Being one of the largest producers of poultry in the world, India lacks a coherent poultry policy which now poses a serious threat to the survival and growth of the entire poultry sector.
Concerns In April 2019, the Government of India permitted JBS, the largest meat processor in Brazil, with a turnover of ` 3.2 crore to sell processed chicken products, including thighs and leg quarters of which Indians are inordinately fond of. JBS has received approval from Indian authorities to sell its chicken products through its subsidiary, Seara. But this is definitely a disturbing development for the Indian poultry market, which is currently positioned as the world’s third-largest. Domestic poultry players are rattled at the latest threat as imports of poultry products are growing in India.
Imports of poultry products rebounded in 2018–19 after India lost a prolonged dispute at the WTO to the United Nations in 2018 over the imports of frozen chicken legs from USA. As per the Directorate General of Commercial Intelligence and Statistics (DGCIS) data, poultry product imports rose to 797.73 tonnes, valued at ` 37 crore, for the April–January period in 2018–19. In 2017, poultry imports stood at 572 tonnes at ` 26.87 crore. Significantly, poultry imports from the US increased the most, at 136.92 tonnes at 1.2 million dollar, in April to January 2018–19, as against 0.01 tonnes in the previous year. Frozen chicken imports in April 2018 to January 2019 period surged to over 136 tonnes, from a mere 100 kg in the same period a year earlier.
Disruptions, Production, and Marketing The impact of imports has been immediately felt. India’s broiler meat production was a huge market with 4.2 million tonnes (carcass weight) in 2017, and egg production crossed 88 billion, the world’s second-largest. The Indian poultry sector, including eggs and layer production, is one of the fastest-growing among the other agri-industries. It registers an impressive 7–8 per cent growth rate. However, due to different factors including poor planned approach and policy paralysis accompanied with methodological faults, the sector is now unable to compete with global players.
About 70 per cent of India’s poultry production is in the organised sector, with vertically integrated process, and their sizes are not significant in comparison to global standards. In 2017, Tyson, the meat-producing company in the US, generated over 40 billion dollars, making it one of the world’s largest companies in any sector. In 2019, Tyson alone slaughtered 1.8 billion chickens, while India’s total chicken population is estimated at around 2.5 billion.
Feed Cost Global players enjoy significant advantages, which even the organised producers in India cannot think of, whereas the small or backward farmer accounts for about a third of the market size in the country. One of the important advantages is the lowest cost of feed. The feed alone accounts for 60 to 70 per cent of the production cost of a bird. Brazilian or American birds are fed on cheaper genetically modified maize and soya, which are banned in India. Maize and soya as agricultural crops are subject to weather condition and price fluctuation in India. Maize prices have been increasing over the past six months and have risen by nearly 50 per cent during the period, while broiler prices have increased only 40 per cent. The rising production cost is a big threat for domestic players as India becomes a lucrative market for low-cost producers such as the US and Brazil. Once out of business, it would be difficult for poultry farmers to make a comeback. Faced with a new threat, poultry players are seeking a level-playing field to compete with low-cost producers. Besides seeking higher maize imports to tide over short supplies, poultry players also want the government to increase the bound duty on chicken product imports to protect domestic farmers.
Bound Duty on Chicken Products While the current duty levels on imports may provide a partial protection, in the long run, the cheaper imports will harm the domestic poultry sector. At present, chicken portions such as legs and sausages attract 100 per cent duty. But chicken legs, which are not consumed in the West, are sold at a throwaway price. Despite 100 per cent duty, the imported chicken legs will still be cheap in India. The cost of production for chicken legs is estimated at around 700 to 800 dollars per tonne in the US. With 100 per cent duty, it would still be available at 1,500 to 1,600 dollars per tonne, while the cost of production of processed chicken in India is around 1,800 dollars per tonne. So, even with 100 per cent import duty, the landed (from imports) cost is 20–30 per cent cheaper than the production cost in India! Therefore, the government should provide a level playing field by allowing higher imports of maize, the main raw material for the poultry sector. While maize prices are 300 dollars per tonne in India, they are 160–170 dollars in US and Brazil.
In this scenario, the government is now allowing higher imports. So, it would be impossible to compete with such high prices.
Problems of Infrastructure The poultry farmers do not have proper infrastructural support in India. There is a huge gap in the support system and a massive shortage of infrastructure for value addition such as processing, warehousing, cold storage, and refrigerated supply chains. Therefore, about 94 per cent of the market is still for raw meat, which limits the income for the poultry farmers. Both eggs and birds are highly perishable and very sensitive to small fluctuations in the weather. In this condition, cold chains are the only solution. But, in India, we lack cold chains, which results in limited holding capacity of producers. Fluctuations in soya meal and maize prices also mean that farmers are unable to predict pricing and are at the mercy of the distributors. Another major problem is frequent outbreaks of disease at the peak production time. To add, lack of proper regulation and control has led to environmentally unsound practices in the business.
Most importantly, the rampant use of antibiotics and even growth hormones to speed up weight gain are some serious issues that threaten the poultry sector. The uncontrolled use of a ‘last hope’ antibiotic, Colistin, is leading to a worldwide rise in drug-resistant superbugs.
India needs a coherent national policy for poultry farming. From funding to infrastructure development to phytosanitary control and supervision, India urgently needs to put in place systems which can help sustain and develop the industry to meet global competition.