While contract farming is not yet firmly entrenched in the country, the model is firmly established and growing in the broiler meat industry.
About 25 companies, including Venky’s, Suguna, IB, Sneha Farms, Sampoorna, Maa Integrators and Unnat, have thrived in this business in recent years, in a model where they bear the bulk of the cost of poultry production, while that farmers are paid for animal husbandry. charges. On average, 8-10 rupees/kg are paid by these integrators to the breeders for a “live and weighed bird” and about half of this sum corresponds to the profits of the breeders.
These private entities lift the broilers of around 2 kg body weight to the farm gate. The breeding period of a bird varies between 35 and 38 days. Either the integrators sell the products on the wholesale market, or the raw meat is processed to make value-added products.
“The integration model ensures that farmers are insulated from fluctuations in market prices. They remain assured of getting fixed, pre-determined prices,” said contract farming ABIS-IB group vice president Ricky Thaper.
According to Prasanna Padgaonkar, Managing Director (Poultry), Venky’s India, who pioneered the contract farming model from 2004 to 2005, the model worked well for poultry farmers during the Covid-19 pandemic when prices crashed on the Marlet. “If it had been an individual farmer, it would have been difficult for her to survive. Under the contract farming model, the integrator takes the risk,” Padgaonkar said.
The integrators provide day-old broiler chicks, feed, medicine and technical support as well as raising costs to the breeders. There are also other incentive structures for farmers, such as additional payments when market prices rise sharply.
The average bird holding capacities of poultry farmers in India vary between 5,000 and 10,000 birds per shed.
According to the Department of Livestock and Dairy Industry, more than 80% of India’s poultry meat is produced by organized commercial farms and the rest is produced by backyard poultry, mainly in rural areas. Apart from commercial broiler production, large poultry companies that follow vertically integrated operations hold a share of about 60-70%.
Suresh Chitturi, Chairman of the International Egg Commission and CMD, Srinivasa Hatcheries, says many smallholder farmers have been shielded from market volatility due to contract farming.
India’s poultry meat production was estimated at 4.44 million tonnes (mt) in 2020-21, up from 4.34 mt in the previous fiscal year.
The poultry sector provides employment to approximately 6 million small and medium farmers (who own farms of 5,000 to 10,000 broilers).