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Chap 42 Sector Study Animal Feed Industry
Chap 42 Sector Study Animal Feed Industry
CHAPTER
42
Sector Study: Animal Feed
Industry
Introduction:
l The human population is growing rapidly and so is their demand for con-
sumption of animal products. The rise in the standards of living has necessi-
tated that India expands its market in the areas of animal feed and livestock
production. The increasing commercialization of livestock production and
compulsions to improve productivity in face of intense competition in the
liberalized and globalized economy has resulted in massive increase in de-
rived demand of animal feed in the country-side.
l Animal feed industry is broadly classified in two main categories viz.
1. Cattle feed industry and
2. Poultry feed industry.
While the former has not yet developed to any sizeable extent the latter has
expanded in an organised fashion. Only some sporadic efforts have been made to
undertake cattle feed industry on commercial lines and with limited success.
However, there is a growing realisation on the part of all concerned to develop
this industry so that composite nutritious feed may be made available at reasonable
prices to cattle farmers.
Terminologies used for different types of animal feeds:
l Concentrate: High value feed materials generally rich in protein and nutri-
ents.
l Roughage: Bulky and low value feed stuffs, low in protein but rich in carbo-
hydrates.
l Compound feed (Balanced concentrates): Customised feed formulation con-
taining all the feed ingredients in balanced proportion.
l Mash: Type of compound feed available in powder form.
l Pellet: Type of animal feed available in small cylindrical bullets.
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
l Starter ration (for broilers): Mash or pellet containing high protein and low
energy.
l Finisher ration (for broilers): Mash or pellet containing low protein and
high energy.
l Feed supplements/Additives: Generally added with feed for enriching nu-
tritional value and improving storage quality.
Reason for low usage of compound feed:
The share of compound cattle feed manufactured by the industry, in relation to
the overall potential, is low in India for the following reasons:
l The cattle population is fragmented and spread over large parts of the coun-
try. Farmers’ low level of education and strong traditional beliefs mean that
there is generally little awareness of compound cattle feed.
l 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.
l 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. Home-mixed feed is very frequently used for buf-
faloes and low-yielding cattle.
Livestock industry value chain:
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Sector Study: Animal Feed Industry
l The livestock value chain describes the full range of activities which are re-
quired to bring the product from conception through the different phases of
production. This approach encompasses the whole food chain from primary
production to final consumption. Stakeholders include farmers, other sup-
pliers, animal feed manufacturers, milk and poultry farmers, dairies, slaugh-
terhouse operators, food processors, transport operators, distributors, whole-
salers, retailers and consumers, as well as governments.
l Value chain of livestock industry represents the key components contribut-
ing towards its performance. Feed industry is the cornerstone of the animal
protein value chain. Studying the trends upstream and downstream of the
sector will give the animal feed marketers a better insight of the industry.
The downstream component such as volatility of the input supply and input
prices has an impact on the feed industry. Similarly the upstream compo-
nents including the practices followed in the farming model, changes in the
processing sectors and the final demand for the livestock products in the
form of meat, milk, eggs, wool etc by consumers also has an impact on the
feed industry.
l The buying and selling of cattle is an important livelihood activity across
rural India. However, dairy farming for most farmers is not profitable when
one imputes the full economic costs including the cost of labour. Although
there are over 70 million dairy farmers in India today, they are often unable
to turn dairy farming into a profitable activity due to constraints with re-
spect to access to markets and good prices, unavailability of inputs such as
artificial insemination, quality feed, lack of knowledge in best practices and
of customised cattle finance products.
l The first priority to encourage farmers to invest in dairy farming is to help
them get a good and secure price for their milk. A farmer who can predict
his/ her cash flows and receives a price that depends upon quality has an
incentive to increase involvement in dairy farming and to adopt scientific
practices that will improve the quality and quantity of the milk produced.
l Once a market has been established it can be leveraged to its maximum ben-
efit by increasing productivity. The major constraint that farmers face here
is in terms of feeding practices. Though farmers have access to low cost
fodder this is not necessarily an optimal solution since poor nutrition also
leads to less than optimal milk yields.
l Farmers also need to purchase inputs including fodder and concentrated
cattle feed to supplement the diet. In addition, there are costs linked to
artificial insemination to ensure that the animal becomes pregnant and con-
tinues to produce milk, as well as the ongoing costs of veterinary health
services.
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
Global scenario:
l FAO and other institutions suggest that global meat production and con-
sumption will rise from 233 million tonnes (Year 2000) to 300 million tonnes
(Year 2020), and milk from 568 to 700 million tonnes over the same period.
Egg production will also increase by 30 percent over the same period. These
predictions show a massive increase in animal protein demand, needed to
satisfy the growth in the human population, and the increasing affluence of
the emerging economies.
l However, much of the growth has been taking place in a relatively small
number of countries, including some of the most populous ones e.g. China,
Brazil, and India. Including these two countries, the per capita meat con-
sumption in the developing countries went up from 11 to 23 kg in the 2
decades to the mid-1990s. Excluding these two countries, it went up from 11
kg to only 15 kg.
Growth in World animal feed industry:
l As reported by FAO (Year 2004) around 1,000 million tonnes of animal feed
is produced globally every year, including 600 million tonnes of compound
feed (FAO 2004). As of 2004, more than 80 percent of this feed was produced
by 3,800 feed mills, and 60 percent of the world total was from 10 countries
(FAO 2004).
l Competition from the bio-fuel industries for grain is however likely to im-
pact upon the feed sector. The growth in demand for livestock products
suggests that there will be a consequent rise in demand for animal feed not
only of cereals but of other feeds and particularly proteins.
l It is possible to make broad calculations based on assumptions concerning
the use of feed for pigs, poultry, dairy cows and other ruminants. The de-
mand for animal feed can then be projected after making following assump-
tions:
1. Broilers convert at 2:1 and have a 70 percent carcass yield;
2. Egg production has a 2:1 food conversion ratio;
3. Pigs convert at 3:1 and have a 60 percent carcass yield;
4. 3 litres of milk is produced per kilogram of cow feed;
l Obviously, these are very simplified assumptions, given the diversity of pro-
duction systems. It is impossible to calculate the feed use of other ruminants
and this is done here simply to account for the known additional feeds that
are used. Such a calculation may be more reasonable at predicting the future
trends, given that growth will be mainly in intensive systems. However, the
limitations must be noted.
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Sector Study: Animal Feed Industry
Source: FAOSTAT
Projected world growth in demand for animal feed
(Based on existing feed conversion ratios and carcass yields)
626
612 614
597 605 597 604
590 586 591
600 575
537
500
440
400 370
290
300
200
1975 1985 1995 1997 1999 2001 2003 2005
rior feed with optimum balance of different nutrients. The increased de-
mand for naturally reared meat often results in the expansion of livestock
production, which would, in turn, increase production of intermediate prod-
ucts such as animal feed and feed additives. This requirement for meat is
likely to improve sale of feed grains and protein meals.
l Although animal population has increased only marginally, the key driver
for growth is the willingness of owners to spend more on the health of their
animals and the ability of veterinarians to meet that need. The human-cattle
bond has a high economic ceiling and the animal feed industry has recog-
nised the potential of this market segment.
l The professionalism of poultry industry, growth of organised dairy produc-
tion and changing focus of farmers from treating to preventing diseases are
other factors driving growth in the animal feed market.
l Increasing interest of the government in the health conditions of animals
due to the outbreak of bird flu and foot-and-mouth disease has boosted
demand for high-quality ingredients in animal feed. This demand is driving
the growth of the animal feed additives industry.
l Legislations such as the ban on antibiotic growth promoters (AGPs) in the
European Union compel the industry to discover alternative feed ingredi-
ents, especially with pork producers increasingly demanding substitutes for
growth promoters.
l The world meat economy has been characterized by the rapid growth of the
poultry sector (its share in total meat output went from 13 percent to 28
percent in the last three decades) and, in more recent years, the buoyancy of
the meat trade. The growth drivers behind poultry industry in India are
growing processed chicken market, rising export opportunities, particularly
in the Middle East, better penetration of real good chicken through increased
brand building efforts and expansion in value-added products.
Although the United States is by far the biggest exporter of poultry meat, it is
essential to note the importance of a number of developing and emerging
economies in this market, most notably Brazil and Thailand. China’s position is
somewhat anomalous, being at the top of both imports and exports, suggesting
considerable reprocessing of poultry meat in that country.
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
l Global demand for meat has multiplied in recent years, encouraged by grow-
ing affluence and nourished by the proliferation of huge, confined animal
feeding operations.
l The world’s total meat supply was 71 million tons in 1961. In 2007, it was
estimated to be 284 million tons. Per capita consumption has more than dou-
bled over that period. In the developing world, it rose twice as fast, dou-
bling in the last 20 years.
l The FAO data show that livestock production is growing rapidly, which is
interpreted to be the result of the increasing demand for animal products.
Since 1960, global meat production has more than trebled, milk production
has nearly doubled and egg production has increased by nearly four times.
This is attributed partly to the rise in population, as well as to the increase in
affluence in many countries.
l A joint IFPRI/FAO/ILRI study suggested that global production and con-
sumption of meat will continue to rise from 233 million metric tons (Mt) in
the year 2000 to 300 million Mt in 2020, as will that of milk, from 568 to 700
million Mt over the same period. Egg production will also increase further
by 30%.
l World meat consumption is expected to double again by 2050 resulting in a
relentless growth in livestock production. More meat means a correspond-
ing increase in demand for feed, especially corn and soy, which some ex-
perts say will contribute to higher prices.
l Americans are downing close to 200 pounds of meat, poultry and fish per
capita per year (dairy and eggs are separate and hardly insignificant), an
increase of 50 pounds per person from 50 years ago.
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Sector Study: Animal Feed Industry
Consumption of milk and dairy products has some way to go before it hits limits.
As per various projections, there is higher growth in the world milk and dairy
sector than in the recent past because of the cessation of declines and some recovery
in the transition economies (FAO, 2000). Excluding the transition economies, world
demand should continue to grow at 1.6 percent per annum as in the past. China
has little influence on the dairy sector because consumption has historically been
very low. However, there are signs, particularly in the cities, of a change in this
culture and an exponential growth in demand, albeit from a very low base.
Overall, it is quite possible to have an optimistic view of the growth of the livestock
industry and its contribution to better human nutrition. But many developing
countries and whole regions, where the need to increase protein consumption is
the greatest, have not been participating in the buoyancy of the world meat sector.
In this category are the regions of sub-Saharan Africa (with very low consumption
per capita reflecting the quasi perennial economic stagnation), the Near East and
North Africa. Here, the rapid progress of the period to the late 1980s (oil boom)
was interrupted and subsequently slightly reversed, due in some respects to the
collapse of consumption in Iraq. Similar considerations apply to the developments
in the per capita consumption of milk and dairy products.
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Sector Study: Animal Feed Industry
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
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Sector Study: Animal Feed Industry
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
l Cereals and grains: Maize, sorghum and bajra (a type of millet) are com-
monly used in animal feeds. Wheat and rice are mainly retained for human
consumption.
l Cakes and meals: Commonly used commodities of this kind are soybean,
groundnut, rapeseed, sesame and sunflower meals in poultry feed.
l Others: In cattle feed, in addition to these meals, others such as cottonseed
and copra are used as premium ingredients.
By-products as animal feed ingredients: Some by-products are very nutritious
and palatable to cattle, and these products forms the bulk of cattle feed. They
include:
l Wheat bran, rice bran and oil-extracted rice bran, tapioca, guar meal, saf-
flower meal, maize gluten and molasses.
l A special mention should be made of Indian cattle feed’s unique use of hulls
or shells, popularly known as chunnis in the local language. These shells
come from pulses: horse gram, black gram, mung bean and pigeon pea.
The following by-products are also added to animal feed:
l Forest produce babul seed, dhaincha seed, puwad seed, patwa seed, sagaon
seed, san seed, tulsi seed, tamarind seed, babul falli, mesta seed etc.
l Food industry Biscuit waste, cocoa-shell powder, cocoa beans, maize dust,
macaroni waste, issapgul chhala etc.
l Gum and starch industry guar seeds, guar kurma and chunni, dhaincha kurma,
tapioca milk powder, tapioca spent pulp, maize gluten, maize cake etc.
l Fruit and vegetable processing orange peel, spent lemon, orange waste, jamun
seed, potato waste, tomato waste, mango kernel, pineapple waste, mango
seed extraction, coffee waste, extracted tea leaves etc.
l Alcohol industry Barley waste, yeast sludge, grape extractions, penicillin
residue etc.
l Essential oil industry spent residue of pepper, cardamom and ginger, spent
ajwan seed, spent anthia seed cake etc.
Minerals and vitamins: Cattle feed is necessarily enriched with vitamins A and
D3, and trace minerals such as iron, zinc, manganese, copper, cobalt and iodine.
Calcium and phosphorus are also included. Poultry feed is enriched with all of
these and all of the B complex vitamins.
Feed additives and supplements: Feed additives and supplements have played a
very important role in enhancing the performance of dairy animals and, even
more so, poultry. Today they are necessary in any feed formulation and essential
for the formulation of a balanced diet. The additives and supplements used are
antibiotic growth promoters (their usage is not banned in India), prebiotics,
probiotics, enzymes, mould inhibitors, toxin binders, anti-coccidial supplements,
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
Oilseed meals:
l India produces soybean, groundnut, rapeseed, sunflower, sesame and cot-
ton meals and these are used as major ingredients in animal feeds. For ani-
mal feeds, soybean is the most frequently used oilseed meal and has com-
pletely replaced fishmeal in poultry feeds.
l Cottonseed cake and meal are often used in cattle feed throughout the coun-
try. 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.
l India regularly imports edible oil and they have created problems for the
country’s crushers. Although India has about 600 solvent extraction units,
they run at only 50 percent of their 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 agro-based commodities.
Formulations of Animal feed:
l Compound feed manufacturers produce both finished compound feeds (suit-
able for consumption by an animal without further processing) and protein
concentrates, which are mixed and diluted with cereals on the farm before
they are eaten by animals.
l Manufacturers produce compound feeds to meet specific nutritional require-
ments. On the basis of energy, protein, fibre, vitamins requirements of dif-
ferent animals, the compound feed manufacturers mix different ingredients
available to fulfil the requisite make-up of balanced feed. This is done with
help of linear programming to optimise cost, whilst ensuring that the speci-
fications of the diet are in accordance with specific requirement.
Typical compound ration for cattle
Molasses, 4% Minerals &
Oil/Fat, 4% Vitamins, 2%
Meat-bone Meal/Fish
Meal, 5%
Cereal By-
products, 35%
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
Corn, 65%
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Sector Study: Animal Feed Industry
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Sector Study: Animal Feed Industry
and Escherichia coli testing and mould count, and contaminated materials are
rejected and sometimes destroyed.
l The feed millers have acquired the latest technologies and modern equip-
ment such as high-pressure liquid chromatography (HPLC) and near-infra-
red (NIR) analysers. All vitamins, minerals and other feed additives are
regularly analysed using modern analytical techniques.
l The quality of Indian feed in organised industry can be compared with that
of any Western feed. Today it is common to achieve a chicken house average
of 310 eggs in 52 weeks, in layers, and body weights of 2.0 kg in less than six
weeks, with a feed conversion ratio of between 1.5 and 1.6, in broilers. Dairy
feed can use the genetic potential of Indian cattle at its maximum. The qual-
ity of Indian feed is satisfactory and innovation will continue.
R&D:
Research and development in animal feed is of paramount importance to innovate
and meet the emerging demand and satisfaction levels of the customers (farmers).
Given the importance of feed ingredients, Indian scientists have worked on various
aspects of research and development in the field of animal feeds and feeding.
l In the 1960s, all Indian raw materials were analysed for their proximate
composition, metabolizable energy values and deleterious factors.
l During the 1970s, the government sanctioned special projects to study the
use of by-products in animal feeds. Various by-products were considered
and their nutritional parameters were studied. Indian scientists analysed
ingredients for their chemical values and studied their biological values, and
this information was useful to the industry in the initial stages of growth.
l In the 1980s subsequent research was conducted on the energy-protein and
energy-amino acid ratios and the vitamin and mineral requirements of ani-
mals.
l 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 addi-
tives in enhancing milk, egg and broiler meat production.
l Research and development work has been conducted on least-cost formula-
tions and usage of synthetic amino acids.
Major organised players in animal feed industry:
Godrej Agrovet:
l Godrej Agrovet Limited is a Rs. 1250 crores (US$ 297 million as per 2008
data) company. The activities of the company are in areas of Compound
Animal feeds, Agricultural Inputs, Integrated Poultry Business, Oil Palm Plan-
tations, Plant Biotech, Retailing of Fresh Farm Produce in urban areas, and
rural retailing of a wide range of products including agricultural inputs.
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
seas market. It operates under four main divisions to meet the diverse needs
of the veterinary and animal farming community they are Vetcare, Petcare,
Aquacare, and Equicare.
l Vetcare employs nearly 450 employees and has 5 plant locations, a Research
Farm and Kennel. It exports to over 20 countries. Post joining hands with
Provimi, one of the giants in Animal Health and Nutrition, Vetcare intro-
duced many products in Premix and Dairy specialties. The Provimi Group is
active worldwide in all types of Animal Nutrition and is a leader in all mar-
kets where it is present. The Group is actively seeking acquisition opportu-
nities to continue its growth in key markets including North America, Latin
America, Eastern Europe and Asia. It employs about 8,000 people and has
annual sales of EUR 2.2 billion. Provimi has 87 production centres in some 30
countries and exports to over 100 countries. Provimi manufactures products
and supplies technical support for all species, including ruminants, poultry,
swine and pets.
Anmol Feeds:
l Anmol group of companies is a leading poultry feed manufacturer of India.
It has a turnover of 35 million US dollar in year 2006. The first poultry feed
manufacturing unit was established in the year 1999 at Muzaffarpur, Bihar,
with the capacity of 50 MT per day catering the market of Eastern and North
Eastern part of India.
l The company now has 5 plants located in various parts of the country with
the total production of 500MT per day of poultry feed. In the year 2006,
Anmol entered the cattle feed segment with brand name of ‘Anmol Super’.
Challenges:
The growth in animal feed industry faces numerous challenges since it is not a
well developed and modernized industry except poultry. The biggest challenge
which the industry faces is marketing and supply chain related issues. There are
problems of low awareness among the livestock farmers regarding the importance
of animal feed, supply side related issues such as the shortfall of stock of raw
materials due to irregular supply of feedstuffs and its ingredients, rising inflation,
lack of standardization, regulation of quality and unhealthy competition.
Marketing challenges:
1. Small livestock farmers: Smallholder livestock production supports the live-
lihoods of majority of the poor livestock keepers in mixed livestock-crop
system. Thus majority of farmers have 1-2 cows or buffaloes for dairy farm-
ing and very few birds in poultry farming, this results in inability of farmer
to follow scientific feeding practices for their animals.
2. Poor management of animals: Livestock are managed unscientifically in-
cluding improper nutrition and health care, which results in nullification of
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The Agribusiness Book : Opportunities, Challenges & Business Strategies
any quality of compound feed given to them. Since nutrition can only be
effective when all other aspects related to livestock production and manage-
ment are taken care well.
3. Traditional feeding practices: Cattle feeding practices are very traditional.
Generally farmers prepare their own formulations at home and home-mixed
feed is very frequently used for buffaloes and low-yielding cattle. They be-
lieve that by these means they are able to pay more individual attention to
their cattle as well as it is cost-effective. The challenge before the animal
feed marketer is to remove this misconception in the farmer’s mind and
educate him about the advantages of providing compound feed to the live-
stock. They must understand how it ensures proper and complete supply of
all the required nutrients in right proportions.
4. Lack of farmer awareness: Farmers’ low level of education coupled with
strong traditional beliefs means that there is generally little awareness of
compound cattle feed. The lack of awareness is crippling the feed industry
since it poses a great challenge to the industry. Companies are forced to
spend disproportionate time, energy and money in concept selling to ensure
that the farmer appreciates the importance of compound feed.
5. Low production potential of livestock: More than 50 percent of the coun-
try’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. 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. 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.
6. Fragmented livestock population: The cattle population is fragmented and
spread over large parts of the country. Since India has a huge geographic
expanse, the relative density of livestock is quite thin. As such, heavy cost is
incurred on distribution and logistics. Underdeveloped drivers of feed in-
dustry: Majority of Indian population is facing the problems related to pov-
erty which results in non-affordability of the livestock products such as dairy
products and meat. The demand for the livestock products directly impacts
the feed industry.
7. Untapped export potential: India has a lot of opportunities to export com-
mercial animal feed because of the strategic location and availability of hu-
man resources. Issues related to quality and safety as well as a presence of
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Sector Study: Animal Feed Industry
very few private players, the export potential remains untapped in animal
feed industry.
8. Product Innovation: Due to presence of very few big players there has been
a lack of research and resultant poor innovation in commercial feed. Gov-
ernment though has research centres such as NIANP etc. There is still a lot
of gap to be covered in the areas of animal nutrition.
Supply chain challenges:
Supply-chain management has become more important as consumers demand
product quality and integrity. Hence there needs to be integrated management
from farm to retail-shelf and this may have profound implications especially on
smallholder producers. The five things which may affect the supply chain include
food safety, quality, production circumstances, cost price and information.
l Bulkiness: Generally lot of backtracking takes place from the inflow of raw
material stage to the outflow of the finished goods. Freight costs form any-
thing between 15 to 30 per cent of total cost. Compound animal feed is bulkier
and this also results in higher transportation costs if the distance between
the feed manufacturing plant and the target customer increases. Moreover,
unit transportation cost increases if small orders are received from different
locations due to lack of economies of scale. The feed industry is highly price
sensitive and operates on wafer- thin margins which results in erosion of
profits.
l Quality and warehousing problem: Animal feed consist considerably high
protein which may result in lower keeping quality or else if the feed is pro-
vided to livestock it may result in various diseases and subsequent loss of
confidence of farmer in company’s product. Thus proper storing of feed is
necessary to prolong the keeping quality of feed.
l Unhealthy competition within industry: Since the feed sector in India has
numerous small and regional players, there exists a high competition and
subsequent price wars. The firms supplying a high quality compound feed
has to compete with other smaller players producing not so good quality
animal feed and compromise on the prices. This results in non-attractiveness
of the industry for high quality compound feed manufacturers.
l Problems related with classifications of animal feed supplements / addi-
tives for import: The classification of feed additives is a major hindrance to
the Indian feed industry. Worldwide, animal feed supplements and addi-
tives are covered under chapter 23.09 of the Harmonized System of Nomen-
clature (HSN), to which India is a signatory. In the HSN, all feed ingredients
are listed under the “free” category for import, but the Indian Government
put them into the “restricted” category in October 1995. Since then, there
have been continuous discussions among the drug control authorities, the
Director-General of Foreign Trade and the Central Excise Department, all of
which want to bring feed additives under their administration so as to in-
crease their own revenues. The industry, represented by CLFMA, has made
several representations to the government, but these have been round vari-
ous government departments, appellate tribunals, the High Court and the
Supreme Court without providing any useful results for the industry.
l Lack of standardization and regulation: Though BIS has produced guide-
line feed standards and the feed industry also has its own guidelines, cur-
rently there is no compulsion to use BIS standards, but the central govern-
ment has been advising states to introduce their own regulatory standards.
The industry, however, is resisting this move. Another feed standards issue
that worries both the government and industry is that any changes to exist-
ing standards will be slow and difficult to arrive at because of participative
conflicts and various lobbying groups. However, the industry’s principal
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Sector Study: Animal Feed Industry
concern about compulsory standards is that they will disturb efforts to inno-
vate 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.
l Problems with the Essential Commodities Act: One of the major reasons
for opposition from the private players regarding the standardization is that
the government wants to legislate regulation under the Essential Commodi-
ties Act 1955 which is considered draconian and totally inappropriate in this
context. There is no shortage of compound animal feeds anywhere in the
country. In fact, the organized sector of the compound feed industry is fac-
ing serious problems resulting from a huge idle capacity, to the extent of 50
percent or more. New capacities are being added by global players in the
feed business and by national as well as multinational integrators. The na-
ture of animal feeds and the animal feed industry has completely changed.
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 lag far behind the industry’s products. For cattle, they have not been revised
for 30 years, while the BIS standards for poultry are obsolete.
l Improper supply of animal feed ingredients: Expenditure on raw material
comprises of about 80 to 90% of the total cost of production, hence the in-
dustry is highly susceptible to movement in prices of raw materials. Avail-
ability of sufficient feed resources both in quantitative and qualitative terms
is the key factor for the growth and sustenance of the feed industry in the
country. However, due to various climatic and other factors every year
there is an erratic supply of the feed ingredients as well as there is very high
fluctuation in their prices. Apart from this some feed ingredients such as
feed additives and supplements have to be imported.
l Local Sales Tax: Another threat to the industry is posed by local sales taxes.
It must be noted that the feed industry is mainly commodity-oriented and,
although it is value-added, it cannot support the burden of any kind of taxa-
tion. The industry has made several representations to the government and
some state governments have accepted its point of view and refrained from
levying any tax on animal feeds.
l Countervailing duty on amino-acids: The essential amino acids, such as
DL-methionine, L-lysine and L-threonine, are not manufactured in India.
These products are vital ingredients of compound animal feed for improv-
ing the quality of the final feed and making it conversion-efficient. With a
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Sector Study: Animal Feed Industry
A number of trends may be discerned in the livestock and feed industries. There
is a continuing rise in the demand for animal products and particularly those
from poultry and pigs. There is a concomitant rise in the need for animal feeds
and particularly oil cakes and meals. At the same time, there is increased public
concern about contaminants and health, and demand for safety, regulation and
traceability.
The development of government infrastructure and human resources for the
management of livestock production as well as the improvement in the efficiency
of utilisation of feed resources for livestock production has to be ensured through
proper organisation. There should also be an assurance of the quality and safety
of materials entering the human food chain through livestock feeds. The
worldwide Code of Practice for the production of proteins for the feed industry
should be implemented.
Many governments want to upgrade their legislation and its implementation and
put in place a system of feed management which will ensure the safety of raw
materials and compound feeds entering the food chain through animal production.
The system could provide feeding standards for livestock and implement these
through information and training.
The need to apply standards is both in terms of feed safety and feed quality.
Improved feeding standards, feed quality and feed information will increase
confidence in the manufacturing, product quality, marketing and utilisation of
commercial animal feeds, and will be the basis of a sustainable development for
the livestock sector. This will best be achieved by the adoption and implementation
of international standards for testing and manufacture such as those provided by
the Hazard Analysis Critical Control Point (HACCP) System and the International
Standards Organization (ISO).
The collection of good quality data relating to world and Indian market forces
and the availability of proteins for the feed industry should be addressed.
Innovative developments in the feed industry should be sought with a view to
providing alternative sources of proteins and new amino acid technologies.
When the livestock industry is viewed holistically, the issues related to the
restructuring of value chain have to be seriously acknowledged. There is tendency
in the industry towards modernisation and more scientific orientation.
l The emerging challenges are needed to be given due recognition especially
in input supply sector. There is severe competition within and outside the
industry, rising costs and emergence of various new by-products.
l Feed industry requires niche players and resource optimisation is the need
of the hour to overcome competition and have negotiating power to secure
supplies from vendors. Feed safety needs to be ensured.
l Modern livestock farms have to scale up and be managed more profession-
ally. There should be consolidation in the new farming model concept.
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Sector Study: Animal Feed Industry
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