Cattle Feed industry likely to witness strong demand in near future

Brief: SMERA believes that livestock industry will play pivotal role in achieving doubling the farmers’ income; Meat production has been growing at an average of above 7% for last five year and reached 7 million ton in FY16; higher return from meat production will encourage the farmers to use compound feed to grow the livestock faster.

Impact: Positive

Agriculture sector is in the priority of the central government policy in recent years. This sector is source of income for around 70% of rural households. Therefore, strengthening the agriculture sector will help in improving the quality of life in the rural areas. Central government has set a target of doubling the farmers’ income by 2022.

SMERA believes that livestock industry will play pivotal role in achieving this target. This industry accounts for 29% in the agriculture GVA has been growing at an average of 3.7% for past five years (in livestock index). Meat production has been growing at an average of above 7% for last five year and reached 7 million ton in FY16. With the strong demand, meat price has grown at an average rate of 8.5% between FY13 and FY17. Overall price level, on the other hand, has increased by 6.9% during the said period. This indicates this meat production has been giving good return.

India has consistently remained on the top in the global milk production rank. However, average milk production per cow is very low at 11.2kg/per day. Israel, in contrast, has achieved an average output of 33kg milk per cow in a day. In India majority of cows are non-descript bread and following traditional way in feeding castles. Generally, Indian farmers prefer own ingredient for cattle feed. Agricultural Ministry is planning for genetic up gradation and cross-breeding in order to increase the milk productivity per cow. Increasing dairy farming of high bread cow/buffalo will demand high quality compound feed. Moreover, higher return from meat production will encourage the farmers to use compound feed to grow the livestock faster. Therefore, we expect that cattle feed industry is expected to attract more investment in near future.

Generally, cattle feeds are prepared out of the food grains and byproducts of cotton, oil and sugar industry. A positive factor for the Indian cattle feed industry is that India has recorded bumper food production and de-growth in food prices. Global food commodity price, on the other hand, is increasing. This gives a wider scope for export to the Indian cattle feed industry especially to the developed countries, which gives special attention to the diet of animal. The livestock industry is expected to post healthy growth with a favorable government policy. Therefore, cattle feed industry being a part in the supply chain is expected to follow the trend. As per our estimates, the annual cattle feed production in India is likely reach to 73 million tons by FY22.

Feed production (in Million Tons)

Source: Global Feed Survey, Alltech; SMERA Knowledge Centre
Note: "*” indicates SMERA estimates

Movement in annual food and agro commodity index:

Source: World Bank, CMIE, SMERA Knowledge Centre
Note: Domestic food price in Financial Year, "*” indicates average global price during January to July, domestic price during April to July

 

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