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(~22%). This represents ~6.2% of world production. India exports about 4mn MT of protein meal, (25% of its total production) to other countries, such as South Korea, the Middle Eastern countries and the EU. About 80% of these exports are soya bean meal, and India is the fourth-largest meal exporter in the world, with a ~5% market share. Currently the market is dominated by regional unorganized players and the share organized players in this sector is less than 12% and is dominated by few Indian players. The cattle feed business is growing by a CAGR of more than 30% as milk producers have started replacing traditional feed with more nutritional DOC having realized the tangible benefits in terms of yield improvements. Also, there is an increasing trend in diversion of soya-bean meal for human based consumption leading to bigger market share of cottonseed meals for cattle feed in India.
The Indian feed industry is about 35 years old. It is mainly restricted to dairy and poultry feed manufacturing; the beef and pork industry is almost non-existent. The quality standards of Indian feeds are high and up to international levels. Raw materials for feed are adequately available in India. The industry's production is about 3.0 million tonnes, which represents only 5 percent of the total potential, and feed exports are not very high. The feed industry has modern computerized plants and the latest equipment for analytical procedures and least-cost ration formulation, and it employs the latest manufacturing technology. In India, most research work on animal feeds is practical and focuses on the use of by-products, the upgrading of ingredients and the enhancing of productivity. The country has entered into a period of liberalization and this is bound to influence the livestock industry. The per capita consumption of milk, eggs and broiler meat will grow. The Indian feed industry is undergoing a very exciting phase of growth for the next decade. Feed manufacturing on a commercial and scientific basis started around 1965 with the setting up of medium-sized feed plants in northern and western India. Feed was produced mainly to cater to the needs of dairy cattle. The poultry sector was not developed at that time and was restricted to backyard production, with the desi (or native bird) kept mainly for the production of eggs. The poultry industry is now growing in importance. Today, the Indian feed industry is worth approximately Rs 45 billion, that is about US$1 billion. Dairy Cattle Worldwide, India is number one in milk production, at 78.0 million tonnes per annum, and the dairy industry is spread across the whole country. India has one of the largest populations of cattle and buffalo
in the world. In a total of 288 million head, there are 10 million crossbred cows, 15 million good milch cows of local varieties and 36 million buffaloes of good milch varieties (Table 2). The remainder of the cattle population is of a non-descript variety and a sizeable proportion consists of bullocks.
Table of Contents
Introduction The livestock industry of India Feedstuffs and ingredients in animal feeds Animal feed commodity production Feed standards and specifications Feeding practices and the use of compound feed Research and development in animal feed
The feed industry and CLFMA Issues in the animal feed industry The future of the Indian feed industry - winds of change
INTRODUCTION
Feed manufacturing on a commercial and scientific basis started around 1965 with the setting up of medium-sized feed plants in northern and western India. Feed was produced mainly to cater to the needs of dairy cattle. The poultry sector was not developed at that time and was restricted to backyard production, with the desi (or native bird) kept mainly for the production of eggs. The poultry industry is now growing in importance. Today, the Indian feed industry is worth approximately Rs 45 billion, that is about US$1 billion.
Dairy cattle
Worldwide, India is number one in milk production, at 78.0 million tonnes per annum, and the dairy industry is spread across the whole country. India has one of the largest populations of cattle and buffalo in the world. In a total of 288 million head, there are 10 million cross-bred cows, 15 million good milch cows of local varieties and 36 million buffaloes of good milch varieties (Table 2). The remainder of the cattle population is of a non-descript variety and a sizeable proportion consists of bullocks.
The cross-bred population is either Jersey or Holstein-Friesian, crossed with local cows. Cross-breeding was a natural solution to upgrading the milk yield in the absence of highvalue imported varieties of pure-bred animals. The buffalo breeds are unique to India, and produce milk with a fat content of 7 to 8 percent. Milk is seen as a health drink and a variety of Indian sweets are prepared from milk. The ice-cream market is growing. Farms are located on the outskirts of cities and within cities. Almost all villages have a number of cattle, but there are only a few organized dairy farms. In India, dairy is not so much an industry as a smallholder farming activity. Growth in the milk sector has occurred mainly through cooperative efforts. Cooperatives started by supplying milk collection centres, where milk was collected from villagers in quantities as small as 1 litre, and gradually started to provide other services to farmers, including education, artificial insemination, veterinary health support and feeding. The small farmers became prosperous, loan facilities were made available through banks, and member farmers started to share the profits from cooperatives. Cooperatives also set up
their own modern computerized feed plants. They have modern milk processing plants from which they produce and market pasteurized milk, butter, butter oil, chocolate, ice-cream and milk sweets, which are very popular with Indian consumers. Today, the feed production from cooperatives is about 0.6 million tonnes per year. The National Dairy Development Board (NDDB), which has excellent facilities for research on breeding, nutrition and health care, has played a pivotal role in setting up cooperatives. Without NDDB and several of the existing dairy cooperatives, the milk sector in India would have suffered. The dairy industry in India is expected to grow, but growth will be restricted to individual small farmers. It is unlikely that India will see the advent of large, organized dairy farming in the near future.
Poultry
Compared with the rest of the livestock sector, the poultry industry in India is more scientific, better organized and continuously progressing towards modernization. Breeding and feeding management has improved through education, training, competition, expansion and survival instincts. India is the world's fifth largest egg producer, with a total production of 40 billion eggs per year. The broiler industry is growing at the rate of 10 percent per annum. Indicators are given in Table 2. India has 150 million layers and 650 million broilers. Annual per capita consumption of eggs is 40, and that of broiler meat is 1 000 g. Although these figures are low in comparison with those for developed countries, the industry has great potential to expand because 30 percent of the country's population (about 300 million people) is developing economically and the demand for poultry products is therefore likely to grow. The poultry industry has witnessed several ups and downs in the last 25 years as a result of unplanned growth and a lack of government regulation. Currently, 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. Although the phenomenon is new, 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. The poultry industry is very modern, with pure-line breeding, the latest vaccines and medicines, environmentally controlled poultry houses, up-to-date processing units, the latest management practices, chicken processing, exports of hatching eggs and excellent feed quality.
the basis of local, long-established knowledge of feeding and breeding. There is, however, a fairly good disease diagnosis and treatment system, with modern medicines and vaccines.
Swine
India is a multilingual, multiracial country whose people hold various religious beliefs. Although the majority of the population is Hindu, there are sizeable minorities of Muslims, Christians, Sikhs, Buddhists, Jains, Parsees and others. India also has a large tribal population and is a plural society in which the sentiments of each social and religious group need to be respected for harmony and peaceful coexistence. Thus, most states in India have banned cow slaughter and the beef industry is therefore non-existent. The majority of people disapprove of pork consumption, maybe because of the lack of scientific management on swine farms. Swine reared on the streets are very unhygienic and buyers are always suspicious about the source of pork, so there is no organized pork industry.
Aquaculture
The aquaculture industry is relatively young. Prawns and fish are grown in both fresh and brackish water, the latter being located mostly in the southeast and southwest coasts. Aquaculture feed is manufactured with highly scientific methods and modern plants that use new technologies and are highly efficient. Multinational companies from Thailand and Taiwan Province of China have invested in this business. India exports most of its aquaculture products.
Popular by-products
Some by-products are very nutritious and palatable to cattle, and these products form the bulk of cattle feed. They include wheat bran, rice bran and oil-extracted rice bran, tapioca, guar meal, safflower meal, maize gluten and molasses. A special mention should be made of Indian cattle feed's unique use of hulls or shells, popularly known as chunis in the local language. These shells come from pulses: horse gram, black gram, mung bean and pigeon pea.
Sunflower meal 0.52 Cottonseed cake 1.12 Rice bran (deoiled) 2.95 1 Spillover from previous year's production. Source: Government of India. 1995. Fertilizer statistics 1994-95.
0.03 0 0.005
Oilseed meals
India produces soybean, groundnut, rapeseed, sunflower, sesame and cotton meals and these are used as major ingredients in animal feeds. The production of solvent meals is shown in Table 3. For animal feeds, soybean is the most frequently used oilseed meal and has completely replaced fishmeal in poultry feeds. Cottonseed cake and meal are often used in cattle feed throughout the country. Groundnut meal is less popular because of the aflatoxin problem. Rapeseed meal is second to soybean meal in production and second to cottonseed cake and meal for cattle feed. Sunflower meal is commonly used in both cattle and poultry feed. India regularly imports edible oil and imported 4.4 million tonnes in 1998-1999. These imports have created problems for the country's crushers and, although India has about 600 solvent extraction units, they are running at only 50 percent of capacity. India's economy is agro-based but the yield per hectare is a cause of major concern to the country's farmers and agriculture. The government recognizes this and there are subsidies on fertilizers and power tariffs. The government also assures base prices for many agrobased commodities. India's average yields per hectare of major commodities compared with the highest yields realized worldwide are given in Table 4.
With a population of 1 billion people, the demand for agroproducts is great and India will have to augment its agricultural production by several hundred percent if the country is to remain self-sufficient.
Moisture(maximum 11 11 11 %) Crude protein (N x 23 20 20 6.25)(maximum %) Crude 6 6 7 fibre(maximum %) Acid-insoluble 3.0 3.0 4.0 ash (maximum %) Salt (as NaCl) 0.6 0.6 0.6 (maximum %) Source: BIS. Poultry feeds - specifications, fourth revision.
Calcium (Ca) 1.2 1.2 1.0 1.0 (maximum %) Available phosphorus(minimum 0.5 0.5 0.5 0.5 %) Lysine (maximum %) 1.2 1.0 0.9 0.6 Methionine(maximum 0.50 0.35 0.3 0.25 %) Metabolizable energy (minimum 2 800 2 900 2 600 2 500 cal/kg) Source: BIS. Poultry feeds - specifications, fourth revision.
Table 6c BIS standards, poultry feed requirements for minerals, fatty acids, amino acids and vitamins
Characteristic Broiler starter feed Broiler finisher feed Chick Growing feed chicken feed Laying chicken feed
55 1 75 75 9 8 000 1 200 3 5 15 15 0.15 0.010 0.5 800 10 1.0 5 1 0.55
Manganese(mg/kg) 90 90 90 50 Iodine (mg/kg) 1 1 1 1 Iron (mg/kg) 120 120 120 90 Zinc (mg/kg) 60 60 60 50 Copper (mg/kg) 12 12 12 9 Vitamin A(IU/kg) 6 000 6 000 6 000 6 000 Vitamin D3(IU/kg) 600 600 600 600 Thiamine(mg/kg) 5 5 5 3 Riboflavin(mg/kg) 6 6 6 5 Pantothenic 15 15 15 15 acid(mg/kg) Nicotinic acid(mg/kg) 40 40 40 15 Biotin (mg/kg) 0.2 0.2 0.02 0.15 Vitamin B12(mg/kg) 0.015 0.015 0.015 0.01 Folic acid(mg/kg) 1.0 1.0 1.0 0.5 Choline (mg/kg) 1 400 1 000 1 300 900 Vitamin E(mg/kg) 15 15 15 10 Vitamin K(mg/kg) 1.0 1.0 1.0 1.0 Pyridoxine(mg/kg) 5 5 5 5 Linoleic acid(g/100 g) 1 1 1 1 Methionine + 0.9 0.7 0.6 0.5 cystine (g/100 g) Source: BIS. Poultry feeds - specifications, fourth revision.
The Compound Livestock Feed Manufacturers' Association (CLFMA) has prepared its own specifications, which are shown in Table 7 for cattle and Table 8 for poultry.
Table 7 CLFMA specifications for compound feeds, dairy cattle and buffaloes
Characteristic Dairy special feed Type I feed Type II feed
12.0 18.0 -2.5 12.0 4.5
Moisture (maximum %) 12.0 12.0 Crude protein (on dm basis) 22.0 20.0 (minimum %) Undegraded protein(minimum 8.0 -%) Crude fat (minimum %) 3.0 2.5 Crude fibre (maximum %) 7.0 7.0 Acid-insoluble ash(maximum 3.5 4.0 %) Source: CLFMA Standards for Compound Animal Feeds.
Moisture(maxim 12 12 12 12 12 12 um %) Crude protein(minimum 18 14 16 14 20 18 %) Fat (maximum 2 2 2 2 3 3 %) Crude fibre(maximum 7 8 8 10 6 5 %) Acid-insoluble ash (maximum 4 4 4 4 4 4 %) Metabolizable energy(minimum 2 600 2 300 2 500 2 300 2 600 2 700 cal/kg) Source: CLFMA Standards for Compound Animal Feeds.
The specifications of both BIS and CLFMA are only guidelines and their use as standards is not compulsory. The animal feed business is competitive and feed manufacturers therefore endeavour to produce feed of the highest possible quality.
Cattle feed
Cattle feeding practices are very traditional. Farmers choose their own ingredients and prepare their own formulations, believing that by these means they are able to pay more individual attention to their cattle. The productivity of the cattle is limited because of their poor genetic make-up, 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 because most farmers are reluctant to use compound feed fully. Instead they compromise by using such feed in proportions of 5 to 60 percent, making up the balance with their own formulations. 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 share of compound cattle feed manufactured by the industry, in relation to the overall potential, is low for the following reasons: 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. 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. 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. Homemixed feed is very frequently used for buffaloes and low-yielding cattle.
Poultry feed
Poultry feed is divided into layer and broiler feed. In the case of layer feed, cost is the main constraint in using compound feed. An innovative, high-value compound feed can result in increased numbers of eggs, but the risks are too high because of the birds' long life cycle. Compound feed has, however, made a major contribution to broiler feeding. This is an example of excellent coordination among instrument technology, formulations and use of feed additives and supplements. Cost is a less important factor because the performance improvements are greater than the cost increases and the birds' life cycle is short.
Two types of poultry feed are prepared. One is ready-made and in the form of mash or pellets. The second is in concentrated form for mixing with an energy source. Concentrates are protein sources, balanced in amino acids and containing vitamins, minerals and feed additives. They are mixed with energy sources such as maize, sorghum or bajra to prepare poultry rations.
conducted on the energy-protein and energy-amino acid ratios and the vitamin and mineral requirements of animals. During the next phase of research, the main focus was on bypass fat and bypass protein utilization in ruminants, and on the role of various feed additives in enhancing milk, egg and broiler meat production. Research and development work has been conducted on least-cost formulations and usage of synthetic amino acids.
Note: Most of these by-products are used in cattle feed. They are regional and seasonal and used, always fresh, in small quantities. Source: Author's selection from various research and published work.
Over the years, CLFMA has been able to solve many problems of the industry, but many others still remain unsolved. CLFMA is gradually becoming a representative of the entire livestock industry. The feed production of its members is described in Table 10, while the industry's production of feed vis--vis potential is described in Table 11.
Others
0.05 0.03 0.02 0.03 0.03
Total
2.81 2.93 2.77 3.18 3.53
1995 1.50 1996 1.50 1997 1.41 1998 1.46 1999 1.60 Source: CLFMA publications on production.
Production as % of potential
2.6 21.1 5.07
Sources: Directorate of Economics and Statistics, Ministry of Agriculture. 1992. Livestock census; CLFMA production figures.
Increasingly, products, including new products, are being excluded from the purview of the Essential Commodities Act 1955. Major raw materials for compound animal feeds, such as groundnut, soybean, rapeseed and sunflower meals and cottonseed and rice bran extract, which are exported, are not covered by the Act. There is therefore no reason for it to cover the animal feed manufactured with these raw materials. Furthermore, the industry has several reservations about implementing BIS standards. There is a lack of flexibility in these standards and they are lagging far behind the industry's products. For cattle, they have not been revised for 30 years, while the BIS standards for poultry are obsolete. 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. However, the industry's principal 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. This is because all innovations would have to be passed by BIS, and such a process is likely to take several years to complete.
Country
Rate (%)
Hong Kong 0 Indonesia 0 Japan 0 Malaysia 0 Nepal 4.0 Pakistan 0 Singapore 0 Sri Lanka 5.0 Thailand 0 India 39.61 Source: Information collected by CLFMA from various feed associations in the other countries.
follows: per capita milk from 240 to 450 g per year; per capita eggs from 40 to 100 per year; and per capita broiler meat from 1 000 to 2 000 g per year. A major change is occurring in India on the economic front. The country has adopted a model that lies midway between liberal and public sector production, but growth has been affected by the poor performance of most of the public sector units, rising government costs and fiscal deficit, and the economy has suffered. A process of liberalization was set in motion by the government and has been implemented for the last eight to ten years. This has caused India to open up and invite investment from multinationals, liberalize imports, reduce government expenditure and remove public sector businesses. It also means that the days of nationalization, unnecessary government controls and restrictions will soon be over thanks to progress in the country's economy. India has entered into an agreement with its trade partners under the World Trade Organization (WTO). The changes brought about by the liberalization process will be slow but certain. The government is opening up imports in a phased manner, and it is expected that this process will be completed by April 2003. In the meantime, about 930 items, including agricultural products, will be open for import under open general licence from April 2001, making it possible to import dressed chicken, milk and milk products. Various livestock industry associations have taken issue with such imports in an attempt to protect their members. If the livestock industry is affected, the feed industry will also be affected. The Government of India has raised the tariff on all poultry and poultry products from 35 percent to the WTO boundary level of 100 percent. It therefore appears that there will be a level playing field. In view of the expected rise in per capita consumption of chicken meat, eggs and milk, livestock production and productivity will grow. The dairy industry, which is cooperative-based, is growing with the increased capacities of milk processing units. The population of cross-bred cattle and buffaloes is also growing. Milk is very popular in India. The poultry industry is developing towards vertical integration and a few multinational companies have already entered the Indian poultry business. Although the live bird market currently accounts for about 90 percent of the total market, it is expected that the consumption of dressed chicken will grow in the next five years, from the existing 10 percent to 25 percent or more. This would mean establishing very hygienic and scientific processing units. Cold chains, branded chicken, chicken cuts, etc. will be introduced and, depending on the success and consistent quality, consumer preference for dressed meat will grow. The next decade will see significant changes in restructuring, mergers, acquisitions, amalgamations, joint ventures, diversification, integration and efficient service chains, ecommerce and use of the latest information technology in global tenders, trading, export/import and other commercial activities. At the root of all these developments will be the scientific development of feed manufacturing technology. The Indian feed industry will increasingly use biotechnology, more scientific formulations, new molecules and natural and herbal products to improve animal productivity. Indian agriculture will also use biotechnology and genetically modified organisms (GMOs) to support the feed industry, which is entering a very exciting phase of growth for the next decade.
Animal Husbandry
Statement 10 : Cash flow analysis of the feed plant project (Rs. in Lakhs)
Particulars Year 1 2 3 4 5 6 7 8 9 10
Costs
Capital Cost
314.32
Cost of Production
i ii iii iv v vi
Cost of raw materail Power and fuel Packing material Wages Factory over heads Repairs maintenance
1316.96 38.78 73.20 9.36 30.00 2.40 33.00 27.00 16.71 34.42 16.94
1481.58 43.63 82.35 10.53 30.00 2.40 33.00 27.00 17.54 38.72 34.16
1646.20 1646.20 1646.20 1646.20 1646.20 1646.20 1646.20 48.48 91.50 11.70 30.00 2.40 33.00 27.00 18.42 43.02 50.53 48.48 91.50 11.70 30.00 2.40 33.00 27.00 19.34 43.02 54.51 48.48 91.50 11.70 30.00 2.40 33.00 27.00 20.31 43.02 58.06 48.48 91.50 11.70 30.00 2.40 33.00 27.00 21.32 43.02 61.28 48.48 91.50 11.70 30.00 2.40 33.00 27.00 22.39 43.02 63.26 48.48 91.50 11.70 30.00 2.40 33.00 27.00 23.51 43.02 63.38 48.48 91.50 11.70 30.00 2.40 33.00 27.00 24.68 43.02 63.35
viii Selling and distribution13.50 cost ix x xi Salaries Interest on capital loan Income tax 7.96 working15.06 0.00
Total cost
1012.80
1598.77
1800.91
II
Benefits
1 2 3
725.34 12.72
1657.92 29.08
1865.16 32.72
2072.40 2072.40 2072.40 2072.40 2072.40 2072.40 2072.40 36.35 36.35 36.35 36.35 36.35 36.35 36.35 52.78
Total benefits
738.06
1687.00
1897.88
0.76 1208.90
0.66 1184.13
0.57
0.50
0.43
0.38
0.33
0.28
0.25
Discounted @15%
benefits641.79
1275.62
1247.88
NPW
169.03
BCR
1.02
0.35
0.27
0.21
Total discounted net benefits at= 30% Discount factor @ 35% Net benefits 0.74 -274.73 0.55 88.23 48.41 0.41 96.96 39.41 0.30
IRR
32.65
I Sales
738.06 1687.00 1897.88 2108.75 2108.75 2108.75 2108.75 2108.75 2108.75 2108.75
income
II Variable
costs
1 Cost of raw576.17 1316.96 1481.58 1646.20 1646.20 1646.20 1646.20 1646.20 1646.20 1646.20
materail fuel
2 Power 3 Packing
material
43.63 82.35
48.48 91.50
48.48 91.50
48.48 91.50
48.48 91.50
48.48 91.50
48.48 91.50
48.48 91.50
4 Wages 5 Interest
working capital
4.09
9.36
10.53 38.72
11.70 43.02
11.70 43.02
11.70 43.02
11.70 43.02
11.70 43.02
11.70 43.02
11.70 43.02
on15.06 34.42
Total variable644.32 1472.72 1656.81 1840.90 1840.90 1840.90 1840.90 1840.90 1840.90 1840.90 costs
2 Repairs and1.20
maintenance heads
2.40
3 Adm.
over16.50 33.00
4 Selling
5 Salaries 6 Interest
term loan
fixed123.73 175.78 163.43 153.01 143.96 135.90 128.57 124.08 123.81 123.87
Contribution 93.75 214.28 241.06 267.85 267.85 267.85 267.85 267.85 267.85 267.85
61.02
57.13
53.75
50.74
48.00
46.33
46.22
46.25