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Sector Study: Animal Feed Industry
Introduction: l The human population is growing rapidly and so is their demand for consumption of animal products. The rise in the standards of living has necessitated that India expands its market in the areas of animal feed and livestock production. The increasing commercialization of livestock production and compulsions to improve productivity in face of intense competition in the liberalized and globalized economy has resulted in massive increase in derived demand of animal feed in the country-side. l Animal feed industry is broadly classified in two main categories viz. 1. Cattle feed industry and 2. Poultry feed industry. While the former has not yet developed to any sizeable extent the latter has expanded in an organised fashion. Only some sporadic efforts have been made to undertake cattle feed industry on commercial lines and with limited success. However, there is a growing realisation on the part of all concerned to develop this industry so that composite nutritious feed may be made available at reasonable prices to cattle farmers. Terminologies used for different types of animal feeds: l Concentrate: High value feed materials generally rich in protein and nutrients. l Roughage: Bulky and low value feed stuffs, low in protein but rich in carbohydrates. l Compound feed (Balanced concentrates): Customised feed formulation containing all the feed ingredients in balanced proportion. l Mash: Type of compound feed available in powder form. l Pellet: Type of animal feed available in small cylindrical bullets. 1
The Agribusiness Book : Opportunities, Challenges & Business Strategies
Starter ration (for broilers): Mash or pellet containing high protein and low energy. Finisher ration (for broilers): Mash or pellet containing low protein and high energy. Feed supplements/Additives: Generally added with feed for enriching nutritional value and improving storage quality.
Reason for low usage of compound feed: The share of compound cattle feed manufactured by the industry, in relation to the overall potential, is low in India for the following reasons: l The cattle population is fragmented and spread over large parts of the country. Farmers’ low level of education and strong traditional beliefs mean that there is generally little awareness of compound cattle feed. l More than 50 percent of the country’s total milk production comes from a very large number of low-yielding cows and buffaloes. A further 25 percent of milk production comes from buffaloes and only the remaining 25 percent of the total is produced by cross-bred and improved cows. l Industrially manufactured compound cattle feed has proved its value for cross-bred cows and buffaloes but not for low-yielding cattle because of their genetic limitations. Home-mixed feed is very frequently used for buffaloes and low-yielding cattle. Livestock industry value chain:
Sector Study: Animal Feed Industry
The livestock value chain describes the full range of activities which are required to bring the product from conception through the different phases of production. This approach encompasses the whole food chain from primary production to final consumption. Stakeholders include farmers, other suppliers, animal feed manufacturers, milk and poultry farmers, dairies, slaughterhouse operators, food processors, transport operators, distributors, wholesalers, retailers and consumers, as well as governments. Value chain of livestock industry represents the key components contributing towards its performance. Feed industry is the cornerstone of the animal protein value chain. Studying the trends upstream and downstream of the sector will give the animal feed marketers a better insight of the industry. The downstream component such as volatility of the input supply and input prices has an impact on the feed industry. Similarly the upstream components including the practices followed in the farming model, changes in the processing sectors and the final demand for the livestock products in the form of meat, milk, eggs, wool etc by consumers also has an impact on the feed industry. The buying and selling of cattle is an important livelihood activity across rural India. However, dairy farming for most farmers is not profitable when one imputes the full economic costs including the cost of labour. Although there are over 70 million dairy farmers in India today, they are often unable to turn dairy farming into a profitable activity due to constraints with respect to access to markets and good prices, unavailability of inputs such as artificial insemination, quality feed, lack of knowledge in best practices and of customised cattle finance products. The first priority to encourage farmers to invest in dairy farming is to help them get a good and secure price for their milk. A farmer who can predict his/ her cash flows and receives a price that depends upon quality has an incentive to increase involvement in dairy farming and to adopt scientific practices that will improve the quality and quantity of the milk produced. Once a market has been established it can be leveraged to its maximum benefit by increasing productivity. The major constraint that farmers face here is in terms of feeding practices. Though farmers have access to low cost fodder this is not necessarily an optimal solution since poor nutrition also leads to less than optimal milk yields. Farmers also need to purchase inputs including fodder and concentrated cattle feed to supplement the diet. In addition, there are costs linked to artificial insemination to ensure that the animal becomes pregnant and continues to produce milk, as well as the ongoing costs of veterinary health services.
including some of the most populous ones e. l Obviously. China. These predictions show a massive increase in animal protein demand.800 feed mills. Such a calculation may be more reasonable at predicting the future trends. more than 80 percent of this feed was produced by 3. However. and India. Excluding these two countries. Egg production will also increase by 30 percent over the same period. much of the growth has been taking place in a relatively small number of countries. including 600 million tonnes of compound feed (FAO 2004). It is impossible to calculate the feed use of other ruminants and this is done here simply to account for the known additional feeds that are used. Pigs convert at 3:1 and have a 60 percent carcass yield. the limitations must be noted.000 million tonnes of animal feed is produced globally every year. these are very simplified assumptions. Challenges & Business Strategies Global scenario: l FAO and other institutions suggest that global meat production and consumption will rise from 233 million tonnes (Year 2000) to 300 million tonnes (Year 2020). Egg production has a 2:1 food conversion ratio. given that growth will be mainly in intensive systems. poultry. and milk from 568 to 700 million tonnes over the same period. 3. Growth in World animal feed industry: l As reported by FAO (Year 2004) around 1.The Agribusiness Book : Opportunities. 2. l However. it went up from 11 kg to only 15 kg. The growth in demand for livestock products suggests that there will be a consequent rise in demand for animal feed not only of cereals but of other feeds and particularly proteins. given the diversity of production systems. dairy cows and other ruminants. and the increasing affluence of the emerging economies. 4 . l It is possible to make broad calculations based on assumptions concerning the use of feed for pigs. 4. The demand for animal feed can then be projected after making following assumptions: 1.g. Including these two countries. l Competition from the bio-fuel industries for grain is however likely to impact upon the feed sector. needed to satisfy the growth in the human population. 3 litres of milk is produced per kilogram of cow feed. and 60 percent of the world total was from 10 countries (FAO 2004). Brazil. Broilers convert at 2:1 and have a 70 percent carcass yield. As of 2004. the per capita meat consumption in the developing countries went up from 11 to 23 kg in the 2 decades to the mid-1990s.
l Given that India is the largest producer of milk globally and also the fifth largest poultry and shrimp producing nation. since animals reared for their meat require supe5 . the opportunity to grow in the animal feeds market is huge. This forces the industry to comply with industry standards and produce quality foods. The demand for feed additives is related to animal feed production which in turn is dependent on the steady demand for milk.Sector Study: Animal Feed Industry Source: FAOSTAT Projected world growth in demand for animal feed (Based on existing feed conversion ratios and carcass yields) World Compound Feed Production Million Tonnes 700 605 575 604 612 614 626 600 537 590 597 586 591 597 500 440 400 370 300 290 200 1975 1985 1995 1997 1999 2001 2003 2005 Source: Feed International January 2006 World compound feed production Key drivers of animal feed industry: l India has the largest livestock population in the world. The present animal feeds capacity looks puny when compared with the latent market that exists. meat and poultry. l One of the key drivers of feed additives is consumer demand for guaranteed safe foods. this is a welcome statistics. The real challenge is convert the unorganised traditional raw material feed users to compound animal feeds and here lies a tremendous growth potential.
growth of organised dairy production and changing focus of farmers from treating to preventing diseases are other factors driving growth in the animal feed market. The professionalism of poultry industry. increase production of intermediate products such as animal feed and feed additives. which would. the key driver for growth is the willingness of owners to spend more on the health of their animals and the ability of veterinarians to meet that need. particularly in the Middle East. The increased demand for naturally reared meat often results in the expansion of livestock production. The human-cattle bond has a high economic ceiling and the animal feed industry has recognised the potential of this market segment. the buoyancy of the meat trade. Challenges & Business Strategies l l l l l rior feed with optimum balance of different nutrients.The Agribusiness Book : Opportunities. Meat production in the World: Present & projected 6 . rising export opportunities. especially with pork producers increasingly demanding substitutes for growth promoters. in more recent years. The growth drivers behind poultry industry in India are growing processed chicken market. in turn. Legislations such as the ban on antibiotic growth promoters (AGPs) in the European Union compel the industry to discover alternative feed ingredients. This requirement for meat is likely to improve sale of feed grains and protein meals. better penetration of real good chicken through increased brand building efforts and expansion in value-added products. The world meat economy has been characterized by the rapid growth of the poultry sector (its share in total meat output went from 13 percent to 28 percent in the last three decades) and. Although animal population has increased only marginally. This demand is driving the growth of the animal feed additives industry. Increasing interest of the government in the health conditions of animals due to the outbreak of bird flu and foot-and-mouth disease has boosted demand for high-quality ingredients in animal feed.
China’s position is somewhat anomalous. being at the top of both imports and exports.Sector Study: Animal Feed Industry Although the United States is by far the biggest exporter of poultry meat. most notably Brazil and Thailand. Chicken meat production in the World: Present & projected 7 . suggesting considerable reprocessing of poultry meat in that country. it is essential to note the importance of a number of developing and emerging economies in this market.
Challenges & Business Strategies l l l l l l Global demand for meat has multiplied in recent years. More meat means a corresponding increase in demand for feed. milk production has nearly doubled and egg production has increased by nearly four times. The FAO data show that livestock production is growing rapidly. Americans are downing close to 200 pounds of meat. it was estimated to be 284 million tons. poultry and fish per capita per year (dairy and eggs are separate and hardly insignificant). In the developing world. Per capita consumption has more than doubled over that period. global meat production has more than trebled. from 568 to 700 million Mt over the same period. confined animal feeding operations. doubling in the last 20 years. Egg production will also increase further by 30%. The world’s total meat supply was 71 million tons in 1961. it rose twice as fast. This is attributed partly to the rise in population.The Agribusiness Book : Opportunities. encouraged by growing affluence and nourished by the proliferation of huge. as will that of milk. Egg production in the World: Present & projected 8 . especially corn and soy. which some experts say will contribute to higher prices. as well as to the increase in affluence in many countries. A joint IFPRI/FAO/ILRI study suggested that global production and consumption of meat will continue to rise from 233 million metric tons (Mt) in the year 2000 to 300 million Mt in 2020. Since 1960. which is interpreted to be the result of the increasing demand for animal products. In 2007. an increase of 50 pounds per person from 50 years ago. World meat consumption is expected to double again by 2050 resulting in a relentless growth in livestock production.
it is quite possible to have an optimistic view of the growth of the livestock industry and its contribution to better human nutrition. the Near East and North Africa. Milk production in the World: Present & projected Indian animal feed industry: l In India.6 percent per annum as in the past. Excluding the transition economies. albeit from a very low base. there is higher growth in the world milk and dairy sector than in the recent past because of the cessation of declines and some recovery in the transition economies (FAO. there are signs. 9 . As per various projections.Sector Study: Animal Feed Industry Consumption of milk and dairy products has some way to go before it hits limits. the rapid progress of the period to the late 1980s (oil boom) was interrupted and subsequently slightly reversed. China has little influence on the dairy sector because consumption has historically been very low. Overall. In this category are the regions of sub-Saharan Africa (with very low consumption per capita reflecting the quasi perennial economic stagnation). have not been participating in the buoyancy of the world meat sector. 2000). Here. Similar considerations apply to the developments in the per capita consumption of milk and dairy products. world demand should continue to grow at 1. particularly in the cities. There are also a large number of small-scale feed mixers who produce feed for local consumption. But many developing countries and whole regions. due in some respects to the collapse of consumption in Iraq. the term “compound feed” refers to feed that is nutritionally balanced and has been manufactured using the facilities of an analytical laboratory and under the supervision of nutritionists. of a change in this culture and an exponential growth in demand. where the need to increase protein consumption is the greatest. However. Such feed is termed “self-mixed feed” or “home-mixed feed”.
The Indian feed industry was worth approximately Rs 45 billion (US$1 billion) as per data of year 2002. the scenario has changed altogether now. 124 million goats. Challenges & Business Strategies l l The feed manufacturing on a commercial and scientific basis in India started around 1965 with the setting up of medium-sized feed plants in northern and western India. A very large population of dairy animals is either grazed or stall-fed on dry roughage of uncertain quality. l The estimates of Indian Livestock Industry Report 2005 of CLFMA (Compound Livestock Feed Manufacturers Association) show that the compound feed (balanced concentrate) produced by members of CLFMA and non-members of CLFMA is about 5 MMT. Availability of sufficient feed resources both in quantitative and qualitative terms is the key factor for the growth and sustenance of the livestock and poultry sector in India. with the growth of poultry industry as well as progress made by dairy and meat industry.The Agribusiness Book : Opportunities. l Dairying in India has emerged as an important sub-sector accounting for nearly two-thirds of the total livestock contribution to GDP with an encouraging growth rate of almost 8-9 per cent.32 MMT. cereal grains for livestock and by-products of pulses like chunnis is about 35. it is still in a very primitive stage. l This dairy sector offers a tremendous opportunuty to feed manufacturers and marketing professionals to popularize the concept of using balanced compound feed. the bulk of that feed is being produced in large part by home and custom mixers. Feed was produced mainly to cater to the needs of dairy cattle as the poultry sector was not developed to that extent at that time and it was restricted mainly to backyard production. l According to a study conducted by NIANP (National Institute of Animal Nutrition and Physiology). 61 million sheep and 489 million poultry (Livestock census 2003). supplying only about 8. the availability potential of concentrates like oilseed cakes. However. 98 million buffaloes. The Indian livestock feed industry is quite old. The total estimated requirement of compound feed is about 60 MMT. bran. According to the association. Market potential of Indian feed industry: l India has a very large population of livestock both of productive and unproductive animals.33 percent of cattle feed and 40 percent of poultry feeds for the country (Year 2005). It sees feeding animals with compound feeds as a route to improve efficient use of the ingredients available. India is bestowed with a huge livestock population comprised of 222 million cattle. This report clearly indicates the gap between requirement and availability. the current estimated compound feed re10 . with the desi (or native bird) kept mainly for the production of eggs. Based on the number of productive dairy animals and the current milk produced by them.
compared with India at less than 1 kg. Although not an exporter. such as Pakistan. A developed country like the United States has an annual consumption of 44 kg per head. can become a potential centre of growth for poultry. but there are only a few organized dairy 11 .Sector Study: Animal Feed Industry l l l l quirement is 45 MMT considering feeding compound feed at 50% of milk production. The poultry sector in India is one of the fastest growing sectors in the country. more than 70 million rural families are engaged in milk production in India. India’s broiler industry is not well organized in the North. China and Thailand have annual per capita poultry consumption levels of 2. small and marginal farmers with limited resources account for 65 percent of the total milk production in the country. India. India is the fourth largest producer of eggs and eighth largest producer of broilers in the world. 20 million good milch cows of local varieties and 40 million buffaloes of good milch varieties. and the dairy industry is spread across the whole country. With the advent of fast-food chains and growing dependence on convenience foods. In the egg production industry. producing about 100 million tonnes per annum. and 9 kg respectively. The remainder of the cattle population is of a non-descript variety and a sizeable proportion consists of bullocks. l Farms are located on the outskirts of cities and within cities. but in the South. and particularly that of poultry. It is suggested that the Indian poultry sector has the potential to grow at 20 percent per annum over the next 10 years. with its very low poultry meat and egg consumption per capita but a population rivalling that of China. the producers have come together to form integrated operations. The current estimated demand for poultry industry is about 15 MMT. Dairy cattle: l Worldwide. A similar situation exists for the egg industry. thirty per cent is still in the hands of small producers. crossed with local cows. Almost all villages have a number of cattle. Landless. l The cross-bred population is either Jersey or Holstein-Friesian. The buffalo breeds are unique to India and produce milk with a fat content of 7 to 8 percent. This confidence arises from the fact that even developing neighbours. There are 14 million cross-bred cows. Cross-breeding was a natural solution to upgrading the milk yield in the absence of high-value imported varieties of pure-bred animals.3. India is number one in milk production. the processed foods sector. is expected to have a growth rate in double figures. India has one of the largest populations of cattle and buffalo in the world. There has been a large increase in egg production which is expected to continue. Unlike many developed dairying countries where large mechanized farms predominant.
12 . Although these figures are low in comparison with those for developed countries. and member farmers started to share the profits from cooperatives. The feed production from cooperatives is about 1. The broiler industry is growing at the rate of 10 percent per annum. artificial insemination. The dairy industry in India is expected to grow. dairy is not so much an industry as a smallholder farming activity. Kerala. Poultry: l India has 150 million layers and 650 million broilers. better organized and continuously progressing towards modernization. competition. the poultry industry in India is more scientific. and that of broiler meat is 1 kg (Year 2006). the industry has great potential to expand because 30 percent of the country’s population (about 300 million people) are developing economically and the demand for poultry products is therefore likely to grow. It is unlikely that India will see the advent of large. loan facilities were made available through banks. The small farmers became prosperous. including education. India is the world’s fifth largest egg producer. Lots of cooperatives have also set up their own modern computerized feed plants. In India. where milk was collected from villagers in quantities as small as 1 litre. Annual per capita consumption of eggs is 40. expansion and survival instincts. Tamil Nadu and the western region of Maharashtra. and gradually started to provide other services to farmers. Poultry farming is hampered in northern regions because of cold conditions during certain periods of the year.The Agribusiness Book : Opportunities. Breeding and feeding management has improved through education. Challenges & Business Strategies l l farms. veterinary health support and feeding. Cooperatives started by supplying milk collection centres. Tamil Nadus’ Coimbatore region alone accounted for more than 30 percent of the total broiler production in 2000. with a total production of 40 billion eggs per year. which are very popular with Indian consumers. chocolate. the States of Karnataka.5 million tonnes per year (Year 2002). butter. although Punjab contributes significantly at around 6% of the total egg production in the country. ice-cream and milk sweets. They have modern milk processing plants from which they produce and market pasteurized milk. Andhra Pradesh. l The poultry industry has witnessed several ups and downs in the last 25 years as a result of unplanned growth and lack of government regulations. account for more than 56 percent of total national egg production and similarly 60 percent of the broilers. Growth in the milk sector has occurred mainly through cooperative efforts. l Compared with the rest of the livestock sector. but growth will be restricted to individual small farmers. butter oil. organized dairy farming in the near future. l In poultry. training.
and that for the broiler breeders to about 0.74 MMT. Thus the total requirement of feed for poultry sector is estimated to be about 14. it is growing at the rate of 10 percent in broilers and 6 to 7 percent in layers and is going through a phase of integration in broilers which is likely to change the face of the industry.64 MMT.Sector Study: Animal Feed Industry l Currently. With the rapid growth of the broiler industry in the last couple of decades. chicken processing.13 MMT (Year 2004). up-to-date processing units. The poultry industry is very modern. environmentally controlled poultry houses. the requirement of feed for commercial broilers has gone up to 5.39 MMT and that for the layer breeders approximately 0. totalling feed requirements for layer birds of 8.29 MMT (Year 2004). except by a small section of people who have backyard poultry where the practice of feeding scratch grains or leaving birds to fend for them is usual. the latest management practices. the latest vaccines and medicines. Although this integration phenomenon is new.65 MMT totalling a broiler feed requirement of 6. The feed requirement for the layer population is about 7. 13 . exports of hatching eggs and excellent feed quality.34 MMT. l Poultry is traditionally fed on balanced concentrates either mixed on organized farms or manufactured by compound feed millers. it is expected that there will be very rapid changes towards integration as more farmers find it increasingly difficult to run farms with marginal profits or negative margins. with pure-line breeding.
Compared to other sectors there is massive need of extension services for technology dissemination in this area of animal husbandry. rearing and management practices. There has been little implementation of scientific husbandry. in the states of Rajasthan and Gujarat. There is. bordering Pakistan. the sheep and goat sector is mostly in the hands of nomadic tribes. India also exports large quantities of hatching eggs to Bangladesh. Singapore. multiracial country whose people hold various religious beliefs and thus few religions shun pork consumption. Swine: l India is a multilingual. Saudi Arabia and Oman and specific pathogen free eggs to the EU for pharmaceutical purposes. the Indian poultry sector is expected to capture a significant share of the export market currently dominated by the United States. there has been a good demand for wool. India has already started exporting shell eggs to gulf countries and egg powder to the European Union (EU) and Japan. l Most of the country’s camels are located in the desert area of the western part of India. a fairly good disease diagnosis and treatment system. Brazil.The Agribusiness Book : Opportunities. Other people 14 . long-established knowledge of feeding and breeding. however. The feed given is very traditional and is mainly limited to grazing in the fields. Maldives. There is a total lack of scientific management practices. goats and camels: l In India. Netherlands and Thailand. with modern medicines and vaccines. By making the quality and cost of eggs and poultry meat competitive. United Arab Emirates. Challenges & Business Strategies Poultry Feed Usage in MMT (Source: CLFMA) l Export markets are also likely to open up as subsidies on agricultural products are phased out internationally under World Trade Organization (WTO) agreements. however. The market in mutton and chevon is in its nascent stage. Sheep. Camels are reared by individuals who feed them local ingredients. genetic studies and scientific feeding practices in camel rearing and the industry survives mostly on the basis of local.
maybe because of the lack of scientific management on swine farms.Sector Study: Animal Feed Industry disapprove of pork consumption. Essential Commodities Act and Harmonized System of Nomenclature (HSN) which deal with the ingredients of animal feed industry. Uttar Pradesh food grains and other Essential Articles. Punjab Trade Articles (Maximum quantity set by different orders) (Maximum quantity=2. Haryana Food Articles Licensing and Price Control. acts and policies which directly or indirectly influence the feed industry.2 t) Punjab Maize Movement Order Punjab Trade Articles (Dealer trade not to exceed 2. Uttar Pradesh Food Grains Act Motor Vehicles Act (Maximum Weight=16. Some of the Government interventions have been shown in the following table. Punjab Trade Articles Support price. Government: Both Central and State Governments influences the business in India. export and import related duties directly influence the cost of production of the industry. Thus the scope of feed industry in terms of demand from piggery is not very bright. Business environment: The business environment of Indian feed industry is influenced by government policies and regulations as well as the association called CLFMA (Compound Livestock Feed Manufacturers Association). In addition there are certain international laws and policies which influence as India has become a member of World Trade Organisation (WTO).5 t) Licensing Order. Swine reared on the streets are very unhygienic and buyers are always suspicious about the source of pork. There are many regulations. local sales tax. so there is no organized pork industry. Government interventions in feed and feed ingredient marketing Regulation Coarse cereals Trade Licensing Government Level Central and state Examples Food Grains Licensing and Procurement Order.5 t) Price control Transport Inter-state Trade Dealer Trade Storage quantity Central and state Central State State Central and State 15 . countervailing duties.
The Agribusiness Book : Opportunities. l To collect. by-products and feed supplements and additives. consultants. l To promote. Class B. students and others. feed additive manufacturers. feed mill personnel. retailer 10 t. The objectives of CLFMA are: l To promote the concept of nutritionally balanced compound feed. oil cakes. hatcheries and milk cooperatives and feed machinery manufacturers. classify and circulate information related to animal feed to its members and government. Punjab Trade Articles Essential Commodities Act. sponsor or co-sponsor surveys and studies. and l To impart training to livestock farmers. CLFMA is gradually becoming a representative of the entire livestock industry and has thus become the main influencer for feed industry. importers. assist. City Wholesalers 50 t. The Product-Feedstuffs and ingredients used in animal feeds: Livestock in India is fed with various types of food grains. l To conduct. veterinarians. City Wholesalers 150 t. retailer 5 t) (Maximum quantity 2. The major ingredients of animal feed are: 16 . Challenges & Business Strategies Storage licensing State Uttar Pradesh Scheduled Commodities Dealers’ Licensing Order. l To offer suggestions to government in formulating policies. Punjab Trade Articles (if quantity >2. organize and coordinate scientific research in the field of animal nutrition. assign.5 t) Essential Commodities Act Punjab Trade Articles Haryana Food Articles (Class A.5 t) Agricultural Produce Marketing Act (oilseed manufacturing is restricted to small-scale enterprises) Oil seeds Trade licensing Central/State Transport State Storage quantity Central/State Marketing Central/State Source: The World Bank Document on the Indian livestock sector review Compound Livestock Feed Manufacturers Association (CLFMA) CLFMA was formed in June 1967 as an association of feed manufacturers and associated industries such as ingredient suppliers.
guar kurma and chunni. mould inhibitors. These shells come from pulses: horse gram. Minerals and vitamins: Cattle feed is necessarily enriched with vitamins A and D3. potato waste. coffee waste. black gram. penicillin residue etc. even more so. prebiotics. maize gluten and molasses. manganese. cobalt and iodine. copper. Calcium and phosphorus are also included. l A special mention should be made of Indian cattle feed’s unique use of hulls or shells. Feed additives and supplements: Feed additives and supplements have played a very important role in enhancing the performance of dairy animals and. spent lemon. maize dust. and these products forms the bulk of cattle feed. probiotics. Cakes and meals: Commonly used commodities of this kind are soybean. The following by-products are also added to animal feed: l Forest produce babul seed. in addition to these meals. l Gum and starch industry guar seeds. zinc. 17 . babul falli. l Food industry Biscuit waste. and trace minerals such as iron. groundnut.Sector Study: Animal Feed Industry l l l Cereals and grains: Maize. Wheat and rice are mainly retained for human consumption. By-products as animal feed ingredients: Some by-products are very nutritious and palatable to cattle. anti-coccidial supplements. sesame and sunflower meals in poultry feed. maize gluten. dhaincha seed. cardamom and ginger. jamun seed. san seed. mango kernel. mung bean and pigeon pea. Others: In cattle feed. yeast sludge. tomato waste. Poultry feed is enriched with all of these and all of the B complex vitamins. cocoa-shell powder. patwa seed. The additives and supplements used are antibiotic growth promoters (their usage is not banned in India). tamarind seed. sorghum and bajra (a type of millet) are commonly used in animal feeds. tapioca milk powder. orange waste. pineapple waste. dhaincha kurma. safflower meal. tapioca spent pulp. others such as cottonseed and copra are used as premium ingredients. extracted tea leaves etc. macaroni waste. enzymes. They include: l Wheat bran. toxin binders. maize cake etc. issapgul chhala etc. mesta seed etc. popularly known as chunnis in the local language. Today they are necessary in any feed formulation and essential for the formulation of a balanced diet. tapioca. l Fruit and vegetable processing orange peel. poultry. rice bran and oil-extracted rice bran. spent ajwan seed. cocoa beans. puwad seed. spent anthia seed cake etc. l Alcohol industry Barley waste. mango seed extraction. l Essential oil industry spent residue of pepper. guar meal. rapeseed. sagaon seed. tulsi seed. grape extractions.
95 million tonnes of solvent-extracted rice bran. about 4 million tonnes of which are used in the starch industry. by-pass fat. The description related to these ingredients is as follows: Maize and Sorghum: l Maize is one of the most important cereals used in animal feed. 18 . Rice bran and solvent-extracted rice bran: Rice bran and solvent-extracted rice bran are by-products.5 million tonnes in human consumption and seed production (Year 2001). fishmeal. Challenges & Business Strategies acidifiers. so there is no price parity between imported and domestically produced maize. Fishmeal and meat-meal were popularly used in poultry feed. India also produces approximately 2. antioxidants. Animal feed commodity production: The commercially important feed ingredients used in compound feed are maize and sorghum in cereals. imports have been approved under open general licence (OGL). India is one of the world’s largest producers of rice. with the exception of some bone-based dicalcium phosphate. There is no export of sorghum and bajra (millet).5 million tonnes. l Sorghum and bajra are very sturdy varieties of millet that can grow under limited rainfall conditions and are popularly used in animal feeds.5 million tonnes in animal feeds and 2. however. It should be mentioned that farmers have faced production problems owing to the bacterial contamination of fishmeal and meatmeal. The annual production of maize is about 10. but the increased production. the Indian feed industry does not use materials of animal origin in dairy cattle feed. Now even the use of bone-based dicalcium phosphate has been banned and mineral-based dicalcium phosphate is used instead. amino acids. which accounts for 90 percent of the total.The Agribusiness Book : Opportunities. A number of these products are imported from developed countries. This was not out of fear of any zoonotic problems but the result of deep-rooted beliefs that the cow is sacred and must therefore be vegetarian. l The import of maize used to be restricted. which is regularly exported (Year 2001). feed flavours and herbal preparations of Indian origin. bone-meal and dicalcium phosphate of bone origin are the common raw materials available for animal feeding. Production of sorghum has remained static. improved availability and better awareness of soybean meal has led to its replacing fishmeal and meatmeal in most poultry rations. milk boosters. non-antibiotic growth promoters. However. The remaining 10 percent is harvested in the Rabi season (November to February). 4. rice bran and solvent extracted rice bran in by-products and oilseed meals. producing approximately 100 million tonnes. l The major crop cultivation is during the Kharif season (June to October). It is interesting to note that. by-pass protein. 15 percent duty and a grain inspection fee to be paid. There are. since April 2000. Feeds of animal origin: Meat-meal. The quality of fishmeal is also very poor.
soybean is the most frequently used oilseed meal and has completely replaced fishmeal in poultry feeds. India’s economy is agro-based but the yield per hectare is a cause of major concern to the country’s farmers and agriculture. they run at only 50 percent of their capacity. For animal feeds. Rapeseed meal is second to soybean meal in production and second to cottonseed cake and meal for cattle feed. which are mixed and diluted with cereals on the farm before they are eaten by animals. 5% Oilseed Meals. Although India has about 600 solvent extraction units. Formulations of Animal feed: l Compound feed manufacturers produce both finished compound feeds (suitable for consumption by an animal without further processing) and protein concentrates. groundnut. The government recognizes this and there are subsidies on fertilizers and power tariffs. the compound feed manufacturers mix different ingredients available to fulfil the requisite make-up of balanced feed. l Manufacturers produce compound feeds to meet specific nutritional requirements. 2% Cereals/Substitutes. Sunflower meal is commonly used in both cattle and poultry feed. Typical compound ration for cattle Meat-bone Meal/Fish Meal. 10% Oil/Fat. whilst ensuring that the specifications of the diet are in accordance with specific requirement. vitamins requirements of different animals. protein. fibre. 35% 19 . Groundnut meal is less popular because of the aflatoxin problem. The government also assures base prices for many agro-based commodities. l India regularly imports edible oil and they have created problems for the country’s crushers. On the basis of energy. l Cottonseed cake and meal are often used in cattle feed throughout the country. sesame and cotton meals and these are used as major ingredients in animal feeds.Sector Study: Animal Feed Industry Oilseed meals: l India produces soybean. sunflower. 4% Minerals & Vitamins. 4% Molasses. 40 % Cereal Byproducts. rapeseed. This is done with help of linear programming to optimise cost.
nutritional standards have been prepared with respect to the genotype.6 8 4. fourth revision.0 0. production and reproduction requirements.6 6 3.25) (maximum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Salt (as NaCl) (maximum %) Broiler Broiler Chick Growing Laying Breeder starter finisher feed chicken chicken layer feed feed feed feed feed 11 11 11 11 11 11 23 20 20 16 18 18 6 3. maintenance methods.specifications. production capacity and phase of production. The Bureau of Indian Standards (BIS) is a central government organization that facilitates discussion between scientists and industry and prepares guidelines and specifications.6 8 4. 5% nutrients. 20 .0 0.0 0. 3% Soyabean Meal. Dairy feeds . 65% Feed standards and specifications: For cattle and poultry. environment. Poultry feeds .6 8 4.specifications.The Agribusiness Book : Opportunities. 2 % Corn.0 0. and quality of available raw materials. BIS standards: Dairy feed requirements BIS standards Moisture (maximum %) Crude protein (maximum %) Crude fat (minimum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Poultry feed requirements 11 22 3 7 3 BIS standards 11 20 2.6 7 4. BIS standards: Poultry feed requirements Characteristic Moisture (maximum %) Crude protein (N x 6. Challenges & Business Strategies Typical compound ration for poultry Animal ByMicroproducts.0 0.0 0. fourth revision.6 Source: BIS. 25% Feed Phosphates.5 12 4 Source: BIS.
feed starter finisher r chick grower breede breede male II feed feed r feed r feed breeder I feed feed feed Moisture 12 12 12 12 12 12 12 12 12 12 12 (maximum %) Crude protein 18 14 16 14 20 18 18 14 16 16 14 (minimum %) Fat (maximum 2 2 2 2 3 3 3 3 3 3 3 %) Crude fibre 7 8 8 10 6 5 5 7 7 7 7 (maximum %) Acid4 4 4 4 4 4 4 4 4 4 4 insoluble ash (maximum %) Metabolizable 2 600 2 300 2 500 2 300 2 600 2 700 2 600 2 400 2 500 2 500 2 400 energy (minimum cal/kg) Source: CLFMA Standards for Compound Animal Feeds. The Compound Livestock Feed Manufacturers’ Association (CLFMA) has also prepared its own specifications which are as follows: The specifications of both BIS and CLFMA are only guidelines and their use as standards is not compulsory.0 -2.0 7.5 7.0 3.0 8.0 14.0 5.0 -2.0 16.5 12.0 22. The animal feed business is competitive and feed manufacturers therefore endeavour to produce feed of the highest possible quality. 21 .0 Source: CLFMA Standards for Compound Animal Feeds.Sector Study: Animal Feed Industry CLFMA specifications for compound feeds: Dairy cattle and buffaloes Characteristic Moisture (maximum %) Crude protein (on dm basis) (minimum %) Un-degraded protein (minimum %) Crude fat (minimum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Dairy Type I special feed feed 12.5 Type III feed 12.0 4.5 -2.0 3.0 12.0 4.0 18.0 Type II feed 12.0 20. CLFMA specifications for compound feeds: Poultry Characteristic Chick Grower Layer Layer Broiler Broiler Breede Breeder Broiler Layer Broiler feed feed feed.
however. buffaloes. The second is in concentrated form for mixing with an energy source. making up the balance with their own formulations. castor. Poultry feed: l Poultry feed is divided into layer and broiler feed. l Various analyses are regularly carried out. An innovative. Feed raw materials and finished products are subjected to microbial counts. Farmers choose their own ingredients and prepare their own formulations. so high-quality compound feed (industry feed) may not necessarily generate a significant improvement in productivity and this has hampered growth of the cattle feed industry. Concentrates are protein sources. Cost is a less important factor because the performance improvements are greater than the cost increases and the birds’ life cycle is short. layers and broilers. Salmonella 22 . There is a high degree of awareness of feed microbiology among the millers of feed. l Compound feed has. tannins and urease activity. The first one is ready-made and is in the form of mash or pellets. cost is the main constraint in using compound feed. Quality management in compound feed: l The Indian feed industry employs the services of qualified nutritionists who are knowledgeable about the nutrition requirements of cattle. Challenges & Business Strategies Feeding practices and the use of compound feed: Cattle feeding practices in India are very traditional. Members of the industry have their own analytical laboratories and either have their own research and development facilities or have access to the research laboratories of agricultural universities or government institutions.The Agribusiness Book : Opportunities. sorghum or bajra to prepare poultry rations. made a major contribution to broiler feeding. Most farmers are reluctant to use compound feed fully. minerals and feed additives. aflatoxin. l Two types of poultry feed are prepared. balanced in amino acids and containing vitamins. The productivity of the cattle is limited because of their poor genetic make-up. They are mixed with energy sources such as maize. instead they compromise by using such feed in proportions of 5 to 60 percent. believing that by these means they are able to pay more individual attention to their cattle. highvalue compound feed can result in increased numbers of eggs. It is only in the case of highly productive animals that compound feed has been able to show its real potential and the importance of technology has been demonstrated. but the risks are too high because of the birds’ long life cycle. formulations and use of feed additives and supplements. ochratoxin. This is an example of excellent coordination among instrument technology. such as tests for amino acids. In the case of layer feed.
Various by-products were considered and their nutritional parameters were studied. Dairy feed can use the genetic potential of Indian cattle at its maximum. in broilers. Major organised players in animal feed industry: Godrej Agrovet: l Godrej Agrovet Limited is a Rs. l In the 1980s subsequent research was conducted on the energy-protein and energy-amino acid ratios and the vitamin and mineral requirements of animals. and on the role of various feed additives in enhancing milk. The quality of Indian feed is satisfactory and innovation will continue. the main focus was on bypass fat and bypass protein utilization in ruminants. l During the next phase of research. l During the 1970s. Indian scientists analysed ingredients for their chemical values and studied their biological values. Agricultural Inputs. with a feed conversion ratio of between 1. The activities of the company are in areas of Compound Animal feeds. All vitamins. and this information was useful to the industry in the initial stages of growth. Plant Biotech. Oil Palm Plantations. the government sanctioned special projects to study the use of by-products in animal feeds. and body weights of 2. 23 . Indian scientists have worked on various aspects of research and development in the field of animal feeds and feeding. minerals and other feed additives are regularly analysed using modern analytical techniques. and contaminated materials are rejected and sometimes destroyed. metabolizable energy values and deleterious factors. l In the 1960s. The feed millers have acquired the latest technologies and modern equipment such as high-pressure liquid chromatography (HPLC) and near-infrared (NIR) analysers. l Research and development work has been conducted on least-cost formulations and usage of synthetic amino acids. The quality of Indian feed in organised industry can be compared with that of any Western feed. Today it is common to achieve a chicken house average of 310 eggs in 52 weeks.0 kg in less than six weeks. egg and broiler meat production.6.Sector Study: Animal Feed Industry l l and Escherichia coli testing and mould count. R&D: Research and development in animal feed is of paramount importance to innovate and meet the emerging demand and satisfaction levels of the customers (farmers).5 and 1. Retailing of Fresh Farm Produce in urban areas. Given the importance of feed ingredients. and rural retailing of a wide range of products including agricultural inputs. Integrated Poultry Business. all Indian raw materials were analysed for their proximate composition. 1250 crores (US$ 297 million as per 2008 data) company. in layers.
By March 2007. Punjab in October of the same year. grain and oilseeds.The Agribusiness Book : Opportunities. dealers and C&F agents. it is a privately held company employing 160.91 million USD) in the year 2008. There are 180 plants worldwide which support the business unit. in 2001. Then they launched Purina® line of poultry feeds. Challenges & Business Strategies l l l Godrej Agrovet is among one of the largest producers of commercial animal feed in India as it has a rich experience of over 3 decades in the business of animal feeds. which was followed by quick acceptance by broiler farmers in Haryana and Punjab. Cargill develops flavour systems and operates a value investing business. Godrej Agrovet acquired Goldmohur Foods and Feeds Limited from Hindustan Lever. This was followed by the opening of a dairy feed business in Rajpura.000 people in 67 countries and had a turnover of $120 billion in 2008. Cargill: l Cargill is an international producer and marketer of food. agricultural. sugar. the Rajahmundry business became a wholly owned subsidiary of Cargill India. Andhra Pradesh in February 2006. Vetcare: l Tetragon Chemie Pvt. and acquired controlling stake in AlRahaba.000 distributors. aqua feed and poultry feed sectors. 2080 million (42. Cargill has a number of businesses in India. which runs broiler farms in UAE. a subsidiary in animal feed develops and markets a broad range of animal feeds and customized animal productivity solutions to commercial producers in 28 countries across North and South America. large and small animals. with operations including the handling and processing of a wide range of products. a Unilever subsidiary in India. Cargill Animal Nutrition started in India through a joint venture with a local shrimp feed company located in Rajahmundry. Godrej Agrovet has gone global and has started international operations too. It mainly has presence in the veterinary pharmaceutical industry. l Cargill Animal Nutrition. l Cargill started its operation in India as a joint venture in 1987. It has a network of over 10. beef. In addition. such as refined oils. Vetcare has a wide range of therapeutic and nutritional products for poultry. financial and industrial products and services. swine. aquaculture catering domestic and over24 . l Animal Nutrition in India serves feed products in these categories: dairy. cotton and animal feed. It is a 25 year old company and had a turnover of Rs. Its production facilities are spread over 40 locations across the country. It has signed a joint venture with ACI Group of Bangladesh for poultry and feed operations in Bangladesh. It has a strong presence in dairy feed. Founded in 1865. Limited is popularly known as Vetcare. Europe and Asia. poultry and aquaculture.
poultry. Latin America. It has a turnover of 35 million US dollar in year 2006. Thus majority of farmers have 1-2 cows or buffaloes for dairy farming and very few birds in poultry farming. It operates under four main divisions to meet the diverse needs of the veterinary and animal farming community they are Vetcare. Small livestock farmers: Smallholder livestock production supports the livelihoods of majority of the poor livestock keepers in mixed livestock-crop system. Post joining hands with Provimi.000 people and has annual sales of EUR 2. Marketing challenges: 1. The Group is actively seeking acquisition opportunities to continue its growth in key markets including North America. regulation of quality and unhealthy competition. Eastern Europe and Asia. lack of standardization. Provimi has 87 production centres in some 30 countries and exports to over 100 countries. Challenges: The growth in animal feed industry faces numerous challenges since it is not a well developed and modernized industry except poultry. and Equicare.Sector Study: Animal Feed Industry l seas market. It exports to over 20 countries. Provimi manufactures products and supplies technical support for all species. Petcare. Anmol Feeds: l Anmol group of companies is a leading poultry feed manufacturer of India. It employs about 8. The first poultry feed manufacturing unit was established in the year 1999 at Muzaffarpur. this results in inability of farmer to follow scientific feeding practices for their animals. one of the giants in Animal Health and Nutrition.2 billion. supply side related issues such as the shortfall of stock of raw materials due to irregular supply of feedstuffs and its ingredients. Bihar. Vetcare introduced many products in Premix and Dairy specialties. rising inflation. The biggest challenge which the industry faces is marketing and supply chain related issues. In the year 2006. Anmol entered the cattle feed segment with brand name of ‘Anmol Super’. 2. with the capacity of 50 MT per day catering the market of Eastern and North Eastern part of India. Vetcare employs nearly 450 employees and has 5 plant locations. including ruminants. which results in nullification of 25 . swine and pets. a Research Farm and Kennel. Aquacare. There are problems of low awareness among the livestock farmers regarding the importance of animal feed. Poor management of animals: Livestock are managed unscientifically including improper nutrition and health care. l The company now has 5 plants located in various parts of the country with the total production of 500MT per day of poultry feed. The Provimi Group is active worldwide in all types of Animal Nutrition and is a leader in all markets where it is present.
7. 5. Low production potential of livestock: More than 50 percent of the country’s total milk production comes from a very large number of low-yielding cows and buffaloes. It is only in the case of highly productive animals that compound feed has been able to show its real potential and the importance of technology has been demonstrated. the relative density of livestock is quite thin. 6. energy and money in concept selling to ensure that the farmer appreciates the importance of compound feed. Generally farmers prepare their own formulations at home and home-mixed feed is very frequently used for buffaloes and low-yielding cattle. The challenge before the animal feed marketer is to remove this misconception in the farmer’s mind and educate him about the advantages of providing compound feed to the livestock. The demand for the livestock products directly impacts the feed industry. 4. As such.The Agribusiness Book : Opportunities. Companies are forced to spend disproportionate time. making up the balance with their own formulations. heavy cost is incurred on distribution and logistics. Instead they compromise by using such feed in proportions of 5 to 60 percent. This has hampered growth of the cattle feed industry because most farmers are reluctant to use compound feed fully. They believe that by these means they are able to pay more individual attention to their cattle as well as it is cost-effective. Since India has a huge geographic expanse. They must understand how it ensures proper and complete supply of all the required nutrients in right proportions. Issues related to quality and safety as well as a presence of 26 . any quality of compound feed given to them. so high-quality compound feed (industry feed) may not necessarily generate a significant improvement in productivity. Lack of farmer awareness: Farmers’ low level of education coupled with strong traditional beliefs means that there is generally little awareness of compound cattle feed. Untapped export potential: India has a lot of opportunities to export commercial animal feed because of the strategic location and availability of human resources. Fragmented livestock population: The cattle population is fragmented and spread over large parts of the country. Underdeveloped drivers of feed industry: Majority of Indian population is facing the problems related to poverty which results in non-affordability of the livestock products such as dairy products and meat. The productivity of the cattle is limited because of their poor genetic make-up. Traditional feeding practices: Cattle feeding practices are very traditional. A further 25 percent of milk production comes from buffaloes and only the remaining 25 percent of the total is produced by crossbred and improved cows. Challenges & Business Strategies 3. Since nutrition can only be effective when all other aspects related to livestock production and management are taken care well. The lack of awareness is crippling the feed industry since it poses a great challenge to the industry.
Sector Study: Animal Feed Industry 8. the elements of distribution system such as distributors. production circumstances. the export potential remains untapped in animal feed industry. wholesalers and retailers. l Location of the manufacturing plant: The inputs for feed manufacturing plant are not available at one place. It addresses various problems such as the bulkiness of product and subsequent high logistics and warehousing costs thus exploiting the various distribution modes and channels. very few private players. The consumption/demand of feed may not support such costs. Supply chain is of paramount importance in feed industry since it captures various parameters ensuing in availability of the product to the target customers. Government though has research centres such as NIANP etc. cost price and information. Supply chain challenges: Supply-chain management has become more important as consumers demand product quality and integrity. Some of the key issues are: l Availability of animal feed: Making the feed available to farmers living in small villages is dependent upon many factors such as proper roads and transportation available to reach the rural areas. Inputs need to be procured from a number of places both from national as well as international locations. This problem is further aggravated by smallholder livestock farmers as well as poor quality livestock holding by the farmers. Indian villages still face the problem of infrastructural bottlenecks and improper rural connectivity. 27 . There is still a lot of gap to be covered in the areas of animal nutrition. the channel support and accurate forecasting of the demand. quality. The five things which may affect the supply chain include food safety. Hence there needs to be integrated management from farm to retail-shelf and this may have profound implications especially on smallholder producers. Product Innovation: Due to presence of very few big players there has been a lack of research and resultant poor innovation in commercial feed.
Lack of standardization and regulation: Though BIS has produced guideline feed standards and the feed industry also has its own guidelines. Challenges & Business Strategies l l l l l Bulkiness: Generally lot of backtracking takes place from the inflow of raw material stage to the outflow of the finished goods. the industry’s principal 28 . Freight costs form anything between 15 to 30 per cent of total cost. to which India is a signatory. Compound animal feed is bulkier and this also results in higher transportation costs if the distance between the feed manufacturing plant and the target customer increases. however. Worldwide. Another feed standards issue that worries both the government and industry is that any changes to existing standards will be slow and difficult to arrive at because of participative conflicts and various lobbying groups. unit transportation cost increases if small orders are received from different locations due to lack of economies of scale. The firms supplying a high quality compound feed has to compete with other smaller players producing not so good quality animal feed and compromise on the prices. Moreover. Thus proper storing of feed is necessary to prolong the keeping quality of feed. Quality and warehousing problem: Animal feed consist considerably high protein which may result in lower keeping quality or else if the feed is provided to livestock it may result in various diseases and subsequent loss of confidence of farmer in company’s product. is resisting this move. all of which want to bring feed additives under their administration so as to increase their own revenues. represented by CLFMA. there exists a high competition and subsequent price wars. appellate tribunals. Problems related with classifications of animal feed supplements / additives for import: The classification of feed additives is a major hindrance to the Indian feed industry. the High Court and the Supreme Court without providing any useful results for the industry. However. Since then.09 of the Harmonized System of Nomenclature (HSN). but the central government has been advising states to introduce their own regulatory standards. has made several representations to the government. but the Indian Government put them into the “restricted” category in October 1995. This results in non-attractiveness of the industry for high quality compound feed manufacturers.The Agribusiness Book : Opportunities. The industry. The feed industry is highly price sensitive and operates on wafer. all feed ingredients are listed under the “free” category for import. In the HSN. currently there is no compulsion to use BIS standards. The industry. the Director-General of Foreign Trade and the Central Excise Department.thin margins which results in erosion of profits. there have been continuous discussions among the drug control authorities. Unhealthy competition within industry: Since the feed sector in India has numerous small and regional players. but these have been round various government departments. animal feed supplements and additives are covered under chapter 23.
Furthermore. hence the industry is highly susceptible to movement in prices of raw materials. l Countervailing duty on amino-acids: The essential amino acids. the industry has several reservations about implementing BIS standards. it cannot support the burden of any kind of taxation. However. soybean. such as DL-methionine. Availability of sufficient feed resources both in quantitative and qualitative terms is the key factor for the growth and sustenance of the feed industry in the country. l Local Sales Tax: Another threat to the industry is posed by local sales taxes. due to various climatic and other factors every year there is an erratic supply of the feed ingredients as well as there is very high fluctuation in their prices. while the BIS standards for poultry are obsolete. Apart from this some feed ingredients such as feed additives and supplements have to be imported. The nature of animal feeds and the animal feed industry has completely changed. products. are not manufactured in India. rapeseed and sunflower meals and cottonseed and rice bran extract. For cattle. L-lysine and L-threonine. the organized sector of the compound feed industry is facing serious problems resulting from a huge idle capacity. It must be noted that the feed industry is mainly commodity-oriented and. These products are vital ingredients of compound animal feed for improving the quality of the final feed and making it conversion-efficient.Sector Study: Animal Feed Industry l concern about compulsory standards is that they will disturb efforts to innovate and upgrade feed production in order to improve the productivity of the animals. such as groundnut. New capacities are being added by global players in the feed business and by national as well as multinational integrators. Problems with the Essential Commodities Act: One of the major reasons for opposition from the private players regarding the standardization is that the government wants to legislate regulation under the Essential Commodities Act 1955 which is considered draconian and totally inappropriate in this context. There is no shortage of compound animal feeds anywhere in the country. although it is value-added. including new products. are not covered by the Act. Increasingly. This is because all innovations would have to be passed by BIS and such a process is likely to take several years to complete. are being excluded from the purview of the Essential Commodities Act 1955. There is a lack of flexibility in these standards and they lag far behind the industry’s products. The industry has made several representations to the government and some state governments have accepted its point of view and refrained from levying any tax on animal feeds. Major raw materials for compound animal feeds. In fact. to the extent of 50 percent or more. which are exported. they have not been revised for 30 years. There is therefore no reason for it to cover the animal feed manufactured with these raw materials. l Improper supply of animal feed ingredients: Expenditure on raw material comprises of about 80 to 90% of the total cost of production. With a 29 .
livestock output has grown steadily and at the same time. quality. productivity and animal welfare thus a renewed vision is required to revitalize the animal feed industry. so that the feed price to livestock farmers would be economic. as well as growing concern about veterinary drug residues and microbial resistance to antibiotics. The intensification of livestock production and the increasing trade in raw materials for the feed industry. the objective of helping to promote animal husbandry has been defeated. there has been a major increase in production and trade of feeding stuffs. Challenges & Business Strategies l view to bringing about the rapid development of animal husbandry in India. as well as livestock products. the government reduced the import duty on essential amino acids. However. It is suggested that much of the increase in livestock production in developing countries such as India has been based on imported feeds. Public concern about the safety of foods of animal origin has recently heightened due to problems that have arisen with bovine spongiform encephalopathy (BSE). production. Public health & safety: In recent years. dioxin contamination. These problems have drawn attention to feeding practices within the livestock industry and have prompted health professionals and the feed industry to closely scrutinise food quality and safety problems that can arise in foods of animal origin as a result of animal feeding systems. sustainability. Recommendations for growth of animal feed industry: Animal feed industry requires a holistic integration of all the factors so as to emerge as one of the most profitable industries in animal husbandry. with the imposition of countervailing duty (CVD) and other duties. outbreaks of food borne bacterial infections. 30 .The Agribusiness Book : Opportunities. Since animal production involves a number of factors including environment. demands greater attention to risk management by all countries.
The system could provide feeding standards for livestock and implement these through information and training. l Feed industry requires niche players and resource optimisation is the need of the hour to overcome competition and have negotiating power to secure supplies from vendors. feed quality and feed information will increase confidence in the manufacturing. The worldwide Code of Practice for the production of proteins for the feed industry should be implemented. There should also be an assurance of the quality and safety of materials entering the human food chain through livestock feeds. regulation and traceability. When the livestock industry is viewed holistically. there is increased public concern about contaminants and health. Improved feeding standards. 31 . and will be the basis of a sustainable development for the livestock sector. l Modern livestock farms have to scale up and be managed more professionally. Feed safety needs to be ensured. There is tendency in the industry towards modernisation and more scientific orientation. There is a concomitant rise in the need for animal feeds and particularly oil cakes and meals. the issues related to the restructuring of value chain have to be seriously acknowledged.Sector Study: Animal Feed Industry A number of trends may be discerned in the livestock and feed industries. This will best be achieved by the adoption and implementation of international standards for testing and manufacture such as those provided by the Hazard Analysis Critical Control Point (HACCP) System and the International Standards Organization (ISO). marketing and utilisation of commercial animal feeds. There is severe competition within and outside the industry. Innovative developments in the feed industry should be sought with a view to providing alternative sources of proteins and new amino acid technologies. There should be consolidation in the new farming model concept. The collection of good quality data relating to world and Indian market forces and the availability of proteins for the feed industry should be addressed. The need to apply standards is both in terms of feed safety and feed quality. The development of government infrastructure and human resources for the management of livestock production as well as the improvement in the efficiency of utilisation of feed resources for livestock production has to be ensured through proper organisation. and demand for safety. At the same time. product quality. rising costs and emergence of various new by-products. There is a continuing rise in the demand for animal products and particularly those from poultry and pigs. l The emerging challenges are needed to be given due recognition especially in input supply sector. Many governments want to upgrade their legislation and its implementation and put in place a system of feed management which will ensure the safety of raw materials and compound feeds entering the food chain through animal production.
The Agribusiness Book : Opportunities.Winds of change: 32 . Sophisticated technologies equipped with modern ICT (Information & Communication Technology) need to be adopted in the livestock industry. With “Retail boom” organised retailing in food sector is emerging as a lucrative business. both in forward and backward direction is required. The value added livestock products are gaining increased importance to consumers. Integration. Challenges & Business Strategies l l l l Processing industry has to be highly oriented towards public health safety. There is orientation in consumers towards health consciousness and organic meat/egg consumption. The future of the Indian feed industry . Traceability in livestock products can be an important issue in international markets for Indian players.
export/ import and other commercial activities. Cold chains. depending on the success and consistent quality. The livestock industry in India is the second largest contributor to gross domestic product (GDP). This would mean establishing very hygienic and scientific processing units. it is expected that the consumption of dressed chicken will grow in the next five years. branded chicken. and diversification. will be introduced and. diversification. The Indian entrepreneur also has its sights fixed on project exports. growth. The population of cross-bred cattle and buffaloes is also growing. Although the live bird market currently accounts for about 90 percent of the total market. trading. 33 . chicken cuts. integration and efficient service chains. These will act as the drivers for the dependent animal feed industry. India has emerged as the second fastest growing major economy in the world. consumer preference for dressed meat will grow. per capita eggs from 40 to 100 per year. a booming capital market and rapidly expanding FDI inflows. The poultry industry is developing towards vertical integration and a few multinational companies have already entered the Indian poultry business. At the root of all these developments will be the scientific development of feed manufacturing technology. e-commerce and use of the latest information technology in global tenders. India has entered into an agreement with its trade partners under the World Trade Organization (WTO). after agriculture. mergers. which is entering a very exciting phase of growth for the next decade. expansion. With positive indicators. Consumption is projected to increase as: per capita milk from 240 to 450 g per year. The domestic Indian and international markets are fast-expanding with a lot of untapped potential in the areas of animal husbandry sector with multitude of opportunities. amalgamations. The changes brought about by the liberalization process will be slow but certain. Indian agriculture will also use biotechnology and genetically modified organisms (GMOs) to support the feed industry. and accounts for 9 percent of the total.Sector Study: Animal Feed Industry India’s economy is on the fulcrum of an ever-increasing growth curve. The time has come for investment. from the existing 10 percent to 25 percent or more. The dairy industry. Milk is very popular in India. Thus India will become a stakeholder and any global factors causing a change in the livestock industry will affect the feed industry as well. Therefore. rising foreign exchange reserves. such as stable 8 to 9 percent annual growth. The Indian feed industry will increasingly use biotechnology. acquisitions. one needs professional expertise to have a cutting edge over competitors. new molecules and natural and herbal products to improve animal productivity. Intense competition is the keyword of the present day business environment. etc. is growing with the increased capacities of milk processing units. which is cooperative-based. and per capita broiler meat from 1000 to 2000 g per year. more scientific formulations. joint ventures. The next decade will see significant changes in restructuring.