Indian poultry industry is a gamble on market price.
The problems faced by the broiler producer are many. They include
higher cost of production than the sales price for most part of the
year, variable demand for meat products, attitude of the banking sector.
The frequent and severe fluctuations in sales price of broilers do
not reflect in the price to the end users. The annual per capita consumption
of chicken meat in India is less than a kilogram. The demand for broiler
meat is increasing with the emergence of nuclear families with increased
purchasing price and the shift in consumer preference for broiler meat.
In India less than 2% of the total broiler production is sold as processed
and packed poultry meat. Consumers prefer broiler processed before them
due to the availability of fresh chicken, lack of awareness of the quality
of processed chicken meat, and unable to realize the hidden costs of
feathers and offal while purchasing the live poultry for processing
before him.
Export of poultry meat has tremendous potential. The problems in export
are the inadequate support from the Government, international price
structure, and improvements required in technology of packaging, transportation
and preservation.
Broiler Poultry
Indian economy depends on agriculture as about three fourths of the
Indian population thrive on agriculture and related activities.
A concept towards sustainable agriculture is being developed now.
All along, the base of Indian agriculture has centered on crop production.
Poultry production utilizes the resideus or by-proeducts of Indian
agriculture, which are unfit f
or human consumption and converts them to good nutritional poultry
meat. The broiler industry, which came into prominene in early between
farmers and professionals have been developed for the sustainable poultry
rearing activities. It is estimated that for every 1000 broiler birds
sold per week there is an employment potential for 15 persons and actually
there is an additional opportunity for 10% growth annually.
Though poultry rearing seems to have developed into a boom in recent
years why many producers are thrown out of the business? Let us examine
the issues involved.
Fixing Price of Bird
It is said that Indian agriculture is a gamble on monsoon.
Likewise the Indian poultry industry is a gamble on the market price.
The concerned broiler co-ordination committee in the particular region
fixes the price of the bird. The market demand is the major point considered
while fixing the price.
The cut off price for the farmer is the cost of production plus a
small margin. Many a times for more than half of the year the price
fixed would be lower than the cost of production.
This situation when continued, all farmers who can not afford to supply
birds at the price lower than the cut off price as demanded by the market
will be thrown out of the business and it affects the supply.
Thus after every time the selling price goes below the cost of production
many farmers are wiped out of the industry. The supply thus will be
lower than the demand and the price increases.
This will attract fresh batch of farmers who would like to invest
in poultry business and try to reap profits in the shortest possible
time.
Those farmers who are out of business will also try their luck by
recentering into business. This will again lead to surplus production
and result in unremunerative price and cycle will continue.
Moreover the varied customs and cultures prevailing in India readjust
the consumption of meat products during certain days in a month and
certain months in a year. But the producers are unable to restrict their
production capacities during such periods due to technical reasons and
also for fear of loss of market share.
Attitude of Bankers
Though crores of rupees are invested in the industry the banking sector
is skeptical about the future of the industry and they always have a
second though to finance a poultry unit.
At the same time other high risk avenues are under the shelter of
priority sector. The members of the industry should join hand to represent
our case strongly so the poultry rearing may be looked at as a profitable
venture.
Exploitation by middleman
As described above there are frequent and severe fluctuations of the
selling price of live bird in the market.
But it is interesting to note that the price to the end users is not
affected much. It remains almost static throughout the year.
Thus it shows that the middlemen are benefited out of the fluctuation
and to be more precise are responsible for the wiping out of farmers
from the industry.
Future for broiler industry
Broiler industry in India has got a bright future. The per capita
consumption of chicken meat in India is less than a kilogram which when
compared to other developed and developing countries is very much meager.
Emergence of nuclear families with higher per capita income and increased
purchasing power will help in increasing the consumption of chicken
meat.
We have witnessed a shift in preference towards broiler poultry meat
from meat of other species of livestock. Thus the potential for increase
in demand is always there.
But then also the integrators with financial back up and high production
capacities are not able to influence the selling price either during
the high demand periods are during the low demand period, w
hereas the middlemen always enjoy a cost plus benefit throughout the
year. As producers we have to take steps to stabilize the market price
in such a way that the price is always at least marginally above the
cost of production for most part of the year so that more and more entrepreneurs
are attracted towards the industry and make India to move up the ladder
as one of the largest producers of broiler poultry meat.
About Proceed Chicken
Processing
Chicken business in India at consumer level is still at primitive
stages. Consumers seem to prefer only live bird from live bird shops,
dressed in their presence. Processed and packed poultry meat as a commodity
is yet to be accepted by the consumers.
In India only less than 2% of the total broiler production is sold
as processed and packed poultry meat. There are several factors for
this.
Preference for "Fresh materials"
Consumers especially from south India are blessed with the presence
of fertile land, availability of rain and water streams, and seashore.
These aid them to enjoy availability of fresh seafood, vegetables
etc. from time immemorial. Availability of livestock and the support
from government for various livestock development programs had helped
in producing milk also in large quantities.
Thus people have an affinity for fresh food. This affinity has developed
into apartheid against the frozen food, whether it is meat or fish or
vegetables. In this part of the country frozen food is accepted only
at those places where fresh and items are not available due to geographical
reasons.
Lack of Awareness
In the minds of the consumers meat means the chunk of slaughtered
goat or bullock hanging at the meat shop which might have been slaughtered
in a clandestine manner.
Still the customer is happy to buy meat from the place because the
meat shop owner "processes" the meat in their presence and they see
that the meat is good. It is true in the case of chicken meat also.
The customer goes to any live bird trader and the trader dresses the
bird in their presence and sells to them. Whatever a meat technologist
has to say about the quality of meat such processed the customer so
believes strongly that the meat dressed in his presence is safer than
what is coming from an organized processing plant.
Hidden Cost
The customer when goes to a live bird trader the trader weighs the
bird, dresses the same and releases the price of the live bird plus
the dressing charges.
But he compares it with the price of the meat from any processing
plant, which requires no further dressing, and no hidden costs are there.
In the first place the customer is playing for the feathers and other
inedible portions but the poor customer does not know the same.
Price factor
Processed and packed poultry meat is slightly highly period than the
meat from live bird processed before the customer.
The high price speaks about the quality and the processing. First
unlike the dressing done by the trader, processing is carried out in
modern plants and second the materials are subjected to freezing for
which additional expenditure will have to be made.
The final product to reach the customer refrigerated, transport is
required to maintain the cold chain, and in retail shops deep freezers
are required.
At the processing plants back up power supply by using diesel generators
are required to ensure the freezing. Due to heavy capital investment
in the form of equipment and freezing facility the processors have to
operate at 100% capacities so as to break even.
Any reduction in capacity utilization due to erratic demand, the cost
of processing will go up disproportionately. All this, add to the price
of the processed poultry meat vis-à-vis that of the live bird. The housewife
who decides to buy the chicken from a shop makes a calculation to see
how much she saves if she buys a live bird from a trader or processed
meat from a supermarket or cold store.
If only the difference is about one to two rupees, she will prefer
to buy the processed meat but if the difference is wider she will definitely
opt the other one. Thus price has become the most critical factor affecting
the purchase decision of an average chicken customer, and naturally
due to value addition the processed poultry meat from organized processing
plants are sold at a price higher than the live bird.
This limits the sale of processed meat from organized processing
plants and that is why most of the modern poultry processing units in
India are becoming unviable.
Export
A mirage dream Exporting of poultry meat has tremendous potential.
But the price has to match with international market. However there
is a need to improve the packaging, cold chain transportation and preservation
to meet international standards.
The domestic market has to be strengthened to make a profitable export.
Fiscal relief and incentives should back this up.
Import duties on poultry processing equipment should be waived, low
interest loans should be offered to activities related to poultry processing
and marketing, duty drawback for poultry export as in the case of marine
export etc. may be considered for promoting the chicken export.
When India produce quality product, Indian producer can not complete
with producers from Brazil, America etc., as they are offering much
lower price an international market. Without support from the Government
export is still a dream as a mirage for the Indian producers.
Conclusion
The broiler producers should maintain their level of broiler production
at par with the market needs only.
The year average prices per kilogram of live broiler chicken should
be maintained between Rs.28.00 to Rs.30.00 ex farm gate.
There should not be much variation in the price levels throughout
the year.
The broiler producers should avoid the mediators.
As long term measures, the integrators should try and reduce their
production costs and only when the production cost per kilogram is brought
to below Rs.25.00, any producer can think of exports.
The strides Indian poultry has made during the last 3 decades is something
to be proud of by us all engaged in poultry.
From backyard poultry we have today small, medium, big and very big
farms, breeding farms and hatcheries catering to the needs of the farmers;
We have all the vaccines and medicines required;
we have genetic research centres;
equipment and feed manufacturing units;
training and research institutes both in the public and private sectors;
IVRI and CARl being the pioneer institutions.
We have everything to develop poultry on the scientific and latest
technological lines and above all we have that urge to learn more and
more from our own experiences and developments around the globe in the
field of science and technology.
Today we are producing 34,000 million egg and 630 million broilers
and we rank the5th largest in eggs and 20th largest in broiler production
in the world.
We hope to touch 40,000 million eggs by the beginning of the next
century.
From 1990to 1997, egg production went up by 37%, broilers 231%, c0mmerciallayers
44%, poultry meat production 154%, per capita availability of eggs by
18% and poultry meat by 122%, value of poultry products by 162%, feed
production by 77%.
As per the current estimates we hope to reach 40 eggs per person per
year by 2000.
Today we produce eggs and meat very cheaply as compared to mutton
and other meats.
In fact poultry meat consumption has been increasing allover the world
basically because it is considered healthier compared to other kinds
of meat like beef and pork.
By the year 2000 the world population will be around 620 crores of
which 140 crores constituting 22% will be in South Asia.
F AO estimates reveal that India alone will have to provide food for
about 16% of the people and an equal percentage of livestock units living
in the world.
South Asia is faced with acute shortage of animal
proteins -a major constraint in food production which is mainly due to
Highest rate of population growth (2.3%)
Highest density of population (3.1 persons per hectare)
Highest number of unproductive animals (more than 50%)
According to F AO 1996 Report the percentage of annual growth in egg
and poultry meat production in most of the South Asian countries is
higher than the world average.
In spite of this, the per capita consumption of eggs and poultry in
South Asia is much lower than the other Asian nations and the world
averages, indicating a greater need for expansion of poultry in South
Asian region.
In this context, poultry which is recognised as one of the important
segments in animal agriculture has a high potential to improve rural
incomes particularly in areas where soil and climatic conditions are
not conducive for remunerative crops.
India today is the world's largest and fastest growing market.
We have 30 crores plus affluent middle class.
India has,
Infrastructural facilities
Cheap labour
Managers and trained personnel
Large resources of raw materials, and
An easy communication due to widespread use of English language among
the educated.
No doubt we have made rapid progress, but among the major constraints
on our march forward are the marketing and availability of poultry feed
ingredients.
On the one hand we say with pride that our layers are equal to the
best in the world laying 280- 300 eggs a year and our broilers grow
upto 1500 gills in about 6 weeks.
But is the farmer getting the right price of his stock? The answer
is a definite no and it applies to both eggs and broilers.
In northern India the egg market is in the hands of about half a
dozen people who decide the egg rates on daily basis.
The wholesale rates fluctuate between 30 and 40% in the course of
3-4 weeks and that too during the peak season sometimes.
The situation is worst with broiler sales.
Our well bred healthy stocks are sold by the most outdated and primitive
method of auction with 'Kori' as the unit.
When poultry birds are sold allover India, say allover the world;
by weight there is no reason why we should not say good-bye to the primitive
auction systems.
Furthermore the farmer is not made on the spot payments for the stocks
sold, but is issued a post-dated 'parchi'.
With this 'parchi' in hand the farmer goes from shop to shop to buy
his needs of day old chick, feed, vaccines and medicines.
Is this 'parchi' a legal tender? Under what law or authority these
'parchis' are being issued? ,If for some reason, which should not become
a practices, immediate payment cannot be made, a proper post dated cheque
can be made out and given; atleast cheque is a legal tender.
We have banking facilities in the urban and semi-urban areas around
which our poultry farms are established.
In very special cases cash payments can also be made on the spot.
PFI have been struggling for the last ten years to end these mal-practices
but of no avail.
Sometimes it is the vote bank politics, some times it is the strong
lobby against any change, corruption in administration and/ or money
power which is at play.
The solution are deferred and put in cold storage.
Another bottleneck is the shortage of feed ingredients.
If poultry has to keep its growth rate of 10%in the egg market and
15% in the broiler market, it will require about 8.5 million tonnes
of maize by the year 2005.
In contrast the total production of maize.
ln the country during 1994-95 was 7.8 million tonnes and maize is
the biggest single component- 40- 50 percent of the total poultry feed.
Some long-term strategies will have to be evolved to overcome these
shortages.
Concentration of poultry in certain States/ pockets is another bottleneck.
Our efforts should be to produce egg and chicken near the consumption
centres.
Having huge quantities of eggs and chicken to long distances, thus
adding to the costs by way of freight, packing, breakages, etc is not
conducive to healthy growth.
Consumer must get egg and chicken at the minimum price in any case
cheaper than the vegetables throughout the year.
Another step forward to bring stability in the poultry market will
be establishment of egg powder plants and broiler processing plants
on top priority.
Somehow the progress on this front has been dismal.
We have very few broiler processing plants and even those existing
are running much below their capacity and running into huge losses.
Instead of encouraging establishment of processing plants, the Government
has levied excise duty on the branded poultry products.
Whereas 'Sweets' and 'Namkeens' have been taken out of the excise
drag I)et, chicken which is a healthy food item has not been spared.
Government will not get much revenue by this levy, but it will prove
to be a great disincentive.
Another issue, which needs govt. intervention, is the high rate of
interest being charged from poultry farmers.
Poultry business on the small/ medium scale cannot afford to pay 18-22%
interest on bank loans.
Govt. is coming out with Insurance Scheme for agricultural farmers
in case of failure of crops.
Lastly we strongly feel that it will be a step in the right direction
if we have a National Poultry Development Board on the lines of the
National Dairy Development Board.
The paper work in connection with the formation of the Board has been
completed and it is time we implement it.
The proposed Board should function under the professional management
and should have representations from all segments of the poultry industry.
The egg industry in India grew at 7-8% during the last two decades.
The present per capita availability of eggs is about 35.
The potential for Indian layer industry is bright.
The hurdles for this are
Egg distribution and availability in rural areas,
Price fluctuations due to the present transportation in open condition
to long distances.
Gap in producer price and consumer price for eggs,
Factors reducing egg consumption
Under developed, unorganized, under invested, short slighted distribution
system
Mismatch between feed price and egg price and
Inadequate government effort.
Some changes desired to come in the next decade for the
growth of layer industry are,
Increasing the availability of maize,
Setting up of National Poultry Development Board,
Increasing egg consumption through Government programs,
Provision of infrastructural facilities at new poultry production
centers,
Reducing challenges and hardships for egg processing,
Education of egg producers,
Provision of low cholesterol eggs,
Availability of eggs at super markets under refrigeration and
Supply of pasteurized eggs / poultry to bulk consumers.
Introduction
The egg is industry, in India, grew at an average of 7% to 8% during
the last two decades.
The present per capita egg consumption is about 35, while in the neighbouring
countries it is about 90.
The potential for growth of Indian layer industry should be bright
if the requirement of neighboring countries is taken as indicative for
future trend in our country.
In India human population is over 1000 million and geographically
it is ideally located to cater to the Middle East and Far East.
With WTO likely to come into effect soon, the subsidies offered by
developed countries should be slowly phased out and India could improve
its share in world market for poultry products.
Hurdles to over come
However, there are few hurdles that the industry has to over come
before the potential could be converted to growth.
Egg ditribution
The egg distribution and availability till now has come up only around
the urban centers and vast areas in rural India still remain untapped
where 70% of the country's population lives.
Egg transport
Over the last three decades, layer farms came up in concentrated
pockets while consumption is all over the country. As a result, every
day eggs have to be transported to long distances taking 4 to 8days
of transit time.
As it is in open condition and the temperatures and climatic conditions
vary from season to season and region to region, the eggs are at least
10 to 12 days old by the time they reach the consumption center.
As it is without any refrigeration, the shelf life will be maximum
one week and therefore, price fluctuations are substantial with even
minor changes demand and supply.
Gap in producer price and consumer price
The typical egg purchase is mostly in small number and near home
by the consumer. There is practically no cold chain and the number of
retail outlets is too many warranting many intermediary channels thereby,
widening the gap between the producer prices to the ultimate consumer
price.
Factors reducing egg consumption
India is more of a continent than a country with many religious beliefs
and taboos. Egg consumption is affected by seasons and festivals, which
vary from region to region. All through the year, at one center or the
other there is some factor affecting consumption i.e. Ramanavami, Shravan,
Ayyappa, Pithru Paksh, Summer, School vacations, fish catch, etc.
Distribution system
Due to low trade margins and no value addition i.e. no processing
or grading, the distribution system remained under-developed, unorganized,
under-invested and very short sighted.
Mismatch between feed price and egg price
Once in every 3 years, the industry witnesses a mismatch between feed
prices and egg prices, though the industry has grown steadily, the availability
of feed ingredients, especially energy sources, remained static resulting
in periodical shortage and an abnormal increase of its prices.
Government effort
The growth of industry till now has been solely through a private
effort and there has been very limited involvement or received from
Government in marketing of eggs.
Certain agencies like NECC, ACIL, etc., have actively worked for
promotion of eggs and have reduced trader exploitation.
However, the industry requires special efforts for promotion of eggs
and in developing distribution networks in various states like Bihar,
Northeast, UP, MP and others.
Private entrepreneurs as the cost will not undertake this and risks
are high. Instead, the Governmental agencies that already have a network
establishment like PDS, Mid-day meal scheme, Anganwadi etc., should
be motivated to take-up eggs along with other products. In the short-term,
many of the above challenges would continue affecting the industry.
However, in the long-term, the industry would have to take steps or
motivate agencies like NECC, BEPA or Government and accelerate the infrastructure
changes required for ensuring a sustained growth of the industry.
Changes to come in the next decade
Some changes that should come about in the next decade listed below.
Increased availability of maize
The availability of Maize has to be increased i.e., through introduction
of high-yielding varieties and more acreage under Rabi season. The poultry
industry should in consultation with Universities promote use of substitute
energy sources to reduce pressure on Maize.
Further, whenever parity permits, import of poultry ingredients should
also be undertaken so as to stabilize the prices.
Some form of contract between Maize farmers and poultry associations
could also be established for reducing the role of middlemen and to
obtain uniform prices throughout the year.
Setting up of national poultry development board
An organization like National Poultry Development Board (NPDB) has
to be set-up which would be entrusted the job of the market intelligence
for feed ingredients, co-ordinate with State and Central authorities
for having policies benefiting the industry, build the necessary infrastructure
for dry and cold storage facilities for exports and rural distribution
and for promotion of eggs.
Governmental efforts to increase egg consumption
The consumption of eggs in rural areas may be increased through governmental
programs like Mid-day meals, Anganwadis, Public distribution system,
Social welfare hostels, etc.
Provision of infrastructural facilities at new production
centers
New production centers nearer consumption, especially in states like
Utter Pradesh, Bihar etc., would come up in the coming years as a result
of ever increasing freight and packing costs.
Various agencies connected to development of poultry have to plan
for the requisite facilities to meet the future demand i.e. Feed industry,
hatcheries, banks, etc.
Further the existing surplus centers would have to identify new centers
close to production, especially in villages for increasing consumption
and farms have to improve their efficiency so as to survive in the new
scenario.
Egg processing
The egg processing industry is currently facing lot of challenges
and hardships. However, with WTO coming into effect and subsidies phased
out, there would be scope to tap the world market for egg powder.
Future demand for quality eggs
As the consumer is becoming health conscious, some changes shall come-up
specially in urban centers, such as (a) Demand for low cholesterol eggs
like Omega-3 eggs, (b) Graded eggs and sale through Super markets under
refrigerated condition and (c) Demand for pasteurized eggs / powders
from bulk users like Star hotels, Bakeries, Biscuit manufacturers etc.
Conclusions
While there is scope for egg industry to grow, the challenges are
many, which shall affect cyclically in the short-term.
However, in the long-term, with the consolidation of capacities the
economies of scale would necessitate farmers invest in market development.
India with a population of over one 1000 million and low per capita
of 35 shall only grow in the coming few decades.
India's Present Low Per Capita Consumption Holds Promise For Future
Growth Howwever, despite this phenomenal growth, the per capita consumption
of poultry products is lowest in India even as compared to selected
Asian countries, let alone the Western world, as is clean from the following
table: Per Capital Poultry Meat Consumption In Selected Asian Countries:
Countries
1995
1997
1997(f)
China
8.1
9.5
10.2
Hongkong
49.4
53.9
52.5
Japan
14.4
14.0
13.6
South Korea
10.1
10.9
9.9
Singapore
5.3
5.4
4.9
Taiwan
10.9
12.6
13.2
India
0.6
0.8
0.9
Likewise, the overall poultry scenario in India is dismal as compared
to the world situation. The following data proves this:
WORLD & INDIAN POULTRY SITUATION, 1998 World Poultry Production 54,916,000
Tonnes India's Poultry Production 595,000 Tonnes World Poultry Exports
5,750,407 Tonnes India's Poultry Exports 407 Tonnes Main Producing countries
USA(27%), China(22%), EU(15%), Brazil(8%) Main Consuming countries USA(23%),
China(22%), EU(14%), Brazil(7%) India's Poultry Consumption 595,000
Tonnes Main Importing countries FSU(18%), Hongkong(17%), China (15%)
India's Poultry Imports Nil Nevertheless, it is gratifying to note that
over the years there has been a definite and pronounced shift in the
market share of poultry meat in India, vis-à-vis other meat, which the
following table illustrates:
MARKET SHARE OF VARIOUS MEATS IN TOTAL PRODUCTION IN INDIA: Year Beaf
& Veal Buffalo Meat Mutton & Lamb Goat Meat Pork Meat Poultry Meat 1978
34% 34% 6% 12% 10% 4% 1988 33% 32% 5% 13% 10% 7% 1998 31% 31% 4& 10%
10% 13% The overall growth in the Indian poultry sector is propelled
through a compounded, annual growth rate of 10% in the case of egg production
and about 15% in the case of broiler production.
Besides, Indian poultry sector provides for 5 million jobs in the
semi-urban and urban centres. The poultry house litter accumulated over
a period of 9 - 12 months is an excellent organic fertilizer for crop
cultivation.
On an average, 40 birds reared on deep litter for a year produce
one tonne of manure, adequate for one hectare of paddy or maize cultivation
or two hectares of sorghum.
By this standard, the poultry sector contributes as much as around
20 million tones to the pool of organic fertilizer, the vital agri-input.
That is not the all.
The poultry industry in India has remarkably grown also in respect
of poultry health care products, poultry hygiene and sanitation, poultry
equipment and other areas of infrastructure, as also up stream and down
stream projects, such as poultry breeding and feeding, poultry processing
and other areas. With all these, the stage is well-set for a sustained
and all-round, rapid growth of the poultry and industry in India.
Andhra Pradesh stands first in layer population with 4 crores which
is 1/3rd of country's population. Hyderabad zone has 1.2 crore layers.
The layers start production from 20th week and they are kept till
72 weeks of age for egg production and they are sold as cull birds.
These cull birds are sold on piece basis and their cost vary from
Rs. 25-45 depending on the season and demand.
These cull birds are mostly consumed by middle-class people, labour
in cold mines and in the border districts of Karnataka, Maharashtra
and Tamilnadu. The consumption of cull bird is gradually coming down
as the people are preferring tender broiler meat.
The marketing of cull birds is not very well organized and their price
is often decided by the particular day's demand and number of birds
offered for sale by the farmer on that day.
Further, the cull bird rates are not declared in newspapers. Farmers
are not aware of the market price of the cull bird and it is often observed
that cull birds are sold on different corners of the city on the same
day with a price difference of Rs. 2-10 per bird.
Except Hyderabad zone and other parts of A.P. in India the cull birds
are sold on kg. basis, by which farmers get fairly reasonable price
without much exploitation by traders.
In the existing system, traders always demand lesser price saying
that the particular farm birds are weigh less when compared to other
farms.
Trader often stops the lifting of birds in the middle and lifts the
birds of other farmer saying that the second farmer has offered less
price for cull bird as he has some disease or financial crisis.
Traders say that a big farmer is selling the big farmer is selling
the big batch of 1-2 lac birds in the next ten days, that's why the
prices are low. So, in the existing system, trader is exploiting the
farmer saying that there are lot of birds in the market without proportionate
demand, and he quotes less price.
In the light of the above information, A.P. Poultry Federation has
decided to coordinate with the farmers and traders and try to fix the
cull bird rate depending on the demand and supply basis and declare
the prices on weight basis in the newspapers as we are already doing
in the case of egg prices.
For declaration of prices, Federation is planning to gather/collect
the information regarding availability of cull birds and assess the
demand in Hyderabad zone and in surrounding zones where our birds are
going on weekly basis and declare the price in paper accordingly.
WTO and impact of removal of quantitative
Restrictions on Indian Poultry Sector
The Uruguay rounds of trade negotiations were aimed at liberalising
the world trade environment and thereby providing improved market access
to the member countries.
The World Trade Organisation (WTO) since its establishment in 1995
has been enforcing various agreements that were concluded in the Uruguay
rounds.
As a part of the agreement on the market access the member countries
have made offers of reductions in the tariff and non-tariff barriers
to trade.
The implications of these offers of trade liberalisation depend on
the nature of the reduction in the barriers, in the scope of the coverage
of the goods included in the offer package.
There are 135 nations who are presently members of WTO.
In the Uruguay rounds, all the GAT of member countries agreed to
provide tariff liberalisation on large number of commodities
/ items.
Remove all types of prohibitions or restrictions other than duties
(i.e. tariff) .
For the tariff liberalisation submitted to the WTO "offer rates",
also called "bound level" or "bound rate of duty".
The member countries are required to maintain the applied rate at
or below the "bound rate".
India has agreed to make adjustments in the tariff rates to the level
of bound rates for more than 3,300 commodities.
It has also agreed to phase out quantitative restrictions on all commodities
except for around 600 commodities for security, religion, health and
other reasons by 2002 -3 as per the mutual agreement with her major
trading partners and WTO.
Other member countries of WTO have also taken steps for tariff liberalisation and removal of quantitative restrictions.
In fact, developed countries had made similar commitments in earlier
rounds of multi-lateral trading arrangements.
It was for the first time that the developing country like India took
part in the tariff negotiations in Uruguay rounds.
The main objective of the tariff negotiations has been to enhance
the market access.
The underlying principal of Uruguay rounds of agreements was to create
a fair and equitable multi-lateral trading agreements that leads to
development and increased income.
These principals are amplified further through specific provisions
in various individual agreements under WTO.
Unlike most of the countries of the world, India's import has been
subject to different types of quantitative restrictions.
These restrictions are in the form of non-automatic licences, import
through canalised agencies, special import licence (SIL) 1 actual user
criteria etc.
These restrictions are imposed because India presumes that it has
unfavourable position of balance of payment (BOP).
In the early 1990s and even earlier to that, India had serious balance
of payment problem.
However, this has declined significantly during the recent years.
The article relating to balance of payment mentions that a member
country has to publicly announce a time schedule for elimination of
quantitative restrictions.
India presented a case of time schedule of nine (09) years where Australia,
Canada, Japan, EU, New Zealand, Switzerland and the US had objections
to this -time schedule and brought the dispute settlement proceedings
against India, which India ultimately lost.
The dispute settlement body of the WTO had adopted the panel and the
subsequent appellant body reports ruled out that India was not justified
in maintaining the QRs on balance of payment ground and advised India
to bring its measures in conformity with the obligations under WTO.
The panel and the appellant body reports were adopted by the dispute
settlement body on 22nd September 1999.
Pursuant to this, India and the US entered into a bilateral agreement
on 28th December 1999 on the reasonable period of time for India to
implement the rulings and recommendations of dispute settlement body.
According to this, the reasonable period of time given to India would
expire on 1 st of Apri12001.
Further, the bilateral agreement envisages that, out of 1429 tariff
lines (out of total 2714), on which quantitative restrictions are still
being maintained as on date by India on balance of payment ground, on
714 tariff lines quantitative restrictions are to be removed by 1st
of April, 2000 and on the remaining 715 tariff lines by 1st of April,
2001.
At present, these items fall under the categories of restricted list,
SIL list and the canalised list.
The significant number of items from which quantitative restrictions
will be removed belongs to agriculture sector and the items pertaining
to poultry i.e., frozen and cut chicken which falls in the restricted
list for which the tariff have to be removed by April, 2001, in any
case.
Once these quantitative restrictions are removed, it will have a more
serious impact on the poultry sector.
There have been reports that once the imports are free and on the
OGL without any bound rates of tariff the poultry industry in India
which has grown with the efforts of millions of farmers', scientists
and visionaries like Late Padmashree Dr. B. V. Rao will be destroyed
in few days time by the multinational companies operating in the chicken
business.
I would like to quote a report from poultry and egg marketing magazine
of September- October'99 issue published from Washington and the news
item which reads as under, "Russia has purchased 54524.6 MT of US chicken
leg quarters under USDA Food Aid Programme when the bids were opened
on August 16th by USDA Export Credit Division.
The bids were awarded to companies like AJC International, AP USA,
Gold Crist, Koch Foods, Perdue Farms, Sanderson Farms, Cellary Enterprises
and Tyson Foods.
These contracts were given at a price of 22.43 cents per pound to
25.42 cents per pound making an average of US$ 550.2 per ton or 24.96
per pound.
If we take this price at even 25 cents per pound which would mean
50 cents per kg. and if converted into Indian Rupees, this means Rs
22 per kg. landed in Russia duly frozen, packed and delivered.
Can you imagine a situation where chicken legs dressed, packed, frozen
lands in Bombay, Hyderabad, Delhi and Madras at Rs 22 per kg. and you
can well imagine what will happen to your broiler industry.
The threat is real and not imaginative.
The poultry sector in India has developed over four decades from a
backyard poultry and is an integral segment of the agriculture economy
which contributes over 11,000 crores to the GNP.
This sector provides direct and indirect employment to over 1.5 million
people basically in the rural areas and also plays a significant role
in our national effort to improve the nutritional, health standards
especially the weaker sections of the society and helps in combating
the malnutrition.
The per capita consumption of the eggs in the country is 36 eggs per
annum and that of chicken meat is 700 gms per annum.
The National Institute of Nutrition, an organ of Indian Council of
Medical Research recommends that every Indian should eat half an egg
per day and 11 kgs of chicken meat per annum to meet their nutritional
requirements.
By increasing the per capita consumption by just one egg alone results
in the generation of 25,000 additional jobs and similarly an increase
in the consumption of 50 gms. of chicken meat per capita results in
the generation of 20,000 additional job opportunities predominantly
in the rural areas.
The day when we reach a figure of consumption of 180 eggs and 11 kgs.
of chicken meat per annum, this sector has a potential to provide additional
job opportunities to 7 million persons in the rural areas. "
In US, Europe and other developed countries, the poultry farming is
controlled by few hundred people and the processing and distribution
by half a dozen companies in each country.
A single company in US by the name of Tyson Foods slaughters around
50 million chicken per week and they have market share of 26 per cent
in the us market.
For their own fads and other reasons, the US and other developed countries
have promoted the breast meat, which they call the white or lean meat
whereas for them the leg meat is dark meat and a by-product.
They load their complete margins of profit on the breast meat which
is sold for around US$ 2.76 per pound which comes to US$ 5.52 per kg.
or Rs. 250 per kg. whereas, legs or leg quarters being considered as
a dark meat is thrown away at any price sometimes at even less than
25 cents per pound.
In India we do not differentiate between leg and breast meat.
Chicken is sold as chicken which is available currently anywhere from
Rs. 60- 65 per kg.
Similarly, while the eggs in the local markets, in Europe and USA
are sold at anywhere from Rs. 4Cto Rs.6 per egg these are dumped in
places like Dubai at little over a rupee.
In addition to this, these countries are giving huge subsidies to
their exporters in the form of export enhancement scheme in US and restitution
refund money scheme in EU whereas there is no subsidy on exports or
otherwise in India.
The developed countries therefore are able to export their products
at throwaway prices because the products they export are either surplus
production or they are by-products or they have the advantage of huge
subsidy they get from their respective governments in different garbs.
Therefore, if the import of chicken and chicken products and eggs
is allowed into India, the survival of the whole industry would be at
great risk.
In such a situation more than 1.5 million farmers and their dependant
families will be without any livelihood, more than 11,000 crores of
investment in this sector will be destroyed and the industry which has
grown on its own for four decades with its own genetic base will be
eroded.
Under these circumstances, the Government should negotiate for a maximum
bound rate of 300 per cent as applicable for agricultural products under
WTO.
I would also like to quote a report on poultry and egg marketing published
from Seattle which gives the views of Dr Paul Aho, an Economist and
expert on Agri-Business, where he says that poultry industry in the
rest of the world feels threatened by cheap leg quarters and it creates
barriers for importation.
If leg quarters were somewhat higher in prices they would be less
threatening other countries and they would enjoy greater access.
He further adds that even in the US, the cheap prices of leg quarters
actually hinders their own marketability.
"Americans need to be sold more dark meat", he said, ''as the demand
of the dark meat in the US rises it has a . possibility of creating
a virtuous cycle."
Moreover, the Indian poultry sector is going to face an uneven competition
because of several factors, which do not provide us a level playing
field.
It is also a reality which we should not forget that all countries
protect their agriculture and allied sectors like poultry in the garb
of different agreements and their implications.
In some places it is the sanitary and phyto-sanitary measures and
in other places it is the technical barriers of trade which hamper us
to compete with the developed world.
Though, it is clearly mentioned in the SPS and TBT Agreements that
members shall take account of the special needs of the developing country
members and in particular of the least developed country members.
Likewise, agreement on technical barriers of trade also provides for
a differential and more favourable treatment to developing country members
and stipulates further that members shall in the preparation of application
of technical regulations, standards and conformity assessment procedures,
take account of special developments, financial and trade needs of developing
country members, with a view to ensuring that such technical regulations,
standards and conformity assessment procedures do not create unnecessary
obstacles to exports from developing countries.
But here again, we continue to observe the impositions of standards
by developed countries, that are either beyond the technical competence
of the developing countries or do not take into account the special
developments, financial and trade needs of developing countries or fundamental
climate or geographical factors or the fundamental technical problems
of the developing countries. We also do not see a corresponding willingness
on the part of the developed countries to transfer to the developing
countries better and more advanced technologies at a fair reasonable
cost.
The agreements on technical barriers of trade and sanitary and phyto-sanitary measures are not implemented in their real sense and the developing
countries like India are put to disadvantage.
Since ~standards are emerging as one of the major long-tariff barriers
to the market access of the developing countries, it has become the
-light of the might to dictate to the others lOW they can stop the other
person from asking advantage of the market access in the other countries.
The whole egg powder processing industry has faced these barriers
and still are facing because of the new standards being introduced or
upgraded, all of a sudden.
It would not be out of place to mention that some of the countries
do not adhere themselves to these standards what they have documented
for others.
But in -reality their strong point is that they have documented them
so well and their presentation is excellent whenever you question them.
Under the TBT Agreement the three basic needs should be kept in mind:
Participation of the developing :countries in the setting up of standards
for International Standard Setting Organisations.
Technical cooperation to upgrade conformity assessment procedures
in developing countries to gain their acceptance in the developed market.
Mutual recognition of agreements between the national standard setting
bodies and also providing equivalence of standards for each other.
I would like to illustrate this that if we have to export our egg
powder or chicken products to other countries, we first need to get
the country approved as such and also seek equivalence for our standards.
Thereafter, the importing country team will visit our plants and
approve them whether we really meet their standards or not.
Why such a condition cannot be placed on the countries which intend
or would export their poultry products to India ?
Why we cannot put a condition that our team will visit their plants
and if satisfied for scientific and technical reasons, only then the
import will be allowed into India.
I think the Government need to look very seriously in this direction
because other countries have been creating the barriers in the garb
of SPS and TBT Agreements.
It is also a reality that in developed countries the industry gets
financial support on 4 to 5 per cent interest rate and power is available
in plenty and at a cheaper rate as compared to India.
I would not hesitate to say that in India finance is extremely costly
which you get at a rate of 14 to 16 per cent for agriculture, power
first of all is scarcely available and if available is very costly and
same is the case with infrastructure facilities.
Now where is the level playing field for the Indian poultry sector
as compared to the developed countries.
Therefore, it is essential that while we frame our policies the Government
should give a serious thought before deciding any policy on the removal
of QR's by putting sufficient bound rates for the products covered in
poultry sector.
It would be prudent for the policy makers to defend the gains of the
poultry sector which it has made and the tremendous contributions it
is making to the rural development, employment generation and providing
nutritional food to millions of people.
The basic objective of the WTO agreement on agriculture was to bring
about a discipline in one of the most distorted sectors of trade by
disciplining the unrestricted use of production and export subsidies
as well as by reducing import barriers including non- tariff barriers.
At the same time, as indicated in the preamble, the agreement recognised
the importance of non-trade concerns including that of food security
and rural employment.
This is completely true in India where 66 per cent of population of
about one billion is dependent on agriculture sector for its livelihood.
Moreover, a population of about 320 million is surviving just around
the poverty line.
Therefore, countries like India where large population is dependant
on agriculture sector including poultry, need to exert its right of
certain degree of autonomy and flexibility in determining their domestic
agriculture policies.
It must also be recognised that in countries where the main source
of assured and entitlement to food is food production, these either
in the form of subsistence farming or through generation of farming
comes, the import of food cannot be an alternative to domestic production.
Therefore, without protecting the domestic sector, which is sensitive
to fluctuations, the opening up could have serious socio-economic ramifications particularly on the rural farming community.
The developing countries with predominantly rural agrarian economy
should use appropriate measures and safeguard mechanism to minimise
the ill-effects of import which can destroy our food security. It is,
therefore, imperative that all support wherein amber, blue or green
box is brought out to the common objective of present production value
by the developed nation apart from creating a level playing field.
The huge amount of export subsidy still continue to distort the world
agriculture trade which are given in the new garbs repeatedly by the
developed countries.
It would be important for Government to address issues related to
circumvention and rollover of export subsidies by the developed countries
during their negotiations.
Last but not the least, the Government has to give a very serious
thought while going for tariffication and bounding of poultry sector
products.
If the bound rates are kept very low the poultry sector really faces
a very serious threat of its complete destruction.
It would be, therefore, prudent that while doing the tariffication
maximum bound rates should be worked out to protect this very important
rural based sector, which is very vital for the progress of this nation.
The project report envisages 19758 commercial layers to be reared
per year ·
The rearing system is called 1+1+2 ·
One brooding batch of 10500 birds will be reared in deep litters for
9 weeks ·
One growing batch of 10185 birds will be reared in cages for 9 weeks
· 2 laying batches of 9879 birds each I.E. total 19758 birds will be
reared in cages for 54 weeks.
The starting date of the layer farm is February, 98 · Statement No.
3 gives the sample flock schedule considered from the starting date
of purchase ·
The egg production is considered to be 300 per year and the average
egg price is assumed at 113 paise ·
The culls will be sold @ Rs. 34/- per bird ·
The brooding period mortality is 3%, the growing period mortality
is 3% and laying mortality is 7% ·
The other income is of gunny bags and manure ·
The brooding feed consumption is 0.30 kgs per bird @ Rs. 6.00 per
kg ·
The growing feed consumption is 0.52 kgs per bird @ Rs. 5.25 per kg
·
The laying feed consumption is 0.80 kgs per bird @ Rs. 50.00 per
kg ·
Costs including the purchase and sale prices are constant for preparation
of project report ·
The project cost is Rs. 53.75 lakhs of which Rs. 40.31 lakhs will
be financed by the bank under NABARD financing scheme ·
The interest rate on term loan is 16.50% ·
Loan will be repaid in 32 quarterly instalments starting from second
year ·
Administrative expenses have been considered as 2% on total income
·
5% free chicks are taken into consideration for calculating production
of eggs, feed and medicine cost, but are excluded in calculation o chick
cost.
