Agri Business

Corn farmers pin hopes on local poultry feed demand

Reuters MUMBAI | Updated on January 24, 2018 Published on February 11, 2015

poultryfeed



Indian corn producers, after scoring virtually no major export deal for months, are counting on local chicken farms to absorb millions of tonnes of the grain as poultry output heads for yet another record year.

India, a key exporter of the grain to Asia, has struggled to find takers for its relatively expensive corn after global benchmark prices hit five-year lows late last year on record production in the United States and South America.

"No major corn export deal has been signed since October," according to Amit Sachdev, India Representative of the U.S. Grains Council, leaving grain with the producers.

Rising domestic orders for chicken feed will help soak up some of the grain, with poultry producers expected to increase corn consumption by around 10 per cent this year, analysts say.

India's poultry output has been scaling yearly records as higher incomes boost demand for meat in the world's second-most populous country after China. India's broiler production will hit a fresh all-time high of 3.9 million tonnes in 2015, U.S. Department of Agriculture estimates published in October show.

"We expect to breed about 10 per cent more chicken in 2015 from 2014," said Prasanna Pedgaonkar, deputy general manager at Venky's, an Indian chicken processing and product firm that also owns the English football club Blackburn Rovers.

The higher use of corn as feed would make up somewhat for weak exports that traders see easing by as much as 12 per cent to 2.2-2.3 million tonnes in the year to September 2015.

Indian chicken farms will consume 10-10.5 million tonnes of local corn this year, up 1 million tonnes from 2014, according to Deepak Chavan, a commodity analyst with Agro Futures.

LOCAL CORN DEMAND EYED

Major Indian corn exports have ground to a halt as buyers balk at the sizeable premium for Indian supplies.

Despite a 10 per cent drop in Indian corn prices to around $20 per 100 kg since August, export rates of $210-$220 a tonne, free on board, remain significantly higher than the $180-$190 quoted by the United States.

India usually attracts deals when it offers corn at a 5-6 per cent discount to rival supplies. It is expected to produce around 22 million tonnes of corn this year, dealers said, down 10 per cent from a year ago.

With export deals hard to come by, demand from the poultry sector is what corn farmers are now pinning their hopes on.

It is more feasible for poultry farms to source their corn locally as imported corn would be expensive after including freight charges and other transportation costs, traders said.

India's per capita chicken consumption is among the lowest at around 3.5 kilogram (kg) versus a global average of 11.6 kg, but that is fast changing due to new food consumption trends and a younger average age of the population, industry sources say.

Michelin-starred Indian chef Vikas Khanna said the age groups of 12 to 35 years order poultry the most, using his restaurant Junoon in New York as a case in point.

More than half of India's population is below 25 years and the average Indian age is set to be 29 in 5 years, a demographic that suggests poultry demand will continue rising.

Published on February 11, 2015
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