Sector Study: Animal Feed Industry

Sector Study: Animal Feed Industry
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Introduction: l The human population is growing rapidly and so is their demand for consumption of animal products. The rise in the standards of living has necessitated 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 derived 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 nutrients. l Roughage: Bulky and low value feed stuffs, low in protein but rich in carbohydrates. l Compound feed (Balanced concentrates): Customised feed formulation containing 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. 1
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Starter ration (for broilers): Mash or pellet containing high protein and low energy. Finisher ration (for broilers): Mash or pellet containing low protein and high energy. Feed supplements/Additives: Generally added with feed for enriching nutritional 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 country. 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 countrys 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 buffaloes and low-yielding cattle. Livestock industry value chain:

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The livestock value chain describes the full range of activities which are required 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 suppliers, animal feed manufacturers, milk and poultry farmers, dairies, slaughterhouse operators, food processors, transport operators, distributors, wholesalers, retailers and consumers, as well as governments. Value chain of livestock industry represents the key components contributing 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 components 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. 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 respect 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. 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. Once a market has been established it can be leveraged to its maximum benefit 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. 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 continues to produce milk, as well as the ongoing costs of veterinary health services.
Global scenario: l FAO and other institutions suggest that global meat production and consumption 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 consumption 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 impact 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 demand for animal feed can then be projected after making following assumptions: 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 production 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.
Source: FAOSTAT Projected world growth in demand for animal feed (Based on existing feed conversion ratios and carcass yields)
World Compound Feed Production

Million Tonnes 700
605 575 604 612 614 626
600
537
590
597
586
591
597
500
440
400
370
300
290
200 1975 1985 1995 1997 1999 2001 2003 2005
Source: Feed International January 2006
World compound feed production
Key drivers of animal feed industry: l India has the largest livestock population in the world. The real challenge is convert the unorganised traditional raw material feed users to compound animal feeds and here lies a tremendous growth potential. l Given that India is the largest producer of milk globally and also the fifth largest poultry and shrimp producing nation, the opportunity to grow in the animal feeds market is huge. The present animal feeds capacity looks puny when compared with the latent market that exists. The demand for feed additives is related to animal feed production which in turn is dependent on the steady demand for milk, meat and poultry, this is a welcome statistics. l One of the key drivers of feed additives is consumer demand for guaranteed safe foods. This forces the industry to comply with industry standards and produce quality foods, since animals reared for their meat require supe5
rior feed with optimum balance of different nutrients. The increased demand for naturally reared meat often results in the expansion of livestock production, which would, in turn, increase production of intermediate products such as animal feed and feed additives. This requirement for meat is likely to improve sale of feed grains and protein meals. 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 recognised the potential of this market segment. The professionalism of poultry industry, growth of organised dairy production and changing focus of farmers from treating to preventing diseases are other factors driving growth in the animal feed market. 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. Legislations such as the ban on antibiotic growth promoters (AGPs) in the European Union compel the industry to discover alternative feed ingredients, especially with pork producers increasingly demanding substitutes for growth promoters. 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.
Meat production in the World: Present & projected
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. Chinas position is somewhat anomalous, being at the top of both imports and exports, suggesting considerable reprocessing of poultry meat in that country.
Chicken meat production in the World: Present & projected

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Global demand for meat has multiplied in recent years, encouraged by growing affluence and nourished by the proliferation of huge, confined animal feeding operations. The worlds 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 doubled over that period. In the developing world, it rose twice as fast, doubling in the last 20 years. 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. A joint IFPRI/FAO/ILRI study suggested that global production and consumption 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%. World meat consumption is expected to double again by 2050 resulting in a relentless growth in livestock production. More meat means a corresponding increase in demand for feed, especially corn and soy, which some experts say will contribute to higher prices. 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.
Egg production in the World: Present & projected
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.
Milk production in the World: Present & projected
Indian animal feed industry: l In India, the term compound feed refers to feed that is nutritionally balanced and has been manufactured using the facilities of an analytical laboratory and under the supervision of nutritionists. There are also a large number of small-scale feed mixers who produce feed for local consumption. Such feed is termed self-mixed feed or home-mixed feed. 9

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The feed manufacturing on a commercial and scientific basis in India 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 as the poultry sector was not developed to that extent at that time and it was restricted mainly to backyard production, with the desi (or native bird) kept mainly for the production of eggs. However, the scenario has changed altogether now, with the growth of poultry industry as well as progress made by dairy and meat industry. The Indian feed industry was worth approximately Rs 45 billion (US$1 billion) as per data of year 2002. The Indian livestock feed industry is quite old; it is still in a very primitive stage, supplying only about 8.33 percent of cattle feed and 40 percent of poultry feeds for the country (Year 2005). According to the association, the bulk of that feed is being produced in large part by home and custom mixers. It sees feeding animals with compound feeds as a route to improve efficient use of the ingredients available.
Market potential of Indian feed industry: l India has a very large population of livestock both of productive and unproductive animals. India is bestowed with a huge livestock population comprised of 222 million cattle, 98 million buffaloes, 124 million goats, 61 million sheep and 489 million poultry (Livestock census 2003). l The estimates of Indian Livestock Industry Report 2005 of CLFMA (Compound Livestock Feed Manufacturers Association) show that the compound feed (balanced concentrate) produced by members of CLFMA and non-members of CLFMA is about 5 MMT. The total estimated requirement of compound feed is about 60 MMT. l According to a study conducted by NIANP (National Institute of Animal Nutrition and Physiology), the availability potential of concentrates like oilseed cakes, bran, cereal grains for livestock and by-products of pulses like chunnis is about 35.32 MMT. This report clearly indicates the gap between requirement and availability. l Dairying in India has emerged as an important sub-sector accounting for nearly two-thirds of the total livestock contribution to GDP with an encouraging growth rate of almost 8-9 per cent. A very large population of dairy animals is either grazed or stall-fed on dry roughage of uncertain quality. Availability of sufficient feed resources both in quantitative and qualitative terms is the key factor for the growth and sustenance of the livestock and poultry sector in India. l This dairy sector offers a tremendous opportunuty to feed manufacturers and marketing professionals to popularize the concept of using balanced compound feed. Based on the number of productive dairy animals and the current milk produced by them, the current estimated compound feed re10
quirement is 45 MMT considering feeding compound feed at 50% of milk production. The current estimated demand for poultry industry is about 15 MMT. Unlike many developed dairying countries where large mechanized farms predominant, more than 70 million rural families are engaged in milk production in India. Landless, small and marginal farmers with limited resources account for 65 percent of the total milk production in the country. There has been a large increase in egg production which is expected to continue. Although not an exporter, India, with its very low poultry meat and egg consumption per capita but a population rivalling that of China, can become a potential centre of growth for poultry. The poultry sector in India is one of the fastest growing sectors in the country. India is the fourth largest producer of eggs and eighth largest producer of broilers in the world. Indias broiler industry is not well organized in the North, but in the South, the producers have come together to form integrated operations. In the egg production industry, thirty per cent is still in the hands of small producers. It is suggested that the Indian poultry sector has the potential to grow at 20 percent per annum over the next 10 years. This confidence arises from the fact that even developing neighbours, such as Pakistan, China and Thailand have annual per capita poultry consumption levels of 2.3, and 9 kg respectively, compared with India at less than 1 kg. A developed country like the United States has an annual consumption of 44 kg per head. A similar situation exists for the egg industry. With the advent of fast-food chains and growing dependence on convenience foods, the processed foods sector, and particularly that of poultry, is expected to have a growth rate in double figures.
Dairy cattle: l Worldwide, India is number one in milk production, producing about 100 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. There are 14 million cross-bred cows, 20 million good milch cows of local varieties and 40 million buffaloes of good milch varieties. The remainder of the cattle population is of a non-descript variety and a sizeable proportion consists of bullocks. l 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 high-value 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. l 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 11
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. Lots of cooperatives have 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. The feed production from cooperatives is about 1.5 million tonnes per year (Year 2002). 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: l India has 150 million layers and 650 million broilers. Annual per capita consumption of eggs is 40, and that of broiler meat is 1 kg (Year 2006). India is the worlds 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. Although these figures are low in comparison with those for developed countries, the industry has great potential to expand because 30 percent of the countrys population (about 300 million people) are developing economically and the demand for poultry products is therefore likely to grow. l 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. l In poultry, the States of Karnataka, Kerala, Andhra Pradesh, Tamil Nadu and the western region of Maharashtra, account for more than 56 percent of total national egg production and similarly 60 percent of the broilers. Tamil Nadus Coimbatore region alone accounted for more than 30 percent of the total broiler production in 2000. Poultry farming is hampered in northern regions because of cold conditions during certain periods of the year, although Punjab contributes significantly at around 6% of the total egg production in the country. l The poultry industry has witnessed several ups and downs in the last 25 years as a result of unplanned growth and lack of government regulations. 12
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 this integration 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.
Poultry is traditionally fed on balanced concentrates either mixed on organized farms or manufactured by compound feed millers, except by a small section of people who have backyard poultry where the practice of feeding scratch grains or leaving birds to fend for them is usual. With the rapid growth of the broiler industry in the last couple of decades, the requirement of feed for commercial broilers has gone up to 5.64 MMT, and that for the broiler breeders to about 0.65 MMT totalling a broiler feed requirement of 6.29 MMT (Year 2004). The feed requirement for the layer population is about 7.39 MMT and that for the layer breeders approximately 0.74 MMT, totalling feed requirements for layer birds of 8.13 MMT (Year 2004). Thus the total requirement of feed for poultry sector is estimated to be about 14.34 MMT.
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Poultry Feed Usage in MMT (Source: CLFMA)

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Export markets are also likely to open up as subsidies on agricultural products are phased out internationally under World Trade Organization (WTO) agreements. By making the quality and cost of eggs and poultry meat competitive, the Indian poultry sector is expected to capture a significant share of the export market currently dominated by the United States, Brazil, Netherlands and Thailand. India has already started exporting shell eggs to gulf countries and egg powder to the European Union (EU) and Japan. India also exports large quantities of hatching eggs to Bangladesh, Singapore, Maldives, United Arab Emirates, Saudi Arabia and Oman and specific pathogen free eggs to the EU for pharmaceutical purposes.
Sheep, goats and camels: l In India, the sheep and goat sector is mostly in the hands of nomadic tribes. There has been little implementation of scientific husbandry, rearing and management practices. The feed given is very traditional and is mainly limited to grazing in the fields. The market in mutton and chevon is in its nascent stage; however, there has been a good demand for wool. Compared to other sectors there is massive need of extension services for technology dissemination in this area of animal husbandry. l Most of the countrys camels are located in the desert area of the western part of India, in the states of Rajasthan and Gujarat, bordering Pakistan. Camels are reared by individuals who feed them local ingredients. There is a total lack of scientific management practices, genetic studies and scientific feeding practices in camel rearing and the industry survives mostly on 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: l India is a multilingual, multiracial country whose people hold various religious beliefs and thus few religions shun pork consumption. Other people 14
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. Thus the scope of feed industry in terms of demand from piggery is not very bright. Business environment: The business environment of Indian feed industry is influenced by government policies and regulations as well as the association called CLFMA (Compound Livestock Feed Manufacturers Association). Government: Both Central and State Governments influences the business in India. There are many regulations, acts and policies which directly or indirectly influence the feed industry. In addition there are certain international laws and policies which influence as India has become a member of World Trade Organisation (WTO). Essential Commodities Act and Harmonized System of Nomenclature (HSN) which deal with the ingredients of animal feed industry, local sales tax, countervailing duties, export and import related duties directly influence the cost of production of the industry. Some of the Government interventions have been shown in the following table. Government interventions in feed and feed ingredient marketing
Regulation Coarse cereals Trade Licensing Government Level Central and state Examples Food Grains Licensing and Procurement Order, Uttar Pradesh food grains and other Essential Articles, Haryana Food Articles Licensing and Price Control, Punjab Trade Articles Support price, Uttar Pradesh Food Grains Act Motor Vehicles Act (Maximum Weight=16.2 t) Punjab Maize Movement Order Punjab Trade Articles (Dealer trade not to exceed 2.5 t) Licensing Order, Punjab Trade Articles (Maximum quantity set by different orders) (Maximum quantity=2.5 t)
Price control Transport Inter-state Trade Dealer Trade Storage quantity
Central and state Central State State Central and State
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Storage licensing
State
Uttar Pradesh Scheduled Commodities Dealers Licensing Order, Punjab Trade Articles Essential Commodities Act, Punjab Trade Articles (if quantity >2.5 t) Essential Commodities Act Punjab Trade Articles Haryana Food Articles (Class A; City Wholesalers 150 t, retailer 10 t; Class B; City Wholesalers 50 t, retailer 5 t) (Maximum quantity 2.5 t) Agricultural Produce Marketing Act (oilseed manufacturing is restricted to small-scale enterprises)
Oil seeds Trade licensing
Central/State
Transport
State
Storage quantity
Central/State
Marketing
Central/State
Source: The World Bank Document on the Indian livestock sector review
Compound Livestock Feed Manufacturers Association (CLFMA) CLFMA was formed in June 1967 as an association of feed manufacturers and associated industries such as ingredient suppliers, importers, feed additive manufacturers, consultants, hatcheries and milk cooperatives and feed machinery manufacturers. The objectives of CLFMA are: l To promote the concept of nutritionally balanced compound feed; l To promote, assist, organize and coordinate scientific research in the field of animal nutrition; l To conduct, assign, sponsor or co-sponsor surveys and studies; l To collect, classify and circulate information related to animal feed to its members and government; l To offer suggestions to government in formulating policies; and l To impart training to livestock farmers, feed mill personnel, veterinarians, students and others. CLFMA is gradually becoming a representative of the entire livestock industry and has thus become the main influencer for feed industry. The Product-Feedstuffs and ingredients used in animal feeds: Livestock in India is fed with various types of food grains, oil cakes, by-products and feed supplements and additives. The major ingredients of animal feed are: 16

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Cereals and grains: Maize, sorghum and bajra (a type of millet) are commonly used in animal feeds. Wheat and rice are mainly retained for human consumption. Cakes and meals: Commonly used commodities of this kind are soybean, groundnut, rapeseed, sesame and sunflower meals in poultry feed. 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, safflower meal, maize gluten and molasses. l A special mention should be made of Indian cattle feeds 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, 17
acidifiers, amino acids, by-pass fat, by-pass protein, non-antibiotic growth promoters, milk boosters, antioxidants, feed flavours and herbal preparations of Indian origin. A number of these products are imported from developed countries. Feeds of animal origin: Meat-meal, fishmeal, bone-meal and dicalcium phosphate of bone origin are the common raw materials available for animal feeding. It is interesting to note that, with the exception of some bone-based dicalcium phosphate, the Indian feed industry does not use materials of animal origin in dairy cattle feed. This was not out of fear of any zoonotic problems but the result of deep-rooted beliefs that the cow is sacred and must therefore be vegetarian. Now even the use of bone-based dicalcium phosphate has been banned and mineral-based dicalcium phosphate is used instead. Fishmeal and meat-meal were popularly used in poultry feed, but the increased production, improved availability and better awareness of soybean meal has led to its replacing fishmeal and meatmeal in most poultry rations. It should be mentioned that farmers have faced production problems owing to the bacterial contamination of fishmeal and meatmeal. The quality of fishmeal is also very poor. Animal feed commodity production: The commercially important feed ingredients used in compound feed are maize and sorghum in cereals, rice bran and solvent extracted rice bran in by-products and oilseed meals. The description related to these ingredients is as follows: Maize and Sorghum: l Maize is one of the most important cereals used in animal feed. The annual production of maize is about 10.5 million tonnes; about 4 million tonnes of which are used in the starch industry, 4.5 million tonnes in animal feeds and 2.5 million tonnes in human consumption and seed production (Year 2001). l The major crop cultivation is during the Kharif season (June to October), which accounts for 90 percent of the total. The remaining 10 percent is harvested in the Rabi season (November to February). l The import of maize used to be restricted. However, since April 2000, imports have been approved under open general licence (OGL). There are, however, 15 percent duty and a grain inspection fee to be paid, so there is no price parity between imported and domestically produced maize. l Sorghum and bajra are very sturdy varieties of millet that can grow under limited rainfall conditions and are popularly used in animal feeds. Production of sorghum has remained static. There is no export of sorghum and bajra (millet). Rice bran and solvent-extracted rice bran: Rice bran and solvent-extracted rice bran are by-products. India is one of the worlds largest producers of rice, producing approximately 100 million tonnes. India also produces approximately 2.95 million tonnes of solvent-extracted rice bran, which is regularly exported (Year 2001). 18
Oilseed meals: l India produces soybean, groundnut, rapeseed, sunflower, sesame and cotton meals and these are used as major ingredients in animal feeds. For animal feeds, soybean is the most frequently used oilseed meal and has completely replaced fishmeal in poultry feeds. l 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. l India regularly imports edible oil and they have created problems for the countrys crushers. Although India has about 600 solvent extraction units, they run at only 50 percent of their capacity. Indias economy is agro-based but the yield per hectare is a cause of major concern to the countrys 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 (suitable 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 requirements. On the basis of energy, protein, fibre, vitamins requirements of different 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 specifications of the diet are in accordance with specific requirement.
Typical compound ration for cattle
Meat-bone Meal/Fish Meal, 5% Oilseed Meals, 10% Oil/Fat, 4% Molasses, 4% Minerals & Vitamins, 2%
Cereals/Substitutes, 40 %
Cereal Byproducts, 35%
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Typical compound ration for poultry

Animal ByMicroproducts, 5% nutrients, 3% Soyabean Meal, 25% Feed Phosphates, 2 %
Corn, 65%
Feed standards and specifications: For cattle and poultry, nutritional standards have been prepared with respect to the genotype, environment, and quality of available raw materials, maintenance methods, production and reproduction requirements, production capacity and phase of production. The Bureau of Indian Standards (BIS) is a central government organization that facilitates discussion between scientists and industry and prepares guidelines and specifications. BIS standards: Dairy feed requirements
BIS standards Moisture (maximum %) Crude protein (maximum %) Crude fat (minimum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Poultry feed requirements 11 22 3 7 3 BIS standards 11 20 2.5 12 4
Source: BIS. Dairy feeds - specifications, fourth revision.
BIS standards: Poultry feed requirements

Characteristic Moisture (maximum %) Crude protein (N x 6.25) (maximum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Salt (as NaCl) (maximum %) Broiler Broiler Chick Growing Laying Breeder starter finisher feed chicken chicken layer feed feed feed feed feed 11 11 11 11 11 11 23 20 20 16 18 18 6 3.0 0.6 6 3.0 0.6 7 4.0 0.6 8 4.0 0.6 8 4.0 0.6 8 4.0 0.6
Source: BIS. Poultry feeds - specifications, fourth revision.
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CLFMA specifications for compound feeds: Dairy cattle and buffaloes

Characteristic Moisture (maximum %) Crude protein (on dm basis) (minimum %) Un-degraded protein (minimum %) Crude fat (minimum %) Crude fibre (maximum %) Acid-insoluble ash (maximum %) Dairy Type I special feed feed 12.0 12.0 22.0 20.0 8.0 3.0 7.0 3.5 -2.5 7.0 4.0 Type II feed 12.0 18.0 -2.5 12.0 4.5 Type III feed 12.0 16.0 -2.0 14.0 5.0
Source: CLFMA Standards for Compound Animal Feeds. CLFMA specifications for compound feeds: Poultry
Characteristic Chick Grower Layer Layer Broiler Broiler Breede Breeder Broiler Layer Broiler feed feed feed, feed starter finisher r chick grower breede breede male II feed feed r feed r feed breeder I feed feed feed Moisture 12 12 12 12 12 12 12 12 12 12 12 (maximum %) Crude protein 18 14 16 14 20 18 18 14 16 16 14 (minimum %) Fat (maximum 2 2 2 2 3 3 3 3 3 3 3 %) Crude fibre 7 8 8 10 6 5 5 7 7 7 7 (maximum %) Acid4 4 4 4 4 4 4 4 4 4 4 insoluble ash (maximum %) Metabolizable 2 600 2 300 2 500 2 300 2 600 2 700 2 600 2 400 2 500 2 500 2 400 energy (minimum cal/kg)
Source: CLFMA Standards for Compound Animal Feeds.
The Compound Livestock Feed Manufacturers Association (CLFMA) has also prepared its own specifications which are as follows: 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.
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Feeding practices and the use of compound feed: Cattle feeding practices in India 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. 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. Poultry feed: l 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, highvalue compound feed can result in increased numbers of eggs, but the risks are too high because of the birds long life cycle. l 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. l Two types of poultry feed are prepared. The first one is ready-made and is 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. Quality management in compound feed: l The Indian feed industry employs the services of qualified nutritionists who are knowledgeable about the nutrition requirements of cattle, buffaloes, layers and broilers. Members of the industry have their own analytical laboratories and either have their own research and development facilities or have access to the research laboratories of agricultural universities or government institutions. l Various analyses are regularly carried out, such as tests for amino acids, aflatoxin, ochratoxin, castor, tannins and urease activity. There is a high degree of awareness of feed microbiology among the millers of feed. Feed raw materials and finished products are subjected to microbial counts, Salmonella 22
and Escherichia coli testing and mould count, and contaminated materials are rejected and sometimes destroyed. The feed millers have acquired the latest technologies and modern equipment such as high-pressure liquid chromatography (HPLC) and near-infrared (NIR) analysers. All vitamins, minerals and other feed additives are regularly analysed using modern analytical techniques. 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 quality 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 animals. 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 additives in enhancing milk, egg and broiler meat production. l Research and development work has been conducted on least-cost formulations 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 Plantations, Plant Biotech, Retailing of Fresh Farm Produce in urban areas, and rural retailing of a wide range of products including agricultural inputs. 23

l
Godrej Agrovet is among one of the largest producers of commercial animal feed in India as it has a rich experience of over 3 decades in the business of animal feeds. It has a strong presence in dairy feed; aqua feed and poultry feed sectors. Its production facilities are spread over 40 locations across the country. It has a network of over 10,000 distributors, dealers and C&F agents. Godrej Agrovet acquired Goldmohur Foods and Feeds Limited from Hindustan Lever, a Unilever subsidiary in India, in 2001. Godrej Agrovet has gone global and has started international operations too. It has signed a joint venture with ACI Group of Bangladesh for poultry and feed operations in Bangladesh, and acquired controlling stake in AlRahaba, which runs broiler farms in UAE.
Cargill: l Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services. Founded in 1865, it is a privately held company employing 160,000 people in 67 countries and had a turnover of $120 billion in 2008. l Cargill started its operation in India as a joint venture in 1987. Cargill has a number of businesses in India, with operations including the handling and processing of a wide range of products, such as refined oils, grain and oilseeds, sugar, cotton and animal feed. In addition, Cargill develops flavour systems and operates a value investing business. l Cargill Animal Nutrition, a subsidiary in animal feed develops and markets a broad range of animal feeds and customized animal productivity solutions to commercial producers in 28 countries across North and South America, Europe and Asia. There are 180 plants worldwide which support the business unit. l Animal Nutrition in India serves feed products in these categories: dairy, beef, swine, poultry and aquaculture. Cargill Animal Nutritionstarted in India through a joint venture with a local shrimp feed company located in Rajahmundry, Andhra Pradesh in February 2006. This was followed by the opening of a dairy feed business in Rajpura, Punjab in October of the same year. By March 2007, the Rajahmundry business became a wholly owned subsidiary of Cargill India. Then they launched Purina line of poultry feeds, which was followed by quick acceptance by broiler farmers in Haryana and Punjab. Vetcare: l Tetragon Chemie Pvt. Limited is popularly known as Vetcare. It is a 25 year old company and had a turnover of Rs. 2080 million (42.91 million USD) in the year 2008. It mainly has presence in the veterinary pharmaceutical industry. Vetcare has a wide range of therapeutic and nutritional products for poultry, large and small animals, aquaculture catering domestic and over24
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. 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 introduced 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 markets where it is present. The Group is actively seeking acquisition opportunities 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 livelihoods of majority of the poor livestock keepers in mixed livestock-crop system. Thus majority of farmers have 1-2 cows or buffaloes for dairy farming 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 including improper nutrition and health care, which results in nullification of 25
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4.
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any quality of compound feed given to them. Since nutrition can only be effective when all other aspects related to livestock production and management are taken care well. 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 believe 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 farmers mind and educate him about the advantages of providing compound feed to the livestock. They must understand how it ensures proper and complete supply of all the required nutrients in right proportions. 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. Low production potential of livestock: More than 50 percent of the countrys 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 crossbred 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. 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 industry: Majority of Indian population is facing the problems related to poverty 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. Untapped export potential: India has a lot of opportunities to export commercial animal feed because of the strategic location and availability of human resources. Issues related to quality and safety as well as a presence of 26
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very few private players, the export potential remains untapped in animal feed industry. Product Innovation: Due to presence of very few big players there has been a lack of research and resultant poor innovation in commercial feed. Government 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.
Supply chain is of paramount importance in feed industry since it captures various parameters ensuing in availability of the product to the target customers. It addresses various problems such as the bulkiness of product and subsequent high logistics and warehousing costs thus exploiting the various distribution modes and channels. Some of the key issues are: l Availability of animal feed: Making the feed available to farmers living in small villages is dependent upon many factors such as proper roads and transportation available to reach the rural areas, the elements of distribution system such as distributors, wholesalers and retailers, the channel support and accurate forecasting of the demand. Indian villages still face the problem of infrastructural bottlenecks and improper rural connectivity. This problem is further aggravated by smallholder livestock farmers as well as poor quality livestock holding by the farmers. l Location of the manufacturing plant: The inputs for feed manufacturing plant are not available at one place. Inputs need to be procured from a number of places both from national as well as international locations. The consumption/demand of feed may not support such costs. 27

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 anything 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. Quality and warehousing problem: Animal feed consist considerably high protein which may result in lower keeping quality or else if the feed is provided to livestock it may result in various diseases and subsequent loss of confidence of farmer in companys product. Thus proper storing of feed is necessary to prolong the keeping quality of feed. 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. Problems related with classifications of animal feed supplements / additives for import: The classification of feed additives is a major hindrance to the Indian feed industry. Worldwide, animal feed supplements and additives are covered under chapter 23.09 of the Harmonized System of Nomenclature (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 increase their own revenues. The industry, represented by CLFMA, has made several representations to the government, but these have been round various government departments, appellate tribunals, the High Court and the Supreme Court without providing any useful results for the industry. Lack of standardization and regulation: Though BIS has produced guideline feed standards and the feed industry also has its own guidelines, currently there is no compulsion to use BIS standards, but the central government 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 existing standards will be slow and difficult to arrive at because of participative conflicts and various lobbying groups. However, the industrys principal 28
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. 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 Commodities 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 facing 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 nature 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 industrys 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 industry is highly susceptible to movement in prices of raw materials. Availability 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 taxation. 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 improving the quality of the final feed and making it conversion-efficient. With a 29
view to bringing about the rapid development of animal husbandry in India, the government reduced the import duty on essential amino acids, so that the feed price to livestock farmers would be economic. However, with the imposition of countervailing duty (CVD) and other duties, the objective of helping to promote animal husbandry has been defeated. Public health & safety: In recent years, livestock output has grown steadily and at the same time, there has been a major increase in production and trade of feeding stuffs. It is suggested that much of the increase in livestock production in developing countries such as India has been based on imported feeds. The intensification of livestock production and the increasing trade in raw materials for the feed industry, as well as livestock products, demands greater attention to risk management by all countries. Public concern about the safety of foods of animal origin has recently heightened due to problems that have arisen with bovine spongiform encephalopathy (BSE), dioxin contamination, outbreaks of food borne bacterial infections, as well as growing concern about veterinary drug residues and microbial resistance to antibiotics. These problems have drawn attention to feeding practices within the livestock industry and have prompted health professionals and the feed industry to closely scrutinise food quality and safety problems that can arise in foods of animal origin as a result of animal feeding systems.
Recommendations for growth of animal feed industry: Animal feed industry requires a holistic integration of all the factors so as to emerge as one of the most profitable industries in animal husbandry. Since animal production involves a number of factors including environment, quality, sustainability, production, productivity and animal welfare thus a renewed vision is required to revitalize the animal feed industry.
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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 professionally. There should be consolidation in the new farming model concept. 31
Processing industry has to be highly oriented towards public health safety. The value added livestock products are gaining increased importance to consumers. Sophisticated technologies equipped with modern ICT (Information & Communication Technology) need to be adopted in the livestock industry. Integration, both in forward and backward direction is required. With Retail boom organised retailing in food sector is emerging as a lucrative business. There is orientation in consumers towards health consciousness and organic meat/egg consumption. Traceability in livestock products can be an important issue in international markets for Indian players.
The future of the Indian feed industry - Winds of change:
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Indias economy is on the fulcrum of an ever-increasing growth curve. With positive indicators, such as stable 8 to 9 percent annual growth, rising foreign exchange reserves, a booming capital market and rapidly expanding FDI inflows, India has emerged as the second fastest growing major economy in the world. The domestic Indian and international markets are fast-expanding with a lot of untapped potential in the areas of animal husbandry sector with multitude of opportunities. The livestock industry in India is the second largest contributor to gross domestic product (GDP), after agriculture, and accounts for 9 percent of the total. Consumption is projected to increase as: 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 1000 to 2000 g per year. These will act as the drivers for the dependent animal feed industry. 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. 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. Thus India will become a stakeholder and any global factors causing a change in the livestock industry will affect the feed industry as well. The time has come for investment, expansion, growth, and diversification. The Indian entrepreneur also has its sights fixed on project exports. Intense competition is the keyword of the present day business environment. Therefore, one needs professional expertise to have a cutting edge over competitors.The next decade will see significant changes in restructuring, mergers, acquisitions, amalgamations, joint ventures, diversification, integration and efficient service chains, e-commerce 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. 33

Sector Study: Animal Feed Industry

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