meat products.

The majority of Indian poultry is sold live and most slaughter and processing are done manually at the retail level. The Government of India (GOI), recognising the need for hygienic slaughter and handling as well as the proper handling and disposal of waste products, launched the National Meat and Poultry Processing Board (NMPPB) on 19 February 2009. The NMPPB addresses issues related to production of hygienic, safe and wholesome meat and meat products.

In addition to the NMPPB, the Ministry of Food Processing Industries launched a comprehensive financial scheme, the modernisation of existing abattoirs/establishment of modern abattoirs, under the 11th five-year plan (2007-2012). The programme is expected to continue in the 12th five-year plan period (2012-2017). MOFPI is also administering another scheme for technology upgrading, establishment and modernisation of processing plants. For details, click here. India permits 100 per cent foreign direct investment in the food processing sector. Various multinational companies have set up offices in India or entered into joint ventures with poultry firms working in the Indian market.

Consumption

Indian broiler meat consumption is growing at the pace of production, which is estimated at approximately 10 per cent annually. Given that exports are almost zero and that limited cold-storage capacity prevents significant stocks, India consumes nearly all of the broiler meat it produces. Post forecasts CY 2012 broiler meat consumption at 3.2 million tons, up by 10 per cent over 2011. Post has revised the consumption figures for CY 2010 and CY 2011 in accordance with production.

India’s annual per-capita consumption of poultry meat is estimated around 3kg, with chicken emerging as a preferred non-vegetarian protein option. India’s per-capita consumption of eggs is estimated at about 51 eggs per annum. Industry estimates suggest that broiler meat consumption will double by 2014-15. Major drivers of consumption are:

  • an expanding middle class
  • increasing employment levels and incomes
  • new demand for ready-to-eat products and the growing presence of affordable quick service restaurants, and
  • a general preference for poultry meat over other meats due to low prices and cultural and religious non-preferences for pork and beef.

It is important to note that while poultry and egg consumption are expected to grow in India, local dietary practices tend to prefer vegetarian protein sources, even among non-vegetarian consumers. As a result, it is unlikely that per-capita consumption of meat and eggs will grow to levels seen in other countries. Additionally, although total consumption is estimated to double by 2014-15, per-capita consumption will not necessarily double when factoring in population growth.

Stocks

India’s stocks for poultry meat are zero, as the majority of poultry is sold through live bird markets. Lack of cold chain infrastructure is a constraint in maintaining stocks for fresh and frozen meat.

Avian Influenza (AI) Outbreaks in North-East India

In CY 2011, the northeastern Indian states of West Bengal, Assam and Tripura reported four outbreaks of H5 AI. The Tripura outbreaks were found on government-run farms while the other two outbreaks were discovered in backyard flocks. The GOI notified the World Organisation for Animal Health (OIE) of each of the outbreaks. The details of the OIE notifications are available on the OIE’s web site and can be accessed at: September 19, 2011 OIE notification, September 8, 2011 OIE notification, Feb 17, 2011 OIE Notification, and March 7, 2011 OIE Notification.

In addition to notifying the OIE, the GOI took several actions in response to these outbreaks. Actions include issuing orders to cull all poultry in a three-kilometre radius around the outbreak regions, followed by compensation to poultry owners. Poultry markets were closed, an intensive surveillance system was launched in a 10-km radius, and the sale and transportation of poultry products in the affected area was prohibited. The GOI also banned movement of farm personnel, restricted access to wild and stray birds, restricted access to the infected premises, and ensured proper disposal of dead birds and infected materials as per the Ministry of Agriculture’s Department of Animal Husbandry, Dairying and Fisheries (DADF) “Action Plan of Animal Husbandry For Preparedness, Control and Containment of Avian Influenza.”

India’s northeastern states do not produce a significant share of India’s national egg and meat production. Trade sources confirm that there is no impact on Indian exports of egg powder and eggs due to the AI outbreaks. Also, there are no official statistics or estimates released so far to report any impact in terms of loss of trade.

Poultry Feed Developments

Industry sources estimate CY 2011 poultry feed consumption at 14.0 to 15.0 million tons (broiler and layer combined). This approximately breaks down to: corn (10.0 million tons), soybean meal (3.0 million tons) and the remainder split between pearl millet, broken wheat and broken rice (1.0 to 2.0 million tons).

With feed costs comprising approximately 70 per cent of the cost of poultry production, the industry is susceptible to commodity price fluctuations. For example, the poultry industry faced fluctuations in corn prices throughout 2011 due to quality concerns earlier in the season followed by government forecasts of a bumper crop. Industry sources continue to forecast growth in Indian corn production, both due to shifting acreage from rice as labour costs rise, as well as the potential for continued yield improvements as farmers adopt hybrid varieties. As a result, there is a general sentiment that poultry feed supplies are sufficient as the industry continues to expand.

Trade and Trade Policy

There are no restrictions on poultry and egg exports from India. However, India's poultry exports are confined to table eggs, egg powder and SPF egg shipments to markets in Asia, Africa and the Middle East. India’s export of poultry meat is small due to high production costs, insufficient marketing infrastructure and limited processed poultry production.

India does not import poultry and poultry products. Although India does not impose any quantitative restrictions on imports of poultry meat, restrictive sanitary import regulations and high tariffs prevent US poultry and poultry product exports to India and prevent almost all imports from other origins. In addition to restrictive sanitary import regulations, a lack of cold-chain facilities and Indian consumers’ general preference for live birds limit marketing opportunities for frozen poultry.

India prohibits the import of poultry and poultry products from countries reporting either low pathogenic or high pathogenic notifiable avian influenza. The most recent Gazette of India notification on the prohibition of poultry and poultry product imports from notifiable avian influenza reporting countries is available on the web site of the Department of Animal Husbandry, Dairying and Fisheries and can be accessed at Indian Gazette notification on avian influenza.

In 2009, India amended the avian influenza rule to allow imports of processed poultry products subject to a ‘conformity assessment’. Under the conformity assessment, processed poultry may be exported to India if the requirements outlined in the conformity assessment are met by the exporting country. Note that trade data indicates that India’s import of processed poultry products are nil and as of this time, the United States is unable to export processed products to India under the requirements in the conformity assessment. A copy of India’s conformity assessment requirement is available on DADF’s web site at conformity assessment.

Further Reading

- You can view the full report by clicking here.

December 2011