The poultry market in India is expected to grow at 12-15% per year in view of favourable conditions such as falling prices through integration, rising income, young and urban population and increasing domestic demand. Despite being hampered by outbreaks of avian influenza, the poultry industry is estimated to have grown at 11% a year during 1991-2006. ‘There is still a huge potential for further growth. However, the industry requires the right focus to sustain this momentum,’ a recent Rabobank study says.
Challenges: feed, costs, AI, live markets
The industry has been faced with shortages of maize, high logistics costs, threats of virus outbreaks and a large live-bird (wet) market. The live bird market makes up almost 95% of poultrymeat sales. As a result, the processed meat market was witnessing over-capacity. However, fuelled by a booming retail sector, the market for processed meat is growing at an estimated 15-20% per year. ‘The rise in income coupled with greater hygiene awareness will lead to a decline in the wet market share, thus providing an opportunity for the processing industry to set up poultry retail chains,’ the study said.
Opportunities for growth
The rapidly growing sector offers investment opportunities for foreign players in activities such as breeding, animal health, feed, equipment and processing. Although foreign investments are permitted, they are constrained by market uncertainty and poor infrastructure, the report states.
Strong consumer preference for whole fresh chicken is culturally embedded and the demand for processed poultry products will only develop gradually. Still, the processing products provide the industry with opportunities to add further additional value and the industry should initiate efforts to optimise the supply chain to stimulate the development, the study said.
Indian poultry sector has the potential to be a major player in the global market, given its competitive edge but so far, its participation has been negligible. The sector has scope to export to Europe and Japan but it needs to make investment in strong veterinary system and export-driven processing plants.
Regarding recent avian influenza outbreaks, the study says a long-term solution is required in the form of industry investment to prevent further outbreaks. ‘Frequent outbreaks of bird flu have affected the industry adversely,’ according to the report. On expansion, the study says all depends on the pace of change from a live-bird market to a chilled/frozen product market. A shift in mechanical and more hygienic processing would help, as well as offering public health benefits.
Price drives consumption
On prices, the study says that although poultry prices are declining, they are still higher than those for other meats. Buffalo meat is 40% cheaper than poultrymeat and yet it is considered to be inferior. Given their high prices, mutton and goat meat are regarded as luxuries, while beef and pork are not in great demand for religious reasons. Price could remain the main driver of increasing poultrymeat consumption, the report concludes.