Outlook of the Indian Poultry Industry Opinion of Industry Stalwarts

2020 has been a roller coaster ride for the Indian poultry industry. Rumours starting around February last year connecting COVID-19 with poultry consumption impacted all the stakeholders. The industry started to revive after 3-4 months but now is facing another challenge of bird flu. To understand how the industry cope up with the rumors and future strategies, Think Grain Think Feed organized a webinar on 18th February with Mr. Shiva Mudgil of Rabobank. The webinar was attended by 124 attendees and has 1000+ views on various social media platforms.
“Integrators were also impacted up to some extent but because of better farm management, animal health, efficiency, etc. they were able to recover in a better way compared to the unorganized sector which is still on its way to recovery,” said Mr. Shiva while sharing his perspective on the industry.
“The industry was expecting to come back to normalcy in the first quarter of the year but because of bird flu that has not been the case so now, it is yet to be seen how the recovery would be in the next quarter,” he added.
According to him, COVID-19 resulted in the following market trends:

  • Informal to formal market transition
  • Integration of the industry from upstream to the downstream side
  • Better consumer awareness

COVID-19 turned to be positive for Indian poultry industry
Mr. Gulrez Alam, Director, IB Group shared his experience as an integrator about the challenges and impact of rumors which adversely impacted the demand.
“As an industry, we have seen challenges in operations, production, logistics to everything. Resilience is the key and the whole industry responded very well,” said Mr. Alam.
“We came out well in May onwards when lockdown started to stabilize and consumer awareness also increased about the importance of nutrition to build immunity. This negative of COVID-19 turned out to positively impact the industry,” he added.
Amiya Nath, a renowned feed professional and Vice-President of Japfa Comfeed India divided the last year into the following three parts:
COVID link (Jan-Mar 2020) – proved to be the worst period in the history of the Indian poultry industry
COVID rule (April-June 2020) – laid down new rules and there was a medium impact
COVID life (June-Dec 2020) – great recovery
“Since the start of the pandemic, employee safety was our first priority. June onwards, business-wise it started to improve especially due to government support of announcing poultry as an essential good. Internationally also, we revived in the second half of the previous year,” he commented.
Genetics plays a vital role in the poultry industry which along with better farm management can bring more profitability to the farmer. But everything coming to still due to COVID-19, what has been the impact on a genetic company? Mr. Marc Scott, Manager, Aviagen India said it takes 6 months before the product comes into production and hence business-wise, we were least impacted.
“Planning and communication were the keys. Biosecurity measures followed at GGP and GP farms helped really well. Still more research needs to be done to protect the birds from poultry diseases like Avian Influenza (AI),” added Mr. Scott.
Last year feed prices remained low and margins were better for the broiler industry but volumes were low.
“Challenge of the pandemic was unexpected but we managed well due to good price management by our team. This period taught us to finetune ourselves in terms of price-risk management, inventory management, and better planning. This has been the same with integrators but smaller producers were badly impacted. Though we also came up for the rescue of layer farms where we helped them with emergency supplies and also built new customers,” stated Mr. Selvan Kannan, Chief Technical Officer with Noveltech Feeds (a Goldman Sachs company).
Quick-Service Restaurant (QSR) chains are getting back to normal. The results of listed chains in India showed Oct-Nov sales to near to normal (as that of pre-COVID levels) even retail stores are performing above pre-COVID levels in terms of generating sales. But overall chains are still impacted.
“It was a challenging time but also an opportunity as a lot of consumers shifted from live birds to the processed category where startups like Licious, freshtohome, etc. done an excellent job and a lot of new players are coming into this segment. The main challenge was QSR was not the product selling but the time limit for home delivery or take away. But as the situation improved, things started turning out, chains like McDonald, Dominos, etc. started to coming back to the normalcy of 80-85% to pre-COVID levels and some reached even 100%. There are positive signs for the processing industry,” said Mr. Bhupinder Singh, MD and CEO of Vista Processed Foods.
2021 – A year of hope
Bird flu scare started hitting since starting of the year 2021 while on the market side, B2B segment -hotels and dinning still needs to recover. But consumer preferences are changing and restaurants are adapting to the new trends.
“The restaurants are becoming innovative; the trend of protein consumption is going up. In QSR, prior to COVID-19, veg sales were better compared to the non-veg segment but this has been reversed. More innovative chicken products started coming into the market. Though in the case of restaurants, it is yet to place a proper system for purchase as consumer trust is still missing. While due to better trust, modern chains on QSR with traceability and backward integration of the meat have seen growth. I see good growth in this category for 2021,” commented Mr. Singh.
Consumer engagement
In India, there are still 90% traditional stores while 10% modern stores. Consumer awareness still lacks and as an industry it is high time to start investing in marketing and branding.
“Consumer engagement would result in better consumer awareness, like the concept of 4G restaurant introduced by KFC where they are taking its customers’ survey that would also bring consumer awareness,” said Mr. Nath.
“Chicken and egg should be termed as immune supporters as these are the best source of proteins helping in immune status and it might also help to fight other miscommunications created by various vested interest,” added Mr. Kannan.
“As the consumer is not well informed that is why various rumors impact the consumption badly. But in the case of AI, we have to deal together as an industry with assistance from the government,” commented Mr. Scott.
Technology – A key driver going forward
Consumer preferences are changing with a better understanding of the relationship between complete nutrition and immunity, and the Indian poultry industry is adopting these changes. “I see a 50-100% increase in processed chicken from the base that the industry had pre-COVID. The only challenge is the supply chain downstream towards the processing which is only possible with the adoption of technology on both upstream and downstream side,” remarked Mr. Alam.
For the feed industry, it has always been a roller coaster ride. “Price fluctuation, availability, etc. are issues faced regularly by the feed industry that’s why we started forward buying and planning our procurement. To ensure quality supply of raw materials which otherwise is a big challenge, Noveltech has also recently invested 100 million dollars in a solvent extraction plant,” acknowledged Mr. Kannan.
It is important for the farmer to be equipped with the technology and that is true for both whether it is a new farmer planning to come into the farming or someone who is already into farming. It is capital-intensive.
“Until and unless farmers upgrade and invest in technology and environment-controlled poultry houses we will not have a bright future for the industry. With technology, the bird will be better protected, farmers will have better income and there will be lesser use of antibiotics or maybe in longer run no use of antibiotics at all,” said Mr. Alam.
Is integration the way forward?
Poultry farming is a science that needs regular up-gradation. “It would be more ideal for farmer to focus on farming, feed miller on feed milling, and chicken processor on processing. In India, almost every farmer produces his own feed which is not the case with the western markets, where feed companies are offering feed even to the breeding companies. In such a scenario, more innovations can be expected and if feed companies are able to produce on a large scale and become competitive, even a small-scale farmer should be able to make the profits,” opined Mr. Kannan.
Country birds – is it sustainable & economically viable?
Country birds are more immune but there is a question of business viability in terms of FCR or weight gain. “Though country birds are in India for a long time but it gained a special identity during COVID time. When commercial broiler prices were crashed desi bird was sold at Rs 300-400. For the entire last year, country bird placement was increased by 50%. Due to encouragement from the government and small farmers getting into technology to improve the efficiency of country birds, I see this segment may take a different shape in the coming years,” commented Mr. Nath.
Better immunity and survival make country birds an ideal option for rural farmers. But in commercial farming, there are many other factors. “It may not be fair to compare farm birds with country birds as farm birds are totally commercial breed. It has been developed in such a way that it is very sturdy and resistant, requires less vaccination, and has better immunity to survive in open houses so very suitable for rural farming,” said Mr. Kannan.
“Broilers, free-birds or country birds is a consumer choice. Looking at the increasing consumption in India, the country bird is going to be around. But consumer demands clean hygienic meat which is a question in terms of country birds, going forward sustainability and carbon footprint also become a concern as these birds take longer time to get to the desired weight. A country like India, needs a cheap source of protein, while country birds need land and yield a higher FCR, hence it won’t be a cheap source,” said Mr. Scott.
Going forward
Genetics is a continuous process; better birds have been developed and they continue to be developed for the future. “We at Aviagen have birds for all type of market segments, today we are already developing the birds for the future beyond 2025. Processing, controlled housing, and automation are the upcoming market trends in the Indian poultry industry,” said Mr. Scott.
The role of nutrition cannot be understated whether it is increased egg production from 140 eggs (4 decades ago) to 330 eggs (presently) or chicken which used to grow in 65 days while today gains same body weight in 32-35 days. “Breed, feed, farm management – all have a role to play in such improvements which is a continuous process and there is a lot of development going on globally. Though India is doing great in terms of nutrition still it is a unique country in the globe with so many alternate raw materials available which are not there even with the neighboring countries. Using these alternative raw materials with little more investment into the enzymes or technologies can help to produce cheaper egg, milk, and chicken in India,” commented Mr. Kannan.
“Improved quality can protect the Indian market and can also provide us with export opportunities. FSSAI coming into the picture in July is a good indication to upgrade the quality standards and if we invest into food safety, antibiotic-free chicken then obviously we will be able to promote the local consumption and also be eligible for exports,” he added while discussing the scope of the Indian market and future trends.
“On the retail side, downstream companies going upstream and vice-versa. A lot of companies are going into backward integration. We see a lot of start-ups going into backward integration and poultry people coming into poultry processing,” stated Mr. Singh.
“I see the second-generation poultry farmer doesn’t want to be in the same industry and this is due to a generation gap. Technology can change their mindset as it will not only give better performance or better scale to the farmer but also longevity in terms of continuity of business with their next generation,” added Mr. Alam.
“On the future of supply-demand in India, India should remain self-sufficient at least until 2025. India with 1.3 billion people and per capita consumption of 3.5 kg of chicken and 65 eggs, has a great scope of growth,” said Mr. Nath.
Prof. G Devegowda, a renowned nutritionist joined for the concluding remarks. “Whenever we have bird flu in the country there is a drastic reduction in the market price causing huge economic loss to the producer. The cause of recent bird flu is migratory birds but apart from that, it is also seen spreading through country birds. The reason is poor biosecurity measures, no vaccination, and poor management in backyard farming,” he stated.
“All the stakeholders involved in country birds farming should follow the vaccination, improve management practices,” he suggested.
In the COVID times, consumer awareness has increased about animal protein consumption and better immunity, and hence the consumer preference has changed which resulted in increased consumption of chicken and eggs.
“Now the consumer is switching from live bird to processed chicken meat and there is an increase in online sales and take away. But the retail outlets selling live birds should improve hygienic conditions. As India is still 90-95% live bird market,” said Prof. Devegowda.
“Some of processed chicken outlets mention chicken to be free from hormones and steroids which might benefit them for a short period but negatively impact the overall industry. Such practices should be avoided,” he added.
Sustainable poultry production can take India to newer heights. The first step is to ensure efficient use of natural resources like feed, water. “There is a tremendous improvement in terms of Feed Conversion Ratio (FCR) compared to the year 2000 when FCR was 2.5 which is 1.5 in 2020, and 70% less water usage compared to 2000. This resulted in lesser requirements for raw material and land. But there is still a scope of improvement as 25% of feed goes undigested producing nitrogen and ammonia. So improved digestion by using enzymes and other technologies should be our next target,” stated Prof. Devegowda.
You may access the videos on the YouTube Channel of Benison Media.