India faces the same market forces that are currently impacting the global animal nutrition community. As an industry, we must learn to embrace these future changes and work together to mitigate the risks posed to the end consumer of milk and proteins (egg, chicken, fish, shrimp, and milk). Five general market forces that the industry faces at a global level and at the India level are as follows:
Growing world population – Many global organizations are projecting an increase in the global population from 7.2 billion in 2015 to 9.1 billion by 2050. Whether we look in absolute terms (1.9 billion, 26%) or the annual growth rates of 0.7%, this change will put a strain on all global resources to be more efficient to produce enough food to feed the world. The animal nutrition industry must continue to push for new innovations and technological changes to increase production rates in converting feed to protein and milk yields as the industry will be forced to produce more with less (land, water, raw materials, etc.) in the future.
Rising GDP per capita – The size of the middle class in China and India is projected to grow fourfold from 200 million people to 800 million in each country by 2030. In India, this growth would signal that the average GDP per capita will rise from $5,600 to $8,400 by 2020. This increasing GDP can take many final shapes in consumer spending however normal historical patterns in developing economies have shown that a large portion of the higher disposable income will be spent on improving nutrition likely shifting a portion of cereal based diets to include more proteins. This market force will be a positive for the India livestock industry to produce more milk, meat, and eggs to meet the increased demand.
Increasing market volatility – Since the early 2000’s, we have experience major swings in global commodity prices due to changing weather patterns, shifting end uses for grains like biofuels, and increased demand to feed the economic growth in Asia. As India is a closed market today for grains and protein meals, the global impacts of higher prices in maize and soymeal have been less than other markets. However in the past two years, the local Indian markets for maize and soya meal have not decreased in the same way as global markets leaving the India producer and end consumer in a non-favourable position. These factors combined with already volatile prices for milk and meat have greatly impacted stakeholder profitability in the Indian livestock industry. A concerted effort must be made to build local risk management tools for producers to manage raw material price risk and finished products for volatile price movements.
Changing customer needs – Whether we look at the end consumer level of milk, eggs, and proteins or the farmer/producer level in our industry what the customer needs today will not be the unmet need of the future. Changing demographics across India in terms of age, urban vs. rural population, veg vs. non-veg preferences will continue to have major impacts downstream to the livestock industry. Time (convenience), price (value), and nutrition availability will become the main drivers of future consumer choices and change the value chain for all producers.
Adding regulations and policy – A consistently dynamic area to manage for the future remains changing regulations and policy. Whether the issue is antibiotic growth promoters, potential imports of genetically modified grains and proteins, or future tax/infrastructure changes we must find ways to maximize the efficiency of the industry and increase the profitability across all stakeholders in the livestock industry in India. Globally as a feed industry we must do a better job of proactively managing external communication to our end user customer base and marketing the work done across all parts of the value chain. Our industry has a major role to play in the noble cause of feeding the world. We must tell our story to all consumers so that the facts of our industry and science behind production is well understood.
Many of the common market forces will have positive impacts for India. The industry will be consistently challenged to improve production in profitable ways, but the continued growth of the Indian livestock industry should continue through 2020 and beyond. As an industry we must proactively work together to address these risks as we can turn these potential issues into major development opportunities for future industry growth.
Robert Schubert, Cargill Premix & Nutrition – India