Demographic change, higher standards of sanitation and more widespread refrigeration are driving the growth of the poultry sector in India. A billion dollar market is attracting the attention of foreign companies as chicken becomes an everyday choice for millions of consumers, as Debasish Ganguly reports from Mumbai.
The history of poultry in India is some 5000 years old. Although most contemporary breeds in western countries were developed from Red Jungle and Silver Jungle fowls which originated in India, the credit for pioneering action for poultry development in India should be given to a few Christian missionary organisations and some British people who introduced some superior exotic breeds in the beginning of the 20th century. Before the advent of the planning era, commercial poultry production was practically non existent. Poultry production at that time was limited to backyard farming and maintained under peasant husbandry practices.
Today, India has a large and rapidly expanding poultry sector. It has grown at a rate of 15% to 20% during the last two decades. Presently it employs a capital of close to Rs 65bn (US$1.48bn) and accounts for a turnover of Rs95bn at the retail level providing employment to an estimated 1.5 million people.
This growth is being driven by rising incomes and a shift in industry structure towards integrated ownership and coordination of the input, production and marketing operations involved in poultry production and declining real poultry prices. These factors, in addition to government policies affecting feed supply levels, will help shape future growth in the poultry industry in India, as well as in emerging trade and investment opportunities.
Today, India is ranked as the fourth largest producer of eggs and eighteenth largest producer of poultry broiler in the world. It has estimated to have produced about 50 billion eggs and 650 to 700 million broilers in 2004-05. Nearly three quarters of the poultry population in the country consists of different types of indigenous breeds. But nearly 60% of the total egg production and almost the entire commercial broiler production are from improved poultry birds in the organised sector. Future industry expansion may depend on the pace at which integrated poultry operations spread in the West, East, and, particularly, the affluent North.
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By GlobalDataTrade or storage of poultry products in India is negligible, so an estimate of poultry consumption is virtually identical to production.
Myths and beliefs
Industry sources in India tend to minimise the significance of religious practices as constraints on growth in poultry consumption, although there is disagreement on this issue. Some industry sources claim that the share of the population that does not eat meat due to religious practices, as opposed to economic necessity, is fairly small, perhaps as low as 10% to 20%. A 1994 study entitled “People of India,” conducted by the Anthropological Survey of India and based on a survey of 2,469 communities, indicated that only 20% of the ‘communities’ surveyed were vegetarian. According to the survey, men were more likely to be non-vegetarian, and older people were more likely to be vegetarian. The age structure of the Indian population indicates a large potential market for poultry in the years to come, as 30% of the 2000 population were aged between ten and 24. A national food survey, also conducted in 1994 in 32 cities, indicated that 74% of urban households were non-vegetarian.
Poultry meat, which is showing the fastest growth in consumption according to available information, seems to have broad regional acceptance. Poultry meat is also generally low-cost compared to mutton and fish. Low poultry prices in South India because of the prevalence of poultry integrators in the region have stimulated rapid growth in consumption.
Seasonality in demand
Perhaps the most significant impacts of religious practices on consumption of poultry and other meats in India are the strong seasonal patterns in demand in some regions. Seasonal religious observances can lead to significant fluctuation in demand. In some cases, religious practices prohibit meat for specified periods, and in others, celebrations and festivals lead to increases in meat demand. In the Mumbai region, religious observances significantly reduce poultry consumption for about three months of the year, although some festivals can lead to increases in demand which offset this. In Kolkata, on the other hand, an increase in poultry consumption is associated with the Durga Puja festival.
Poultry structure and technical performance
The structure and costs of production in the Indian poultry meat industry vary from region to region. While independent and relatively small-scale producers still account for most production, relatively large-scale integrated producers account for a growing share of output in some regions. Integrated operations include large regional firms that incorporate all aspects of production, including raising grandparent and parent flocks, rearing day-old-chicks (DOC), contracting production, compounding feed, providing veterinary services, and wholesaling.
Most integrated firms also have some presence in retail marketing, largely for the purpose of establishing price leadership and having influence over wholesale-retail margins. Large-scale integrated producers are most prominent in the southern and western regions. Smaller, independent, and sometimes partially integrated producers account for most poultry production in the northern and eastern regions. Commercial broilers and eggs are produced by separate enterprises using specialised broiler and layer breeds and distinct management practices.
Key poultry breeds
Although a number of poultry breeds are available in India, the Cobb 100 breed owned by Venkateshwara Hatcheries currently accounts for 60% to 70% of all broilers in India. The company has a nationwide infrastructure that supplies its breed to broiler operators, either as grandparents, parents, or DOCs, and also provides comprehensive veterinary services to its growers. At present, all broilers supplied by Venkateshwara Hatcheries are the Cobb 100, a relatively older breed based on breeding stock imported from the United States and benefiting from a long period of adaptation to Indian climatic and disease conditions. A Cobb 500 line, based on more recently imported breeding stock has been developed, as is a Cobb 400 line, based on a cross between the Cobb 500 and the acclimatised Cobb 100. Other breeds present in India include Hybro (Netherlands), Avian (US), Ross (UK), Anak (Israel) and Hubbard (US).
Climatic conditions and concentration of poultry units
Climate conditions are most suited to poultry production in southern India, where average temperatures, though fairly high, tend to avoid the extreme heat of the eastern and western regions, and the extremes of both hot and cold found in northern India. The capacities of houses range from 8,000 to 20,000 birds and from 6,000 to 15,000 square feet. There has also been a growing tendency for poultry units to be concentrated around urban areas because of the existence of ready markets for the end products of poultry production. At present, just four states (Andhra Pradesh, Maharashtra, Punjab and Tamilnadu) account for more than 50% of the total output of eggs and broilers in the country.
Live bird preference
The Indian broiler sector operates almost completely as a live-bird market, with poultry retailed as live birds and slaughtered for customers in retail shops. This practice is in accordance both with the lack of cold chain facilities, which limits capacity to market chilled or frozen products, and with consumer preference.
Consumers have more confidence in the quality of fresh poultry meat that is slaughtered in their presence; frozen or chilled meat may have problems that can only be detected when it is thawed. Even when refrigeration is available, consumers lack confidence in chilled or frozen meat because of the unreliability of electrical power. The preference for fresh meat also extends to the belief that it is superior in taste and texture.
Processed poultry demand
Processed poultry products, including chilled or frozen poultry, as well as further processed items, currently account for a small share of urban household consumption and a negligible share of rural consumption. Chilled whole birds and parts can be found in markets and higher end shops in metros and mini-metros and are also consumed in institutional settings, including restaurants and hotels. Frozen birds and parts are more difficult to find at the retail level but can be found in shops in major cities, and are also marketed by processors directly to hotels and restaurants. Frozen, further processed items, such as heat-and-serve dishes, can be found in high-end shops in the major cities. Dressed and frozen products are produced by about 12 firms operating semi- or fully mechanised dressing plants and freezing facilities. It is estimated that the frozen poultry products produced and consumed annually in India is to the tune of 12,000 tons.
The live-bird market will likely continue to dominate in India for the next few years. Institutional demand for chilled and frozen birds will continue to expand, but movement by household consumers to chilled or frozen products is likely to be slow.
Current and future sources of growth in the institutional segment include hotels, restaurants and fastfood establishments, including McDonald’s, Pizza Hut, Dominos and many home-grown fastfood brands. In the retail segment, growth is likely to be fostered by the emergence of a number of new approaches by poultry integrators, including the establishment of integrator-owned or -franchised chilled/frozen poultry shops and sales counters in existing food shops, and home delivery services for chilled/frozen poultry products. The recent emergence of supermarkets across major cities of India is also likely to support growth in the retailing of chilled/frozen poultry.
Poultry processing
Traditional manual poultry processing still accounts for roughly 98% of all consumption in India. The traditional sector, as defined here, consists of manual dressing of birds, either in bulk by wholesalers or individually in retail shops. The Ghazipur wholesale market near Delhi may have the largest such dressing facility in the country, manually dressing roughly 60,000 birds daily.
The modern poultry processing sector consists of ten to 12 firms that, altogether, process about 12,000 tons of poultry, or 1% to 2% of consumption, annually. The plants are all operated by poultry integrators and are located in or near major urban areas, including Mumbai, Kolkata, Hyderabad, Bangalore and Coimbatore.
Future outlook
From now and through the years up to 2010, India will see major changes in the way chicken is sold. Live chicken sales at retail level will continue to thrive, but the entry of bigger players in this segment will give it a big lift. Cleaner outlets, with emphasis on sanitation and hygiene, reduced contamination, and the use of small feather-plucking machines and accurate weighing machines, will help overturn the image of chicken shops as dangerously dirty places to buy food. As more outlets of this type open, existing retailers will see sense and improve conditions in their own outlets.