Poultry

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ICRA Rating Feature

POULTRY INDUSTRY - BROILER MEAT AND TABLE EGG
Analyst Contact
Anjan Ghosh
aghosh@icraindia.com +91-22-3047 0006

Overview
 The domestic poultry market size is estimated at more than Rs. 47,000 crore and the growth trend is likely to continue for the present decade as demand has been growing steadily on back of favourable socio economic factors like healthy GDP growth, rising purchasing power, changing food habits, and increasing urbanization. The poultry sector in India has undergone major shift in structure and operation during last two decades transforming from a mere backyard activity into a major commercial activity with presence of large integrated players with successful implementation of contract poultry farming on a large scale. This transformation involved sizeable investments in breeding, hatching, rearing and processing activities. Farmers in India have moved from rearing country birds in the past to rearing hybrids such as is Hyaline, Shaver, Babcock, Ross, etc which ensure faster growth of chicks, low mortality rates, excellent feed conversion and sustainable profits to the poultry farmers. The industry has been supported by indigenous advancements in genetic capabilities, veterinary health, poultry feed, poultry equipment, and poultry processing sectors. India also leads in producing specialized products like Specific Pathogen Free (SPF) eggs in Asia, which act as key inputs for manufacturing poultry vaccines and health products. Indian poultry sector has been growing at around 8-10% annually over the last decade and at more than 15% in last three years. The production capacity has responded with increased integration and increased penetration of contract poultry farming. ICRA’s assessment based on industry feedback indicates that the domestic broiler meat demand is expected to grow at around 15-18% while table egg demand is expected to grow at 5-7% over medium to long term. Key challenges faced by industry include high feed costs combined with supply shortage of corn, inadequate cold chain and transportation infrastructure, high vulnerability to disease outbreaks and highly volatile realizations affecting cash flows. The realisation pressures stem from the low entry barriers, which leads to oversupply situation. Further the marginal penetration of processed chicken (less than 5%) in overall poultry market limits the value-add potential and adds to the volatility of cash flows for the key players in the industry. There have been concerted efforts in recent years from large integrators as well as Government bodies to promote increased processing of poultry products (in form of frozen/chilled chicken) and at the same time increasing acceptability of dressed chicken in domestic market. The processed chicken market is expected to grow at a much stronger pace of more than 25% albeit on a low base. Transition from a predominantly live bird/wet market to a chilled/frozen market is crucial for the future expansion of domestic poultry industry as well as to increase presence in international trade.

Subrata Ray
subrata@icraindia.com +91-22-3047 0027



Ravi Kabra
ravi.kabra@icraindia.com +91-20-2556 0195/96



Relationship Contact
L. Shivakumar shivakumar@icraindia.com +91-22-3047 0005

June 2011









Website www.icra.in

ICRA Rating Feature

Poultry Industry: An ICRA Perspective

Domestic poultry industry has matured from a backyard activity to large scale integrated poultry farming with wide spread adoption of modern technology Though poultry farming is an age old business in India, modern poultry breeding started in 1970s and large scale integrators have become prominent in last decade. The modern poultry farm methods are based on total separation between chicken bred for meat production (broilers) and those bred for table egg production (layers). This is to take advantage of negative genetic correlation in chicken between growth and...
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