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An overview of the meat sector in India
Agnelo Gomes, Mumbai
The meat industry is the collective of diverse businesses that
together supply much of the food energy consumed by the
world population. Even though food processing is among the
largest industries, India ranks fifth in terms of production,
consumption, export and expected growth. Food processing
industry is widely recognised as a 'sunrise industry' having
huge potential for uplifting agricultural economy, creation of
large scale processed food manufacturing and food chain
facilities, and the resultant generation of employment and
export earnings. India has enormous growth potential from
its current status of being the world's second largest food
producer to be the world's number one producer.
Meat processing industry also is of enormous significance
for India's development because of the vital linkages and
synergies that it promotes. Meat processing covers a
spectrum of products from sub-sector comprising animal
husbandry and poultry farms, and bulk frozen meat,
packaged meat, ready-to-eat processed meat products.
Essentially, the meat industry involves the commercial
movement of food from farm to fork. While India has an
abundant supply of meat, the meat processing industry is

still nascent.
Growth Potential
Though the Indian meat production has been growing at a
compound annual growth rate (CAGR) of 5% during the last
one decade, there is a considerable concern to a certain
extent about production, which remains static or flow at the
present growth rate of 2% annually. Meat exports are likely
to increase at an annual growth rate of about 10%. While in
the previous year 2005-06, the exports touched a
spectacular 48%. The export of buffalo meat has been
growing at a CAGR of about 8%. The country produces an
estimated 1.5 million tonnes of buffalo meat annually. Of this,
about 24% is exported. Meat is primarily exported to the
Philippines, Malaysia, West Asian countries like the UAE,
Saudi Arabia, Qatar, Oman etc., African and CIS countries.
With the overwhelming success of the Green and White
Revolution, India is now fervently poised for the Pink
Revolution that will ensure diversification and large
investments in meat-food-processing.
In the current scenario there is large scope for meat
processing in poultry as well as in red meat. The entries of
few belligerent players like Shalimar Super Foods,
Venkateswara Hatcheries, Godrej Agrovet, Al-Kabeer, Arpit
Enterprises, Allanasons, Mark International, AL Barkat
Exports, Nensey Poultry Farm, Prabhat Poultry, Vista
Processed Foods, Fiza Exports, Meatzza - Darshan Foods,
etc, with an aggressive rise of commodity branding; is
beginning to change the economics of the Indian meat
processing industry.
The poultry sector

The poultry sector in India employs three million people and

contributes Rs 26,000 crore to the national income. In fact
the poultry industry has made a considerable progress by
developing and marketing value added products. Select
companies have made a steady growth in this area, namely,
Venkateswara Hatcheries, Godrej Agrovet, Al-Kabeer,
Shalimar etc. Traditional products are very popular in the red
meat, namely, sheikh kabab, mouth watering biryani,
mughlai qaurma, stew, ham, salami, sausages, cocktail etc.
The poultry meat consumption in 2005 was about 1.9 million
tonnes, or 1.8 kg per capita. It is the major meat consumed
in India and has wider regional acceptance, given the high
price of mutton, cultural and religious restrictions on
consumption of pork and beef; and fish largely being
confined to the coastal regions. Lower retail prices, resulting
from expanding vertical integration, have also stimulated
consumption. Integrators have established wholesale-and
retail-price leadership in their markets, mostly in south India,
by reducing the number of middlemen and forcing
wholesalers and retailers to reduce their margins. In other
regions, particularly in the northern region, where the
traditional wholesale traders still dominate the markets, the
marketing margins and retail prices are considerably higher
than in the south.
The Indian poultry industry remains primarily live birdoriented, although there is a growing market for chilled
products, especially in the restaurant and hotel sector. Most
birds for home consumption are purchased live and
slaughtered in small local shops. Movement of live poultry
from the low-cost growing areas to high-cost consumption
areas is constrained by the high mortality and high transport
and shrinkage costs. This results in significant price

variations. Frozen poultry meat product consumption is

restricted by inadequate cold storage facilities, a lack of
consumer preference, and high import duties. Although a
shift towards chilled products is likely to continue in urban
areas, in part due to slaughter restrictions imposed by major
cities like Delhi due to waste disposal problems, frozen
product demand growth will likely remain weak over the
near-to-medium term.
India's broiler production grew by about 15% to 2 million
tonnes in 2006, due to the larger availability of feed and the
growing demand for poultry meat in response to affordable
prices and rising consumer income. The per capita
consumption of poultry meet in India stood at 1.9 kg in 2006.
A trend towards forward integration in poultry operations,
growing farmer preference for birds with higher dressing
yields, and price stabilisation measures initiated by the
industry are also the factors supporting production growth.
The US Department of Agriculture (USDA) revised
downwards the broiler meat production for 2006 to two
million tonne from 2.2 million tonne, owing to losses caused
by the avian influenza outbreak in some parts of the Western
India. Consequent to the outbreak in the major poultry belt,
the price remained below the cost of production for several
months and caused colossal financial losses to the poultry
industry and forced several units to scale down or close
operations.
That apart, industry analysts say that the demand for meat
products is bound to increase as they foresee a very good
future for the take-away ready-to-eat dishes being sold in the
super markets which are opening outlets in big metros.
There is a rapidly increasing demand for processed food
(meat) caused by rising urbanisation and income levels. This
is supported by number of people preferring to live as

nucleus family, rather than joint families. Rise in employment

with more of adult working ratio and spending lesser time in
the kitchen. In addition to prime factors like, change in
consumer eating habits as well as rising demand for health,
wellness and lifestyle products, together with inflated takehome packages, and rise in family income provides
tremendous growth opportunities for the meat sector.
"With rising incomes, changing lifestyles, and increased
promotional efforts to popularise processed meat, its share is
estimated to increase considerably in 2007," say industry
analysts from the meat sector.
As per the latest update of US Department of Agriculture
(USDA), the growth projection is based on the assumption
that India remains free from Highly Pathogenic Avian
Influenza (HPAI). "Production growth is supported by likely
strong growth in domestic poultry meat demand in response
to affordable prices and increasing incomes," USDA said.
The projected growth in output would also be supplemented
by increasing trends towards integrated poultry operations,
and improving bird weights and dressing yields due to better
genetics. USDA claims that the India's broiler industry, which
was growing at over 15% per annum in recent years, was
badly hit due to the recent outbreak of HPAI.
Many of the poultry integrators already have built, or are
building, poultry processing facilities to produce chilled and
frozen meat and products for the institutional and the retail
segments. Some are looking at export possibilities to Asian
and Middle Eastern countries by reducing costs and
introducing strict bio-security measures.
Production Policy

Poultry receives far less government assistance than other

agricultural sectors, a situation that limits the growth of the
industry. It does not receive any government production
subsidy. Poultry businesses are taxed at the same rates as
industry, whereas agricultural income generally is tax-free.
However, the government funds poultry research by
government institutions and universities, and the Agricultural
and Processed Food Products Exports Development
Authority (APEDA) assists with infrastructure development
for export. APEDA also provides an airfreight subsidy for
exports of eggs and egg products, mostly to the UAE.
Poultry meat exporters are asking for the extension of
airfreight subsidy for poultry meat, but their efforts are
unlikely to succeed. Total government support for the poultry
sector was Rs105 million ($1.8 million) in Indian fiscal year
2004/05 (Apr-Mar), compared with Rs 98 million ($1.6
million) in 2003/04.
The rise of aggressive regional players making forays into
meat sector where entry barriers are low and a boom in
Indian Fast Moving Consumer Goods (FMCG) markets and
the rising need for meat products are the key reasons for the
growth in meat business. According to Goldman Sachs
report, among Brazil, Russia, India and China, India will
grow the fastest over the next 30 to 50 years by leveraging
its demographic advantages and through continued
development.
Exports
Eggs and egg powder exports from India are increasing due
to cost competitiveness, improving hygiene standards, and
logistical advantages. Poultry meat exports are relatively
small, due to India's higher cost vis--vis Brazil, although
several efficient poultry integrators are currently exploring

the possibility of exporting to lucrative markets such as

Japan, South Korea, and the UAE. Although there are no
quantitative restrictions on imports of poultry meat,
numerous unjustified sanitary conditions and high import
tariffs constrain imports.
Highlights
The very fact of India being one of the world's major food
producers, and accounting for less than 1.5% of international
food trade, indicates vast scope for both investors and
exporters to enter the meat sector.
#.While meat and poultry products are potentials for
processed food, India ranks first in world cattle population
with 50% of buffalo population and one-sixth of total goat
population of the world. Buffalo meat is surplus in India.
There is vast scope to set up modern slaughter facilities and
cold store chains in the meat and poultry processing sector.
India's current level of meat and meat-based exports is
around Rs 8,000 million. In past years foreign investment in
this segment stood at Rs 5,000 million which is more than
50% of the total investment made in this sector.
#.Compared with meat, poultry industry has registered
significant growth. India ranks fifth in the world with annual
egg production of 1.61 million tonnes. Both poultry and egg
processing units have come in a very big way in the country.
India is exporting egg powder, frozen egg yolk and albumin
powder to Europe, Japan and other countries. Poultry
exports are mostly to Maldives and Oman. Indian poultry
meat products have good markets in Japan, Malaysia,
Indonesia and Singapore. While meat products registered a
growth of 10%, eggs and broilers registered 16-20 % growth.
#.There are about 15 pure line and grand parent franchise
projects in India. There are 115 layer and 280 broiler
hatcheries producing 1.3 million layer parents and 280

million broiler parents. They in turn supply 95 million hybrid

layer and 275 million broilers, day-old chick. Presently there
are only five egg powder plants in India which is considered
insufficient in view of growing export demand for different
kind of powder - whole egg, yolk and albumen. The scope of
foreign investment and state-of-the-art technology in this
field is therefore tremendous.
All said and done, the biggest bottleneck in expanding the
meat processing sector, in terms of both investment and
exports, is lack of adequate infrastructure. Without a strong
and dependable cold chain a vital sector like meat industry,
which is based mostly on perishable products, cannot
survive and grow. Even at current level of production, chunk
of farm produce and frozen products valued in millions is
wasted every year because there are not enough storage,
transportation, cold chain facilities and other infrastructure
supports. Cold chain facilities are miserably inadequate to
meet the increasing production of various perishable
products like meat, poultry, fisheries, milk, fruits, vegetables,
etc.
Agriculture and agro products remain the most important
sector of the Indian economy. They contribute nearly one
third of the GDP and accounts for 64% of the workforce.
Factors such as volumes, brand loyalty and strong
distribution networks are the main drivers of growth. It is time
for entrepreneurs to get to action and revolutionise the meat
industry. Till then let's wait and watch the meat pick the beat
and make your heart grow stronger.
Summary
In spite of big potential of the large livestock population,
meat industry in India has not taken its due share although

India has acquired Number One position in the world

contributing 13% of the world milk production. The meat
production, which jibes well with dairying, is placed at No. 8
position in the world. India produces about 4.9 million tonnes
of meat annually valued at $4,600 millions, and has grown
@ 4.5% during the last two decades. However, during the
last five years, this segment has been growing very fast at
the rate of 27% annually and has a good future given the
present attention by the government and private
entrepreneurs.
The share of bovine meat in the total meat production in
India is about 60% as against small ruminants (15%), pigs
(10%) and poultry (12%). To produce the above quantities,
the extraction rates in cattle are about 6%, buffaloes 11%,
sheep 33%, goat 38% and pigs 84%.
India exports, both frozen and fresh chilled meat to more
than 54 countries in the world. For the year 2001-2002
export was 243,560 MT. The major export was of deboned
and deglanded buffalo meat, which accounts for 98% of the
total meat exports. The rest of the meat exported is from
sheep, goat and poultry. Meat is produced from animals
procured from disease free zones and processed in the state
of the art processing plants following world class sanitary
and phytosanitary measures and certified with HACCP and
ISO-9002. There is, however, very little processing of meat
(1%) for ready to eat meat products.
There are around 10 fully integrated eco-friendly processing
plants in the country with processing capacity of producing
50,000 to 120,000 tonnes of meat per annum. Six more fully
integrated meat plants are already in the process of
construction. Meat industry has shown a tremendous change
in the last one decade with the establishment of the eco-

friendly fully integrated processing plants and in the next ten

years, there will also be great change with the establishment
of the feedlots as a backward integration to the processing
plants. With the Government of India taking up FMD control
programme in three zones in the country (north, central and
south) consisting of 56 districts, it is assumed that India is
poised with a major breakthrough in the meat and dairy
product exports in the international markets. If India had the
"Green" Revolution, the "White" Revolution, and the "Blue"
Revolution, can the "Pink Revolution" be far behind?