Animal feed total market with CAGR

The Indian animal feed industry is broadly categorised into poultry, cattle and aqua feed. The total production of compound feed for all livestock stands at 17 million tonnes. The animal feed industry is evolving from being a fragmented sector to an organised one. It is increasingly using modern and sophisticated methods to incorporate the best global practices. The industrys growth and potential are evident from the fact that India is among the largest livestock-producing countries and that the feed industry has been characterised by home mixers. Forage and food grain production in India is low due to pricing incentives to grow cereals and pulses to feed indias vast population According to a report by Rabobank on the Indian Animal feed Industry, currently, more than 80% of the cattle feed and more than 50% of the poultry feed is being supplied by the unorganized sector. The total production of compound feed for all livestock stands at 17 MT. The Indian animal feed market can be categorized into poultry, cattle and aqua feed. In the past few years, Indian Poultry and dairy sectors are evolving from being an unorganized sector to an organized one by the increased use of modern and sophisticated methods to maximize the yield. Two examples being Gujarat based - Vigo Bio-tech Dairy Private Limited and Orissa based Milk Mantra Dairy Private Limited. Such organized players, which are bringing in new technologies to increase the production, will also look for animal feed from organized sources to supplement the technology. There is a huge gap in the potential market and the exploited market of cattle feed industry. As a matter of fact, Indias 91M tonnes of milk production implies that a potential market for cattle feed is approximately 45M tonnes; but however the market for compound cattle feed is around 5.5M tones only. The reason behind it are 1) the majority of the cattle are fed through grazing and 2) Lone villagers/farmers do not have an access to the compound feed. The critical need of the cattle feed sector is to cross the borders of established dairies & cooperatives and reach out to the common cattle owners and farmers. It has been reported that the Indias milk production would double if its cattle are adequately fed. There is a dire need to make the villagers aware of the benefits of nutritive feed over the grass & fodder for the proper development and milk yield of cattle. The compound Livestock Manufacturers Association (CLFMA) estimates domestic demand for compound feed in India currently at around 45 million tonnes and is expected to grow to around 68 million tonnes by 2010. The feed production by the organised sector was around 1.5 million tonnes of which broiler feed production was around 1.0 million tonnes. However, industry estimates show that the total poultry feed requirement in India was 14.3 million tonnes in 2004, of which 6.2 million tonnes is estimated to be broiler feed.

However the vast majority of cattle and buffalo in India are fed through grazing and the use of basic mixes and concentrates and the market for compound feed is estimated to be around 5.5 million tonnes. The private players produce around 1.2 million tonnes; the dairy cooperative sector produces around 2.5 million tonnes of low cost feed that is sold to member farmers involved in milk production. The rest is produced by home mixers.

Cattle feed breakup Poultry Feed breakup Drivers Threats

Take cattle. Most are fed a home-made recipe of oilseed cake, bajra, and dry fodder that hasnt changed in generations. In eastern India, cattle are simply left to graze and remain underfed. Farmers everywhere refuse to buy factory-made feed because they believe they know whats best for their animals. Unfortunately, feed companies have no way to prove them wrong. Compound feed shows miraculous results only on modern crossbred cows that have the genetic potential to give up to 40 litres milk daily. But nine out of 10 cows in India are desi ones that can give maximum 10 litres and usually stop at 4 litres. Giving them compound feed, at Rs 12 per kilo, is just not cost effective. Farmers continue to buy desi cows because they cost only a fifth of a crossbreds price. So Indian cattle are neither fed enough nor fed right. Yet feed companies have few customers.

Companies willing to soldier on come up against the wall of taste. A Kerala cow wont touch a mash containing pungent mustard seed cake. A Rajasthan cow loves the slightly bitter guar gum cake which a Gujarat or Maharashtra cow will refuse. Cottonseed cake and molasses are universal favourites but expensive. To create a market, a company needs dozens of small factories catering to local bovine tastes. Biggest Indian feed company, Godrej Agrovet, has 45 factories and vast dealer network. Currently, livestock industry players (consumers of compound feed) are having a difficult time due to the rising costs of animal feed. Rising corn and soybean prices in particular, are adversely impacting the livestock industry. In addition to issues such as productivity and disease, the livestock industry is facing price volatility and low availability of feed. The cattle feed manufacturing units are facing problems like scarcity of raw material, supply of adulterated raw material, shortage of power, high cost of interest, bad debts, absence of laboratory for testing raw materials, high cost of advertisement, high insurance premium as indicated in the study of Marketing of cattle feed in Karnataka, by Mansur. A. Mulla.

Competitive landscape Player moves Technological enhancements Government policies

Rs. 20-crore subsidy for fodder cultivation http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/article3438429.ece

Farmer Impact Other info

A chicken is natures way of converting 2 kg corn and soya bean cake into one kilo tandoori. A cow converts 1.5 kg fodder into a kilo of milk. Biggest Indian feed company, Godrej Agrovet, has 45 factories and vast dealer network.

Animal feed total market with CAGR Cattle feed breakup Poultry Feed breakup Drivers
The broiler industry is growing at 18-20 % annually while the egg industry is growing at 7-8 % annually. Indias poultry feed market is more upscale and modern. Chickens eat any corn and meal recipe. Poultry farmers understand the value of scientific feeding. In theory, you could set up a single big factory and supply the nation as companies do overseas. In reality, your biggest potential customers are also your biggest rivals. The top poultry companies produce feed and supply to all the farms under contract production, usually with the largest number of birds in an area. Feed companies are thus left catering only to small farmers with limited demand and even more limited budgets. Feed companies sell barely a third of the 14 million tonnes annual chicken feed consumption. Buyer credit and marketing costs, coupled with volatile raw material prices, push break-even further down the road.

Threats
Currently, livestock industry players (consumers of compound feed) are having a difficult time due to the rising costs of animal feed. Rising corn and soybean prices in particular, are adversely impacting the livestock industry. In addition to issues such as productivity and disease, the livestock industry is facing price volatility and low availability of feed.

Competitive landscape Player moves Technological enhancements Government policies Farmer Impact Other info References
http://blogs.economictimes.indiatimes.com/something-fresh/entry/animal-feed-trips-on-sacred http://www.venkys.com/general/interview-our-respected-joint-md-mr-b-rao-interviewed-at-feed-info/ http://www.business-standard.com/india/news/cargill-india-to-enter-animal-feed-business/431839/ http://www.thehindu.com/todays-paper/tp-national/tp-tamilnadu/article3438429.ece http://etd.uasd.edu/ft/th9517.pdf http://dealcurry.com/20110816-Provimi-Deal-Cargill-s-Plans-In-India-.htm http://babcock.wisc.edu/sites/default/files/documents/productdownload/du_108.en_.pdf http://www.scribd.com/doc/18061739/Cattle-feedhttp://www.crirec.com/2011/01/the-compound-animal-feed-industry-in-india/

http://www.scribd.com/doc/44965035/Chap-42-Sector-Study-Animal-Feed-Industry
http://www.hansel.in/downloads/Feed%20Report.pdf http://export.business.vic.gov.au/__data/assets/pdf_file/0003/348447/Market-Opportunities-in-the-Indian-Dairy-Market-pt-1.pdf