The Feed Conference was successfully held along with the recently concluded 4th edition of Feed Tech Expo on 01-02-03 February in Pune. The theme of the conference was “Future Perspective of Indian Feed Industry”, where industry experts from India and Abroad shared their expertise on a wide range of topics concerning the feed industry. A compiled report along with the presentations is uploaded on the website but in “Think Grain Think Feed” we would like to cover individual topics in details. This issue covers the first topic of the conference that was dedicated to feed commodities.
Dr. TK Walli, Managing Editor of Think Grain Think Feed welcomed the audience. He said, “innovation is the way forward for the growth of the feed industry. There is a huge gap between the poultry and cattle feed industry. The issues of the poultry feed industry mainly are feed safety, quality, and Antibiotic Growth Promoters. However, the dairy feed industry is still struggling with proper awareness of dairy farmers about feeding balance feed.” He suggested the industry to work hand in hand with research institutions through R&D projects to solve the issues of feed industry and take the industry forward.
Dr. Pradeep Mahajan, Conference Chairman in his keynote address said, “to predict the future the past facts should be observed carefully.” He mentioned how the industry has changed in the last 3-4 decades. In India, in early ’80s major volumes of the animal feed were layer feeds while presently it is majorly cattle, broiler and aqua feed. As the layer industry has consolidated which is still a continuing trend and hence, the volumes of the layer feed have gone down. The major factor that would keep impacting the feed industry is an unpredictable variation in maize and soybean prices. He opened the conference for the speakers while expecting the facts and projections that would be useful for the feed audience.
G Chandrashekhar, an economist and well-known personality of the Indian Livestock industry said in his opening remarks that he sees an extraordinary future of the livestock industry while mentioning some interesting projections mentioned in table 1.
“Though there are challenges like volatility in feed prices, seasonal fluctuation in meat consumption, consumer awareness, and food safety issues etc. But the opportunity is also very huge and to achieve such production numbers the industry needs to improve its yield, ensure proper animal health and nutrition etc.”, he told. He suggested the industry to improve the quality, internal processes and raise their valuation or else the international investors will invade the industry.
Factors to impact the outlook of feed commodity
The outcome of any commodity depends on three factors – government policies & intervention (domestic and global), weather and supply & demand. KautukSoni from McDonald Pelz picked up these factors one by one to elaborate on their specific implications and present the outlook of feed commodities.
Domestic and international government policies impact the outlook in both positive and negative ways. During the election period, government policies expect to be tilted towards agriculture. He said, “the quantum of interventions like Minimum Support Price, Deficit Payment Schemes, Duty Interventions, Provision of Special Incentives etc. depends highly on political events or shortage/excess of the crop coming or expected to come in the market. It is also important to keep a track record of world events like US-China trade war which also impacted this industry.”
Talking of the recent predicaments in the Indian weather, he mentioned the impact of South-West monsoon which was almost a drought year, and the biggest shortfall was seen in the east & north-east region where huge crop production takes place.
“The lower rains, especially in the above-mentioned regions, impacted the crop sowing of maize and soybean and output in key states like Maharashtra, Uttar Pradesh, and Bihar and these states which were otherwise exporting, might resort to importing to meet their own demand.”
Supply and Demand
Since Supply and demand get impacted by sowing, arrivals, import scenario, international markets etc. he focused each one succinctly.
Soni used statistical tabular data (table 2) to demonstrate the comparison of 2017-18 and 2018-19 Kharif and Rabi maize sowing. The data showed that Kharif crop sowing is equal to that of last year, but Rabi crop sowing is down by 10 percent and hence, the yields are expected to be lower for AP and Telangana Crop.
Sonipresented the arrival data from past years i.e. 2017-2018 and 2018-19 to explain the following intricacies:
- Higher arrivals in MP(more than last years’ total arrival till Sep 2018)
- Lower arrivals in UP due to lower crop production
- Karnataka-the only state where market expects arrivals to come in Feb/Mar after a price hike
Supply and Demand – Maize
Soni shared with the audience about the information on government estimate for Kharif crop which is 21 MT while McDonald Pelz figures suggested it to be 18.7 MT. Total production estimate is 80.7 MT.
“Because of higher prices, the demand of feed is 11.5 MT which otherwise could be 12.5 MT and total demand including other industries is expected to be 20.8 MT i.e. it is expected that there could be a shortage of 1.24 MT, which points towards a scenario of import of maize to make up for the shortfall.”
Maize Import-A viable option
Illustrating table 5, hedemonstrated that Importing from Ukraine at zero percent duty can solve the issue. As the world prices are lower than domestic prices, it is viable to import. However, govt. approvals are difficult to expect and the prices will belower only in near future after the new crop arrivals.
Furthermore, there was a detailed discussion on soybean scenario also. Pertaining to Soybeans imports and exports, Soni briefed that world crop supply is comfortable because of various factors like low prices, reduced demand from China and the arrival of Argentina crop. He asserted that Indian soybean crop estimation is 10.23 MT and till date arrival of Soybean Meal (SBM) is 5 MT which is 25-30% higher than the last year.
Since Soybean meal is one of the main ingredients for the feed industry especially for the manufacturing of poultry feed, it was crucial to lay the focus on the Indian scenario of the same. As per the data shared by Soni, domestic demand is expected to be 5.5 MT while the export demand can be 2 MT out of which 1 MT is already exported. Presently, Indian meal prices already outpriced in the international market.
Soni indicated that scenario is predominantly grim as far as soybean oil is concerned.
Regarding corn prices, Soni outlined that if the duty-free import is allowed, the prices would stabilize at INR 18-18.5 per kg. However, if it gets delayed the prices can reach anywhere between INR 21-25 per kg. As far as soybean prices are concerned, he stated that short term prices will be firm till March due to supportive oil and lower selling prices. However, April onwards prices should stabilize or move to the lower side over non-parities in the international market.
While concluding he enumerated the key opportunities that are available to be explored. This included consistent analyzation of crop data, timely representation to government agencies regarding crop scenarios, accessing other competing industry, and have updated information about worldwide implications of commodity movements on Indian Industry.
In the closing remarks, G Chandrashekar, the session chairman substantially agreed that the crop numbers are overstated & the market stature is quite arbitrary, but at the same time maize has been a success story in Indian Agriculture in the past several years which needs to be sustained in the coming years. Government is apprehensive in permitting imports as it might hurt the farmer’s interest and hence the industry needs to lobby harder to present its case.