Time and again, India is compared with China in anything from manufacturing to agricultural commodities trade. Despite the differences in terms of their agri-food industry profile, these two countries continue to influence the global market for everything. Although these two are countries with billion-plus population, India is different from China as itsoverall economic growth is dependent more on domestic consumption than China’s primarily exports-driven growth. Also, India’s population growth rate is healthier than China and the former enjoys a bigger share of relatively younger population than the latter. Every year India adds 22 million to its population but recent trends in China’s demographic profile indicates that the country is indeed getting older may be due to its One-Child policy. Superficially this should not matter but this difference in demographic profile has significance in economic growth and development, labor force replenishment, and ultimately essential needs (e.g. food) and discretionary consumption and expenditure patterns.
India’s domestic food consumption patterns exhibit positive trend for animal proteins in the recent years. According to NCAER(National Council for Applied Economic Research), consumption of poultry meat increased from nearly a quarter of a kgin 1987-88 to 2.2 kgs(2009-10) and the growth is higher in the urban areas. Meanwhile, industry sources claim the percapita annual consumption actually stands at 4 kg currently. One can say increase in poultry meat reflects the overall animal protein consumption including fish and eggsin the country. Although the numbers from different sources differ, the trend is very clear that consumption growingat not less than 6 to 8 percent annually. Consequently, the animal feed sector is also expected to register concurrent growth. Currently, India’s demand for compound feed (22 million tonnes) comes mainly from the poultry feed (about 13 million tonnes)segment. Soy and corn are the biggest components of animal feed and oilmeals including rapeseed, and cottonseed are also widely used depending on prevailing relative prices and availability.
In contrast, China’s meat and livestock sector is experiencing turbulence and in recent years suffered in terms of bad reputation, slower economic growth, and food safety and quality issues including smuggled meats etc. Chinaag.org mentions in a recent article that China’s meat and animal feed sector was the worst performer and was the most affected in the recent stock market collapse. As an example, China’s poultry meat segment has shown negative growth in the last few years stagnating at around 12- 13 million tonnes. Also, its dairy sector is marred by food safety issues and as a result, demand for compound feed is not witnessing any appreciable growth in the recent years. All these have their corresponding impacts on food consumption behavior, food prices and composition of food basket. If one looks beyond these numbers, it is clear that firstly, China’s economic slowdown is reflecting in its food consumption growth and consequently global demand for commodities including oilmeal and oilcakes which are essential components of animal feed.Hence, India seems to assume a pivotal position in relative terms to China though the latter will remain a very significant player when import volumes are considered.
Analyses by different think-tanks also show steady rise in demand for processed and value-added meat and dairy products due to the brisk growth in fast food culture, HORECA (Hotels, Restaurants and Catering), tourism, and hospitality sectors in India. Growth in modern food retailing sector in recent years also has its fair share of contribution in creating demand for newer and healthier product categories. For example, the dairy feed segment could well be the next big thing in India’s animal feed market, if one learns from the magnitude of investments pouring in from venture capital and/or private equity firms. Any significant improvements in productivity at the farm level can only be achieved by using high quality, nutritious compound feeds as the experiences from the developed countries demonstrate. All these are directly or indirectly pushing the demand for manufactured feed.
Thus, overall buoyancy in food and feed sectors along with growing emphasis on food safety, quality, health and nutrition are making India an important market among the emerging economies.
However,India’s supply side for its feed raw materials has more constraints that rather increase its dependence on imports. Due to a prolonged, unjustified and skewed policy focus on rice and wheat (the Votebank crops), the oilseeds sector, similar to pulses, minor millets and coarse cereals, has been affected significantly. Lack of conducive policies on support prices, marketing and procurement, and regulations that limit private players are some of the notable factors that strangleIndia’s domestic oilseed production. Till such time these impediments are addressed appropriately, India’s oilseeds sector would not be able to meet the growth in demand particularly from the feed segment andthe country’s reliance on imports will stay steady or most likely grow.It is rather a complex scene that the best and high-quality protein meal from India is exported while millions of tonnes of oilmealare imported at the same time. Although the reasons for short-term surge in imports may vary such as a significant drop in local production (e.g. rapeseed) or cheaper global prices, which could be temporary or seasonal, long-term outlook on the demand for oilmealsfrom India is rather bullish because of the changing food consumption patterns and increasing average household incomes. In summary, India will remain a major importer of feed raw materials and will indeed, get more prominent in global oilseed and mealtrade than China mainly due to its stronger and more resilient domestic consumption scenario.
Raghavan Sampathkumar
