Poultry industry is in consolidation mode, 5-7% growth expected | ICRA

ICRA’s research wing in its recent report expected that the domestic broiler meat demand would continue to grow at the rate of 5-7 per cent (value growth is expected to be higher at above 10 per cent) and table egg demand to grow at 4-5 per cent in long term.

The transition from a predominantly live bird/wet market to a chilled/frozen market would be crucial for the future growth of the domestic poultry industry as well as to increase presence in international trade where India currently has a negligible presence.

Developing efficient distribution system and increasing the market acceptability of frozen chicken are going to be the key industry drivers in the long-term.

After an aggressive expansion over last five years, domestic poultry industry, run mostly by SME sector companies, is in consolidation mode. Sizeable debt added over the years combined with moderation in accruals has resulted in deterioration of capital structure and coverage indicators for the industry, according to ICRA report.

Average farm gate broiler realisations for FY2015 at Rs. 66-67/kg were similar to FY2014, while average broiler production costs at Rs. 64- 65 /kg in FY2015 were almost 2-3 per cent lesser than FY2014 levels given some moderation in maize prices during FY2015.

Same resulted in improvement in operating margins for the poultry integrators during FY2015 with aggregate operating margins for ICRA set of ten companies improving to 4.4 per cent in FY2015 as against 3.9 per cent in FY2014, said the ICRA report.

Broiler volume growth, in long term demand prospects, continue to remain healthy given favorable factors like low per capita consumption currently at 3 kg pa., regional preference for chicken meat, year round easy availability across country, increasing disposable income, changing food habits, increasing health awareness, and poultry being one of the cheapest source of protein.

According to ICRA report, broiler volume growth for CY2015 is estimated to be moderate at 5 per cent y-o-y taking domestic broiler meat production volumes to 3.9 million tonne (carcass weight) and broiler market value at Rs 425 billion.

The broiler volume growth have moderated given industry wide supply control measures adopted like lower chick placements, hatching holidays, early liquidation of parent stock, etc to control supply and ensure reasonable broiler realizations.

Monthly commercial broiler chick placements are estimated at 260 million while layer chick placements are estimated at 24 million. Table egg production is estimated at 80 billion eggs for CY2015 with table egg market value of Rs. 255 billion.