Present and Future trends for Indian Feed Industry by Dr. P E Vijay Anand, Deputy Regional Lead, USSEC Asia subcontinent – an expert who knows tricks of the trade quite well. Below are the excepts from the interview:
Please give us some idea about the soybean and soy meal consumption in India and also in the Asian Sub-continent over the last decade. What changes do you expect 10 years down the line?
Based on USDA’s long term (16/17 years) data on Indian soybean, soy meal production and Indian soy meal consumption, the following can be deduced – Average production of soybeans for 16/17 years was 8.17/8.33 MMT; low of 4 MMT and a peak of 12.2 MMT. The peak of 12 MMT which was the highest ever produced was achieved only once. Average production of soy meal for 16 years was 5.52 MMT with a low of 2.69 MMT and a high of 7.72 MMT. Domestic consumption soy meal grew 3.66/4.00 times in this period while soybean and soy meal production grew only 1.65/2.22 and 1.38/2.00 times respectively. If this is the trend line evident to our industry/nation, then an urgent action is required to address “Raw material” security with reference to soy meal which is a dependable, consistent source of protein for the feed and human food industries. (Note the two figures for example 8.17/8.33 are for 2015-16 and 2016/17 respectively. Because India has a better crop in 2016-17 it is important to have current updated comparisons).
Relying on 10-15 years forward data/forecast is not a good business strategy – it’s good to keep that data as a guide and a motivator but it’s good to use a shorter window to assess opportunities that will allow one to get into action. The Indian market scenario is rapidly changing, no matter what subject one picks on. Opportunities are on the rise and so is demand for efficiencies and the desire for cost savings. Talking on the subject of “Nutritional security” – this is not new to us; a whole arena of problems and opportunities exist. Among the young in India, it’s a popular saying that every 3-4 years there is an evident generation gap. This in a way indicates speed at which India is transforming. I think we would run out of stock of soy meal v/s growing demand in 3-4 years or cost effectiveness will trigger users to ask for soy meal that suit their changing business models.
Here is an analysis for the past four years (shorter window). Soy meal consumption change for the period 2012-13 to 2015-16 is positive by 1180 TMT; soy meal production change is negative by 4000 TMT i.e. it is positive by 33% and negative by 46% respectively. With the current year’s production in a much better state, we would expect the negativity to cut down to some extent. Prices are better at this moment and if this continues till the next crop, soy meal usage in animal feeds will increase further, adding to consumption growth.
Times are changing. A few years back India had surplus meal on hand but due to growing demand (as seen from the data), the surplus is gradually dwindling. We have seen that the animal feed industry is consistently using 300,000 – 400,000 MT as incremental soy meal volume each year. The main drivers for this volume comes from usage by commercial broiler, commercial broiler breeder, commercial layer, fish feed and the shrimp feed industries. USDA has estimated Indian soy meal consumption at 4.70 million tons in 2015-16 and forecast that it would be 5.20 million tons in 2016-17.
Viewing the region as a whole (2012/13 to 2016-17) – demand is growing very rapidly in the Asian Subcontinent (South Asia) which is forecasted to be 47.3% higher in India, 192.7% higher in Pakistan and 99.4% higher in Bangladesh. Overall demand in the Asian Subcontinent is forecasted to be 72.6% greater in 2016/17 that in 2012/13, the greatest percentage demand of any region compared to other world markets for meal. I think this is something everyone stakeholder in the feed industry should be aware of. In 2015-16 a total of 7.76 million tons of meal has been consumed in the Asia Subcontinent (Bangladesh 1.169; India 4.710; Pakistan 1.486; Sri Lanka 0.215; and Nepal 0.180 million tons). To produce this volume of soy meal, about 9.4 million tons of soybeans would have been processed.
What scope do you find in Aquaculture market in India and its growth in North India?
Consumers for farmed freshwater fish exist in North and East India therefore this is a potential market for aquaculture products. Fish is also considered as a global “protein food”. Water is better supplied from the major North Indian rivers as an essential input for Aquaculture. The sector has not picked up much in North India given the potential/factors mentioned above. Probably there is lack of knowledge on this sector or lack of entrepreneurship. Putting in efforts to improve this gap will improve the industry in North India. Based on what I discussed about chicken, one of the facts (protein for convenience) is probably not being met with fish because of inter-muscular bones in the flesh of fish (particularly carps). This is a deterrent for most of the Indian consumers. To overcome this constraint – India has to make reforms to help entrepreneurs produce new species, high value fish or fish with no intramuscular bones. Added to this processing and presenting fish protein in a customer friendly manner will knit together all opportunities for North India and India in general. Everyone knows fish protein is healthy and to make this more acceptable – hygienic post harvest handling, product availability and knowledge on fish products are educational opportunities that will help improve this industry. Note that India has a world hallmark of being the second largest country in the world (after China) for farmed fish production as per FAO.
With better production of soybean, India is expected to export 1.8 MT of non-GMO soybean meal to Japan, Western Europe and France. Your thoughts on India’s soybean export.
I agree with Indian exports at the estimated 1.8 million tons this year. Indian soy meal is priced favorably because of a good crop in 2016-17 in . As per the Solvent Extractors Association of India – 7,33,527 MT of soy meal has been shipped to off-shore destinations. It is estimated that about 500,000 MT has been exported to India’s neighbors, mainly to Bangladesh. Considering these trend lines the forecasted exports can be achieved.
There has been lot of research going on Alternative feed raw materials like DDGS, Sorghum, canola meal and many more. What is the predictive future of these alternative feed ingredients for usage in poultry and livestock industry?
I would think Soy meal still rules the protein meal market. This is quite evident from USDA’s assessment that global soy meal consumption in 2016/17 (225. 071 million tons) which is estimated at 47.396 MMT greater than in 2012/13 (177.675 million tons). That would be an increase of 26.7% which is amazing. This is because soy meal is time tested and has performed on multiple animal species across the globe. Other raw material will no doubt take positions and demonstrate proportional increases in usage. The key to higher usage will be determined by unchanged and or improved animal performances/ efficiencies and consistent supply and quality of such ingredients to support the growing feed industry. Asia Subcontinent’s feed industry has produced 43 million tons of feed in 2016 as per Alletch’s 2016 Global Feed Survey and this is bound to grow further, calling for raw material need/security.
Consolidation of industry is considered as a huge unknown that can drastically change the scenario of worldwide feed industry; please share your observations for consolidation of Indian industry?
We have spoken about increasing efficiencies and cutting down costs as two major factors that will definitely come into play. These go hand-in-hand when the feed industry makes improvements. Consolidation is for improving efficiencies and profitability at all stages of the value chain. When we say efficiencies – it pertains to raw material sourcing, raw material performances, analytical methods, feed mill machinery, processes, animal production, marketing, value addition and the kind. Any business model thrives on these basics to try and get the best on their balance sheets. Imagine if one could save fines produced in a feed mill and calculate power, labor, feed throughput loss, re-cycling cost etc on a large mill for a period of one year, it could be pretty significant. Similarly if one could use power saving equipment in a feed mill these savings would show up on profitability or serve as a resource to pay other petty bills. If one were to adopt good logistic mechanisms and cut down process, this would translate to savings. If we are able to produce more feed in fewer mills, this will increase the amount of feed produced and cut down costs. If more animal products could be produced using less land or water – the industry stands to benefit from efficiencies. Based on the few instances quoted, I would think consolidation is the way forward.