With a career in the poultry industry spanning a quarter of century, Ricky Thaper has seen significant change in the Indian poultry industry and predicts that there is more to come.
CLEMENTS:
Could you tell us about your current role and how you became involved in the poultry industry?
THAPER:
I have the role of treasurer and spokesperson for the Poultry Federation of India (PFI), an all India association of poultry farmers, breeders, equipment manufacturers, pharmaceutical companies, feed manufacturers and all allied industries.
In 1986, I started my career in poultry and engaged myself with a number of aspects of poultry, following its development through different phases, from small farms to large automatic, environmentally-controlled broiler sheds.
The businesses of Indian entrepreneurs have grown in size, and many now have millions of birds, either in their own modern farms or on contract growing arrangements with smaller farms. I have also attended practical courses at Texas A&M University, Texas, US and at the University of Illinois, US.
CLEMENTS:
What changes have you seen over this period?
THAPER:
Over the last two decades, the poultry industry has seen many changes. From backyard poultry in the early seventies, it has adopted modern farming techniques. Now, broiler growers have capacities in hundred thousands, some are even in millions. Broiler breeder farms have stocks in thousands, some are having many hundred thousands.
Broiler parent, grand parent stocks are produced and maintained in the country. Some breeders have pure line breeds also. On the feed front, the main ingredients soy and corn, are grown in sufficient quantities in India.
Many multinational companies have their manufacturing facilities in India. They supply most of the feed supplements required for profitable broiler production. Only a few supplements such as methionine and lysine are imported. Poultry equipment required for modern poultry production is manufactured in India, with only the very critical parts imported. Most of the vaccines and medicines are manufactured in the country. In a nut-shell, India has all the resources to meet the requirement of modern poultry production - it can be compared with the developed poultry industries, world over.
CLEMENTS:
Since when, has India been self-sufficient in poultry meat?
THAPER:
India has a variety of livestock production. All species, including buffalo, sheep, goats and poultry are produced and consumed in India. Indians, being mostly vegetarians, eat less meat compared to in many countries, where meat is the basic protein source. Whatever is produced in the country, is consumed locally. Very small quantities are exported to Middle Eastern countries. India has now, however, set up modern abattoirs and is the number one exporter of buffalo meat.
The Indian poultry industry has adopted modern techniques of production and has achieved the distinction of producing low cost broiler meat compared to other meats. Thus, production of broiler meat, and its consumption in the country, has expanded very quickly. Broiler meat consumption has grown at 10% per annum over the last 15 years.
India is now the fifth largest broiler producer in the world, with production of 2.3 million tonnes of broiler meat per annum. With the Indian economy growing at 7-8% per annum, for the last two decades, consumption of poultry meat (and other meats) has grown faster than its production. Thus price of meats and meat products have increased in India, and the poultry industry can hardly meet this growing consumption, so there are only very small quantities available for export.
CLEMENTS:
Will the country become a significant exporter? Are larger companies looking at overseas markets?
THAPER:
The larger poultry companies in India are interested in exporting, and are likely to succeed in next 5-10 years. India has a large unemployed work force that is ready to adopt broiler production as a vocation. The large companies will prefer to tie up with them for contract farming and thus broiler production will keep expanding fast in the coming years. All the input industries are well geared to meet this growing demand.
The Indian government has encouraged the National Meat and Poultry Processing Board (NMPPB) to develop meat and poultry processing for local consumption and export. The government has allowed 100% FDI (Foreign Direct Investment) in food processing and many multinational companies are taking advantage of this to process broiler meat in India (including further processing) and export the premium cuts to the markets abroad. Those companies have a good understanding of export markets.
With the availability of required inputs, India is in a position to produce broiler meat at a competitive price, and already India is among the lowest cost producers of broiler meat.
CLEMENTS:
What are the main challenges currently facing producers in India?
THAPER:
India is traditionally a wet market. Over 80% of broilers are sold live in Indian markets. To shift to a ‘dressed chicken’ market, lack of cold chain is the biggest constraint. Big poultry companies are developing the cold chain, but it takes time to develop on the scale required for the vast Indian market.
Cold chain is a big constraint in the country’s infrastructure. The concept of cold chain is new to India. Additionally, energy shortages throughout the country makes it still more difficult, as cost escalations are high with cold chain. Multinational companies involved in cold chain infrastructure can help to develop the system faster.
Over the next 5-10 years, the dressed chicken market is expected to account for 25-30% of the total broiler meat market. Processing plants and big retail chains are trying their best, and meat processors are developing their own franchise shops for the sale of meat products.
CLEMENTS:
Has investment in new technology been affected by the economic downturn?
THAPER:
The economic downturn did have some effect, but it was not as severe as in the developed economies. India is again in growth mode, and the economy is developing fast.
CLEMENTS:
Are producers currently facing any regulatory challenges and, if so, how easy will it be for them to comply?
THAPER:
To meet the standards for export, and also to improve the hygiene standards for Indian consumers, the government is in the process of introducing regulations. However, Indian companies will not have too many difficulties in meeting the proposed regulations, as the technology and machinery adopted by them is fairly modern. Rather, regulations will help to move the unhygienic wet market to a more hygienic dressed chicken market.
CLEMENTS:
Are larger producers resulting in smaller concerns going out of business?
THAPER:
Both large and small producers have different market segments. So both are surviving in the market. However, large producers may take over the inefficient small producers, as their cost of production is not competitive. Efficient small producers are graduating to medium scale producers. As long as the wet market continues, large producers will not have a significant impact on smaller producers, however, with the development of the cold chain, large producers will have an edge over small and medium producers.
CLEMENTS:
How much influence do supermarkets have on eating habits and what is produced? Is their influence likely to increase?
THAPER:
Supermarkets have been able to make a large dent in the share of the traditional market, because of the latter’s poor infrastructure and increased overheads. The supermarkets are growing very fast, but their visible influence, on consumers will take some time, as the country is vast and consumers are widely spread.
CLEMENTS:
How do consumers prefer to buy their chicken - frozen, fresh, cuts, etc?
THAPER:
As discussed earlier, 90% of consumers prefer live chicken, as they do not have confidence in the quality of dressed chicken. The fear is that dressed chicken may be from sick or dead birds. Secondly, the cost of live chicken is lower than that of dressed chicken (overheads are very high). Around 10% of consumers who buy chicken in supermarkets go for frozen/fresh cuts.
CLEMENTS:
To what degree has chicken meat become more affordable over recent years?
THAPER:
Chicken meat was sold at a premium price as Indians prefer chicken over buffalo/sheep/goat meat. With the expansion of the broiler industry, chicken meat costs much less than other meats or even fish. So consumers prefer chicken meat, as it is their first choice and the cost is lower.
It is expected that the broiler industry will keep expanding at around 10% per annum for the next 10-15 years. Consumption of broiler meat is only 2.4 kg per person per annum, so there is scope to expand production.
With the economy growing at 7-8% per annum, and consumers’ desire to eat more animal protein, either milk or meat, there can be further expansion of the broiler and egg industries. Of the 1.2 billion people in India, 400 million-strong middle class has extra money in their pockets, to spend more on healthy foods.
CLEMENTS:
I understand that egg producers benefit from inclusion of eggs in various school meal programmes. Is there anything similar that helps poultry producers?
THAPER:
Eggs are served in Midday Meal programs, free of charge, and sponsored by central and state governments for primary school children. There is no scope for serving broiler meat in these programs as vegetarians have resisted any su ch move. Only reluctantly have they have agreed to eggs.
CLEMENTS:
If the industry were to present the government with a list of wants and demands, what would be on the list?
THAPER:
The poultry Industry continues to approach the government regarding various problems hampering the growth of the industry. Most important among these are cold chain for marketing broiler meat, reduction of excise/import duty that leads to higher costs for processing broiler meat, reduction in import duty on various feed supplements required for efficient broiler production, promotion of meat/egg consumption in India and for export to other countries. The PFI and other poultry groups/association are in constant touch with the decision makers in the government to lobby for their genuine demands.
CLEMENTS:
How do you see the industry developing over the next five years?
THAPER:
The poultry industry is likely to grow by 8-12% per annum over the next five years. Production related problems are very small and demand for broiler meat is increasing very fast in India. The broiler industry is the sunrise industry for next five years.
