Indian feed Industry

Poultry compound feed consumption growing at 7-8% but layer segment remains under penetrated  Approximately 90% of the broiler industry uses compound feed rations which translates into total consumption of 9.4 million tonnes against the required 10.4 million tonnes  Integrators have brought feed based efficiencies and rationalisation to the industry  The shorter cycle of broiler rearing also encourages individual farmers to stick to compound rations  Stand alone broiler feed production will be challenging business in long run  integration provides feed miller an alternative channel to distribute and market their feed. This could drive many feed millers to opt integration as strategy but with varying degree Some of the companies like SKM feed which is right into integrators belt have focus on the regions which does not have feed mill like Kerala. • Another stand alone feed miller belt is North India and Eastern India • Mill size is shifting towards 20 tonne/hr, in past 5 mt/hr was norm but used to required higher labor component. Later industry migrated to 10 Mt/hr however faced utilization pressure and finally now new mills are coming up with 20 Mt/hr capacity Layer remains a key swing factor for future  The total demand of 11.6 million tonnes, however it is estimated that the layer formulated feed consumption represents only 2-3 million tonne growing at 5-6% per annum  In longer term, with consolidation and increase in farm sizes, layer farmers will integrated backward into feed milling transitioning from home mixer to formulated feed  Thinner margins and long layer cycles a key challenge; Volatility in eggs prices throughout the layer cycle encouraging farmer to use home mixer to manage the cost of production Volatility not availability, the biggest concern for feed users  Perishability leads to high volatility - insignificant processing and lack of cold chain infrastructure  Government interventions to reduce wet market and encourage processing would be welcome steps not only for food hygiene and safety but also to reducing the end product price volatility India worlds largest dairy producer; growing @ 4% per annum  Assuming 0.5 kg of compound feed is required for a kg of milk production, cattle feed requirement could be as high as 67 million tonnes in India But dairy feeding remains underpenetrated  only 11% of the total feed requirement met through compound feed, and rest met through home mixer and grazing  One of the key reasons for the low penetration in dairy is that historically lower dairy prices have discouraged farmers to use compound feed  the formalised or professional dairy sector is only 24% (2012/13) of the total production in India and this also helps explain the very low levels of market penetration  The lack of large scale dairy farms remains a key constraints as individual farmers do not use modern feeding practices on a consistent basis  It is noticeable that 78% of India’s milk cow heard is built on indigenous dairy breeds, which may not respond to compound feed as effectively as western dairy breeds It is expected that formal sector would account for 34% of the milk in 2018/19  Some states in India such as Punjab are witnessing significant change towards larger scale dairy farming which should encourage higher degree of feed consumption in coming years  Rabobank expects cattle feed demand to grow at 6% in coming years however it still remains below the true potential  The growth could be higher if the required enabling environment is provided though policy reforms