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Challenges and opportunities for marketing of poultry products

K.G.ANAND
Venkateswara Hatcheries Ltd.,3-5-808, Hyderguda, HYDERABAD 500 029
Email: [email protected]

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Background

Poultry Industry in India has made rapid progress in the last three decades. Its development has not only been in size but also in productivity, technology up gradation and quality of its products measuring to strictest EU/USA norms. India occupies 4 th place in the World for Egg production and 5 th place in the World for Poultry meat production (Annexure-I). The Indian Poultry Industry provides direct and indirect employment to about 3.0 million people specially in much needed rural India, and contributes to about INR 29000 crores to the National GDP. Poultry is the only sector in Agriculture steadily growing at a healthy rate of 7% - 8% in layers and 15% in broilers since last 2 decades. Through a well-planned indigenization and acclimatization, the productivity has been improved systematically to the levels on par with the developed countries. The per capita availability in India has increased to about 42 eggs and 1.6 kg poultry meat. Considering the consumption level of 300 eggs and 11 kg of meat in many developed countries and the recommended per capita consumption of our Nutritional Board of 180 eggs and 9 kgs meat, India, with a population of 1.02 billion is considered by the world to be at threshold stage and move up in World Poultry map and occupy the No.1 position in coming years.

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Egg Marketing :

While for any agricultural product, the producer gets only 30% to 35% of the consumer rupee, thanks to late Dr.B.V.Rao, called “Father of Modern Poultry in India”, the egg producers in India obtain 70% - 75% of the consumer rupee thanks to daily farmer egg price declaration by National Egg Coordination Committee (NECC).

National Egg Coordination Committee (NECC):

NECC is an association of Poultry farmers and traders established in 1982 by Dr.B.V.Rao and a group of farmers to enable farmers declare their own farm-gate price for eggs. It is an unique institution with no parallel in the world where irrespective of size or location the farmer that too, for his entire production at his farm-gate gets the official notified price as decided by elected farmer representatives of NECC every day, which is published in local leading dailies.

National Egg Coordination Committee is a charitable trust with 24 zones and 118 local committees has about 25,000 farmers as its members spread out all over India in every production centre is helping the layer farmers obtain reasonable, remunerative, viable price for eggs based on demand and supply for a production centre and its connected consumption centers. To ensure traders do not exploit farmers, NECC undertakes Market Intervention Scheme as and where necessary by extension of subsidy or directly procuring eggs for cold storage in the domestic market. To enforce the price declared, NECC also has its market arm, Agrocorpex India Limited (ACIL), a Public Limited Company, entirely owned and managed by poultry farmers. NECC has also been instrumental, at the instance of poultry farmers, in incorporating Bharat Egg Producer's Association, which encourages export of shell eggs, promotion of eggs in electronic and print media and sponsors sports and related activities to promote consumption of poultry products.

NECC is the only agency, well recognized by policy makers in State and Centre as representative body of poultry industry to represent the interests of poultry and has been effective to get its grievances addressed and remedial measures initiated.

Challenges:

In India, Eggs are still transported in open condition and in un-refrigerated vehicles. The entire chain of distribution and physical handling up to consumer is in open climate exposed to varying temperatures of seasons and agro climatic conditions. Shelf life of eggs is therefore restricted to 11-14 days in summer and 18-20 days in winter. The egg is still sold as a commodity in India and purchased by consumer mostly from shop next door for daily needs i.e. Pan shops, kirana stores, bakeries etc. India with a 11-12 crore daily egg production and with over its 70% of human population living in villages each with 500 – 2000 population per hamlet is located across the length and breadth of country in over 6,27,000 villages (Annexure-II). It is a marketer's nightmare to ensure sufficient availability of Eggs to consumers as it is a perishable product, to be made available in vast number of shops and stocked sufficient to meet daily needs of consumers.

Opportunities:

  • Rural market:

Because of the location of farms in semi urban and urban centers and poultry traditionally developed in concentrated pockets in AP, TN, Punjab & Haryana and Maharashtra, the availability of eggs is high in few states in Urban and semi urban centers, but in rural centers and rest of the country, the availability is low. There is a vast scope to tap the rural markets and NE states where consumption is low because of poor availability. Sufficient number of sales outlets for eggs in interior villages will ensure in improving the per capita consumption of eggs. To tap the egg market potential in villages, more number of outlets by farmers need to be opened in villages.

  • Even shell eggs free of antibiotics and pesticide residues could be exported to Japan, Fast East and Europe, which is currently sourcing at a high price from USA, Europe and other countries.
  • According to Mr.Geoff Fairhurst, Poultry Economist, USA who conducts regularly a world survey to find out the Competitive status of different countries for Egg production, India is ranked first in 48 countries or competitively the best due to its low cost of production (Annexure-III) Further, India is geographically ideally located to cater to the Middle East and Far Eastern countries for shell eggs. Therefore vast scope exists to increase the export of shell eggs to Middle and Far Eastern countries.
  • India is exporting egg powders meeting strict quality norms of EU. While Egg powder from India is well accepted in EU, Japan and Far-East, the big layer farmers in India need to promote and tap the potential for shell eggs from India allaying the fears of pesticide and antibiotic residues.
  • Eggs in Mid-day meal scheme:

Egg is a balanced food item that can not be adulterated. The infertile egg produced in the modern farms is accepted as a part of vegetarian diet by a majority of population. The Supreme Court has advised all States to implement the mid day meals scheme. Mid day meal scheme is implemented in certain states like Andhra Pradesh, Tamilnadu, Maharashtra etc. In AP, there are about 75 lakhs school children who are covered under mid-day meal scheme. Even if one egg per child per week is served, the egg consumption will increase by 33 crores per annum in AP alone. Similarly, if eggs are served in all the states, the egg consumption could spurt by more than 500 crores per annum. Egg need to be made compulsory under the mid-day scheme once a week to school children in all states which would improve the health status of the under privileged children, and improve the attendance in schools and academic standards, besides help in increasing the per capita egg consumption and maintaining remunerative price for eggs.

Broiler Industry:

The broiler industry operates completely as a live bird market (or 'wet' market), with birds retailed as live birds and slaughtered in front of the customer in the retail shop. Almost 98% of the consumption is in live-form limiting therefore the area that can be catered from a production centre. Customers have over the years developed a perception that fresh poultry meat purchased as live bird and slaughtered on site in their presence is better in quality as problems may be difficult to detect until it is thawed.

Broiler bird trading is very volatile where prices are determined based on demand-supply in a given market for the day. The broiler prices fluctuate widely and even short surpluses result in a very wide fluctuation in market prices. Consumption of poultry and other meats is adversely affected during religious festivals leading to significant drop in demand. With the little scope for sale of frozen products or inter regional movement due to preference of live birds, the seasonal swings in demand are causing high volatility for market prices of broilers.

BROMARK (Broiler marketing Cooperative Society):

Bromark, a brainchild of late Padmashri Dr.B.V.Rao is an all India Broiler Farmers' Body registered under the Multi State Cooperative Societies Act in 1994. The objective of the Bromark is to ensure the gap between producers price and consumer price is reduced and promote the consumption of chicken meat by advertising on its nutritive value.

Bromark like NECC for eggs is announcing farm gate price for broiler live kg at all important production centers in the state by assessing the demand and supply trends and trying to reduce middlemen exploitation to the maximum extent.

Broiler marketing:

The Broiler production is marketed mostly by big farmers, integrators, private wholesalers and retailers. In the interior pockets, the producers themselves are marketing in small retail outlets and catering to the local requirements. While most of the broiler birds are consumed within the state, surplus broilers at times are sent to other states from AP depending upon the supply and demand position.

Integration:

Integration in Broiler production is a recent phenomenon and has been gaining momentum for the last 3-4 years. Presently a bulk of production, about 60% of broilers is under Integration and the rest is held by independent and small scale producers (farmers). Large scale integrated producers are accounting for a growing share of output in A.P, which is steadily growing. Contract farming under integration is assuming significance, wherein, farmers are given all the inputs and paid growing charges based on performance. As all-in-all-out is practiced and farm size is small with owner & family supervision of the flock, the performance is better and cost of production less than stand-alone farmer.

Processed chicken:

The market for frozen or chilled poultry products is only limited to few institutions i.e. hotels, fast-food restaurant chains and to a negligent extent to urban consumers. This very small segment of consumers is served by processing sector, whose volume account for hardly 2% - 3% of production. However, certain State Governments are envisaging to discourage slaughtering of birds within the Municipal jurisdiction limits due to pollution and other issues. If such measures are pursued, the sale of slaughtered chicken is expected to increase and the processing units if simultaneously advertise on the quality aspects of dressed chicken the consumers could be advised to pay slightly higher amount for frozen/chilled chicken for their health. In view of this, there is scope in the coming decade for new chicken processing plants to come up and sale of processed chicken to increase both to cater to domestic market as well as to cater to export markets.

CENSUS OF VILLAGES

 

Villages

Populations (Millions)

% Of Village

% Of Population

< 200

120.1

12.2

21.6

2.4

200 - 499

150.7

51.2

27.1

10.1

500 - 999

135.9

97.1

24.4

19.1

1000 - 1999

94.5

131.5

17.0

25.9

<Total>

501.2

292.0

90.1

57.5

WORLD SURVEY JULY 2004 BY GEOFF FAIRHURST

COUNTRY

CURR

EXCH

1 KG

1 KG

D/O

18 WK

16 WK

Kg Egg

D/O

07/01/04

Egg

Feed

Chick

Female

D/O

Buys

Buys

USING U.S. $

Kg Feed

Kg Feed

 

Argentina

PESO

2.95

58.34

14.25

50.88

240.84

189.96

4.094

3.57

Australia

AU $

1.420

112.50

24.65

176.06

457.75

281.69

4.56

7.14

Bangladesh

TAKA

59.440

100.96

20.19

50.47

311.24

260.77

5.000

2.500

Bolivia

BOL

7.933

60.01

15.50

65.00

200.00

135.00

3.87

4.19

Brazil

REAL

3.08

50.55

14.62

37.36

211.18

173.82

3.46

2.56

Canada

CND $

1.33

129.20

18.60

77.27

330.08

252.81

6.95

4.15

China

YUAN

8.28

62.82

22.35

19.93

NA

NA

2.81

0.89

Colombia

PESO

2658.00

 

 

 

 

 

 

 

Czech

KC

26.190

95.48

24.05

61.09

324.55

263.46

3.970

2.540

Denmark

D. KR.

6.12

114.50

22.73

149.14

452.49

303.35

5.04

6.56

Ecuador

SUCRE

1.00

91.69

28.00

65.00

550.22

485.22

3.28

2.32

Egypt

Ł E

6.22

71.53

25.74

38.62

228.48

189.86

2.78

1.500

Estonia

E. KR.

12.872

97.13

24.86

81.57

427.28

345.71

3.49

3.28

Finland

EURO

0.82

75.33

24.30

97.21

400.97

303.76

3.100

4.000

France

EURO

0.82

78.99

23.69

81.41

388.82

307.41

3.33

3.44

Germany

EURO

0.82

64.40

24.30

63.18

243.01

179.83

2.650

2.600

Ghana

CEDI

9002

 

 

 

 

 

 

 

Holland

EURO

0.82

52.69

27.04

68.04

359.66

291.62

1.95

2.52

Hungary

FOR

206.40

104.99

27.13

75.09

421.51

346.42

3.87

2.77

India

RUP

45.885

38.88

14.17

36.18

174.35

138.17

2.74

2.55

Indonesia

RUPIAH

9295.00

76.39

21.52

43.03

258.24

215.21

3.550

2.000

Japan

YEN

108.130

129.47

32.37

129.47

647.37

517.90

4.000

4.000

Kenya

KSH

79.300

 

 

 

 

 

 

 

Lithuania

LITAS

2.84

 

 

 

 

 

 

 

Malaysia

M. RIN

3.800

87.74

24.47

50.00

260.50

210.50

3.59

2.04

Mexico

PESO

11.47

59.62

21.34

31.38

166.49

135.11

2.79

1.470

 

 

 

 

 

 

 

 

M

 

91.68

23.87

72.35

343.18

269.22

3.840

3.030

 

 

 

 

 

 

 

 

> 112.5%

 

103.14

26.86

81.39

386.07

302.87

4.320

3.41

< 87.5%

 

80.22

20.89

63.30

300.28

235.57

3.360

2.65




COUNTRY

CURR

EXCH

1 KG

1 KG

D/O

16 WK

16 WK

Kg Egg

D/O

07/01/04

Egg

Feed

Chick

Female

D/O

Buys

Buys

USING U.S. $

Kg Feed

Kg Feed

Morocco

DIRHAM

9.029

7.54

33.23

69.22

387.64

318.42

2.33

2.16

Myanmar

KYAT

800.00

66.68

15.63

41.25

312.50

271.25

4.27

2.64

N. Zealand

NZ $

1.56

163.75

32.03

168.48

576.55

408.07

5.11

5.260

Nigeria

NAIRA

132.50

134.20

30.19

120.75

420.19

299.44

4.45

4.000

Norway

N.KR

6.97

150.69

38.46

111.94

480.7

368.83

3.92

2.91

Pakistan

RUPEE

58.37

80.31

17.82

20.56

171.32

150.76

4.56

1.15

Peru

SCL

3.470

95.100

22.19

93.08

243.62

150.54

4.29

4.2

Philippines

PESO

56.03

92.24

25.88

44.62

249.89

205.27

3.56

1.72

Poland

ZLOTY

3.71

67.38

30.87

54.57

350.31

295.74

2.18

1.7

Portugal

EURO

0.82

Russia

RBL

29.03

82.12

23.36

135.38

529.45

394.07

3.52

5.8

S. Africa

RAND

6.22

84.90

24.12

64.33

321.65

257.32

3.520

2.67

Serbia

N DIN

59.72

150.72

26.80

50.23

385.10

334.87

5.62

1.87

Slovakia

SK

32.75

91.64

25.96

62.60

357.31

294.71

3.530

2.41

Spain

EURO

0.82

135.03

26.75

55.89

291.62

235.73

5.05

2.089

Sri Lanka

RUPEE

102.33

87.97

20.52

39.09

244.32

205.23

4.287

1.91

Sweden

S KR

7.540

112.73

24.93

112.73

437.67

324.94

4.52

4.52

Taiwan

NT $

33.7

64.31

29.08

89.03

343.40

254.37

2.21

3.06

Thailand

BAHT

40.78

102.21

24.53

66.22

367.87

301.65

4.167

2.700

Tunisia

DINAR

1.26

115.01

30.13

57.89

413.50

355.61

3.82

1.92

Turkey

LIRA

1468500

U.K.

Ł

0.551

126.06

23.59

81.05

406.54

324.69

5.34

3.47

U.S.A.

U. S. $

1.00

54.18

14.50

51.00

180.00

129.00

3.74

3.517

Ukraine

HRYVNA

5.315

69.00

20.70

43.27

298.15

254.88

3.333

2.090

Uruguay

PESO

29.630

72.69

17.72

57.37

286.87

229.50

4.1

3.238

Vietnam

DHONG

15678.00

126.53

23.34

89.30

331.67

242.37

5.421

3.83

M

91.68

23.87

72.35

343.18

269.22

3.840

3.030

Source : IPSACON-2005