One of the silver spots in the otherwise gloomy agricultural scenario in our country is the Poultry Industry. This sector has been growing at more than 10% per annum and has the potential to grow more at more than 15% if only its feed requirement can be securitized at competitive prices.
More than two decades back, it was told by a visionary that India within five years will cease to be a net exporter of meal and corn and may actually start importing the same. The words though prophetic did not come true till 20 years later (still partly).
Contrary to all predictions in the past the soya crop continued to grow from strength to strength. In due course of time Soya industry became its own worst enemy as more capacity started chasing too few beans. The crop increase started plateauing and soya industry is being pushed to the wall and is fighting a losing battle. The plight of soya industry is being felt by the Poultry industry as well by way of ridiculously high prices for meal which have no co-relation to international values.
Scenario of corn industry
The story of corn is relatively better but the writing is on the wall and going forward availability is going to get tighter and tighter.
Soya crop at around 9/10 million and corn at around 22 /23 MT and not growing, and that should ring alarm bells in poultry industry. The period of complacency is over and the industry will have to seriously start looking at the future unfolding scenario and calibrate their responses accordingly.
Rising income levels and change in food habits is resulting in more people shifting to protein rich diets. No wonder the poultry sector is growing at a healthy clip of 10% and in future has the potential to top 15% growth. The current requirement of soya meal for the animal feed sector is in excess of 4 MT and growing year after year.
On the one hand there is growth in domestic consumption of soya meal and on the other the availability of the same is shrinking. This is in spite of the fact that meal exports from the country have practically become zero. Soya crop which used to be closer to 10 million tons is now being talked about at 8 to 8.5 million tons. With farmers becoming reluctant sellers in view of diminishing returns the bean availability for crushing industry is negligible. No wonder the poultry industry has to fight for securitizing its meal.
The situation of corn is relatively better and supply still outstrips demand, but for how long? We understand about 60% of the corn produced in India goes for the animal feed sector. The poultry sector consumes about 44% of corn produced in the country. With India producing about 22/23 million tons of corn the industry is still not in trouble. However this situation can change dramatically in next few years as with few big plants coming up for producing starch and ethanol and demand for animal feed also skyrocketing.
Till now the country has been able to provide both soya meal and corn for the feed industry albeit at very high prices compared to world values. Question remains if going forward demand can be met or not.
As the cities are urbanizing and population is migrating in search of better living standards food habits are changing big time. Analysts predicts there is a direct co-relation between increase in wages and shift of family from consuming staple based diets to a high protein one including fruits and vegetables as well as dairy and meat products. This point is corroborated by the fact that in 2006 calorie requirement from livestock was 184 which will grow beyond 300 by the end of next decade. The writing is very clear on the wall; the next decade belongs to Poultry and Feed industry. Whether the supply of feed ingredients would keep pace is a moot question?
We have tried to develop different scenarios and the potential requirement of soya meal and corn by 2025. Some basic assumptions are as below:
requirement has been plotted on basis of 12 and 15 % growth
soya meal inclusion in broiler is assumed at 25% and in layer feed at 30%
corn inclusion in broiler feed is assumed at 60% and in layer feed at 50%
consumption growth of soya and corn in other sectors like human and industrial is assumed at 10%
exports have been assumed as zero
On the basis of above assumptions the picture which emerges is really scary and should shake up the policy makers from their deep slumber. The total requirement of soya beans and corn for taking care of domestic consumption including Poultry is as below.
Note- If soya meal inclusion increases by 5% due to lower values, soya bean requirement by 2025 would be 32 MT if poultry industry grows at 15% and marginally less if industry grows at 12%.
Do we seriously think these numbers are achievable with the current pace of Agricultural development? Agri growth at sub 2% and poultry consumption growth at more than 12%, the gap between demand and supply is going to keep widening and assume alarming proportions.
We are actually staring at an impending disaster and the time for action is now or else the nation will forfeit its protein security just as we have forfeited edible oil security.
Way Forward
In my humble opinion some suggestions to face the looming challenge are as below:
Biotechnology: India has about 11.6 million hectares land under G.M crops which is higher than China. Why confine G.M to cotton alone, we should bring corn and soya also under G.M. This could be our only savior as our land laws would not permit big time mechanization and corporatization of farming.
Improve yields in whichever way possible.
Break the wheat/rice cycle in North India and replace it with corn/mustard cycle. This will kill two birds in one stone. It will bring down production of wheat and rice in which we are surplus and replace it with much needed corn and mustard.
Allow feed industry to freely import DDGS.
Last but not the least; allow unfettered free trade of soya meal and corn. Why should the poultry sector be made to pay almost USD 200 higher for their meal? This is blatantly unfair and is restricting the growth of this sector which at last count is more than INR 50000 crore and growing. To protect domestic farmers from unbridled imports, we can regulate the flow by suitably tweaking imports tariffs just like edible oils.
