It is an accepted belief that human beings began their journey as a hunter-gatherer, in order to feed and sustain themselves. As observed by the American Association for the Advancement of Science, stone tools for butchering meat and animal bones with corresponding cutmarks first appear in the fossil study of records going back to 2.5 million years.
With the advent and advancement of river bank civilizations and settled agricultural practices, the significance of animal rearing was further recognized, wherein evidence suggests that animal husbandry as an auxiliary agricultural practice began at least about 10,000 years ago.
Napoleon Bonaparte is believed to once famously said, “An army marches on its stomach,” referring to the importance of food provisioning in a war. However, this comment has a broader reference for animal husbandry, as the quality and quantity of animal-based products are directly correlated with the quality of feed, which in turn, is directly dependent on the quality of feed raw materials so utilized.
INDIA IN THE CONTEXT OF GLOBAL FEED PRODUCTION
As per Alltech’s global feed survey 2016, the global commercial feed production reached almost a billion tons, with China (180 million tons), USA the U.S. (174 million tons), Brazil (69 million tons), India (32 million tons), and Mexico (31 million tons) occupying the top 5 spots.
The analytical observation made here focuses on two points; the share of India in overall global feed production and its relative performance among the top 5 providers. Regarding the former, India has a mere 3.2% share of global feed production, and incorporating the latter, stands around a sixth of 18.1% share of China and 17.5% share of the USA.
Within India, some key trends are driving the consumption of animal sourced products, which has an impact on animal feed market, and in turn, the animal feed raw material market. As reported in the lower house of country’s parliament in March 2017, India currently leads the global milk production with 155 million tons of production. Similarly, the production of eggs and meat has also increased by over 6 and 8 percent respectively in the first half of 2016.
In terms of feed raw material production, agricultural commodities like maize, soybean, rapeseed, and groundnut are witnessing an upward trend, driven not just by their use in human consumption, but the application in the feed industry.
INDIA: TOWARDS A GLOBAL FEED RAW MATERIALS SUPPLIER
Owing to rising disposable income levels in the emerging economies and increase in health and environmental concerns in developed economies, there is a growing demand for organic based animal sourced products. Developed economies, specifically, are facing a supply side shortage, and this is precisely where India has a potential to satisfy the global demand. In the United States, for instance, the demand for organic certified animal sourced products has multiplied manifold in the past few years, with organic certified broiler demand growing about 20 times, layer demand about 9 times and turkey demand about 100 times during the years 2000 and 2014.
ORGANIC FEED RAW MATERIAL
As per the agricultural experts with MarketsandMarkets, India, as a supplier, has huge opportunities in tapping the organic feed raw material export market. This insight is based on the fact that though India currently ranks 15th in terms of global organic agricultural land, given the state backing through the National Programme for Organic Production which targets bringing half a million acres of land area under organic farming in three years with allocation support of over INR 400 crores, major developments are on the verge of happening. At the same time, looking at the in-house potential, the domestic organic food market itself is forecasted to cross USD one billion.
In terms of global trade, the country exported over 165,000 tons of organic products during the year 2012-13, with feed grade soybean accounting for over 40 percent of total volume.
NON-GMO FEED RAW MATERIAL
As far as food and feed is concerned, India has stayed away from the use of genetically modified crops and currently, only cotton production is based on GMO seeds to obtain fiber. An interesting observation here is the rising global demand for non-GMO labelled feed, with poultry sector being the major driver.
With the potential already in place, the requirement is of a shift in production pattern towards adherence to global sanitary and phyto-sanitary requirements. Also required is a mechanism to analyze, grade and label the feed products produced utilizing the non-GMO food crops.
PRECISION NUTRITION FEED MATERIAL REQUIREMENTS
Precision nutrition is based on the identification and satisfaction of specific requirements of individual livestock, rather than using the same technique and material for the entire batch. This practice is aimed at optimal nutrient composition, improved nutrient efficiency, cost optimization and real time monitoring and analysis on the back of technology. Apart from this, FAO highlights the sustainable aspect of this practice, as strategic supplementation of nutrients enhances rumen fermentation digestibility, which stimulates the feed intake, and ensures sustainable production through the reduction of methane and nitrogen excretion.
This technique also incorporates the traceability of feed, in terms of its source and other production dynamics. Specifically given the growing trend for organic and non-GMO, India has a lot to gain in terms of being the required raw materials provider.
Given over 7,500 kilometers of country’s coastline and decreasing area under the cultivation of food crops, it is apparent that we need to tap upon and rely on marine options in the near future; backed also on its environment-friendly aspect.
Seaweeds are plant-like organisms attached to rocks or other hard substrata in the coastal regions and are used in agriculture for crop quality enhancement, in animal feed to produce feed additives, as well as in human consumption.
MarketsandMarkets projects this market to reach around USD 18 billion by the year 2021, growing at a rate of over 9%. Similarly, its usage in animal feed is also expected to reach half a billion dollars by the same year.
FUTURE OF INDIAN AGRICULTURE
Given the current state of agricultural sector in the country, in terms of land holding dynamics and lack of mechanization and farm level investment, there is some expected internal restructuring in the times to come.
Contract farming is already an adopted practice in the country, with global brands venturing to occupy a share in processed and non-processed food market, through a backward supply chain integration towards farms. With state nod to 100% FDI in multi-brand processed food retailing, this practice is going to be a major trend in medium to long term. However, a challenge that remains is the marginal nature of landholding structure, which prevents the buyers from entering into multiple purchase agreements, owing to its adverse cost aspect.
As per MarketsandMarkets agricultural research head, Indian agriculture is on the verge of a phenomenal shift, as the future demand dynamics will promote cooperative model in crop production, like that witnessed in milk production, and will enable the integration of farmers on production level to promote better produce and adherence to the global phyto-sanitary requirements.
Apart from this, given the liberal nature of policies in the past few years, a consolidation is on the cards within the industry, with major players leaning backwards towards the farm level production. This entails bringing a large number of scattered land pieces into a consolidated one, for the purpose of planning and production, and will enable the increased mechanization and rise in farm level investment.
These trends, going hand in hand, will give a customer orientation to the industry, and the focus will be on providing customized solutions, rather than as-is production, which is the trend currently. Apart from this, the already evolving regulatory framework will witness changes towards further liberalization of this sector, to the benefit of both the consumer and producer’s surplus.
THE BEST WAY TO PREDICT THE FUTURE, IS TO CREATE IT: ABRAHAM LINCOLN
India, today, is a verge on becoming a force to reckon with, in terms of its supply side potential for the animal feed industry. Given the potential in satisfying the demand for organic feed, non-GMO based feed, commercial seaweeds and also precision nutrition feed requirements, the country has a lot to gain out of global demand-supply mismatches.
To conclude, this potential in satisfying the global feed raw material demand will require an overhaul of the supply side of feed raw materials in the country. Cooperative models, industry integration, liberalization of investment, and dilution and even removal of archaic colonial era laws to create a countrywide market for agricultural products is not just the need of the hour, but the inherent pattern that will be witnessed in the times to come.
by Syed H. Rizvi & Lalit Fulara, Marketsandmarkets