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2.3 Growth and Concentration in India[6]

Red meat consumption in India is very low, for cultural and religious reasons. But India has participated in the global Livestock Revolution through extraordinary growth in the consumption of milk, eggs, and poultry meat. Poultry is in fact one of the fastest growing segments of the agricultural sector in India today. While the production of crops has been rising at a rate of 1.5 to 2 percent per annum, that of eggs and broilers has been rising at a rate of 8 to 10 percent per annum. As a result, India is now the world's fifth largest egg producer and the eighteenth largest producer of broilers.

A significant feature of India's poultry industry has been its transformation from a backyard activity into a major commercial activity in just four decades. This transformation has involved sizeable private sector investments in breeding, hatching, rearing and processing. Farmers in India have moved from rearing indigenous breeds to producing internationally recognized hybrids. With the exception of sterile egg powders exported to Europe, virtually all-Indian poultry and egg production is consumed in South Asia, and most of it in India.

Like Thailand, India's growth in the poultry industry began with the importation of grandparents in 1974 of grandparent stock from Cobb, a dominant multinational firm at the time. Cobb and Venkateshwara Hatcheries set up a joint venture in the 1980's to produce pure-line parent stock. Venkateshwara now exports breeding stock to Nepal, Bangladesh, and Bhutan.

Four southern states-Andhra Pradesh, Karnataka, Kerala, and Tamil Nadu-account for about 45 percent of the country's egg production, with per capita annual consumption of 57 eggs and 0.5 kilogram of broiler meat in 2001. Production is grouped around major urban centers such as Hyderabad, Mumbai and Delhi (see Figure 2.6 in the appendix to this chapter). The eastern and central regions of India account for roughly 20 percent of egg production; per capita consumption is 18 eggs and 0.13 kg of broiler meat nationally in 2001. The northern and western regions of the country record much higher per capita production of eggs and broiler meat.

The growth of the poultry sector in India is also marked by an increase in the size of poultry farms. In earlier years, broiler farms had produced on average a few hundred birds (from 200-500 chicks) per cycle. Today units with fewer than 5,000 birds are becoming rare, and units with 5,000 to 50,000 birds per cycle are common. Similarly, in layer farms, units with a flock size of 10,000 to 50,000 birds have become common. Small units are probably finding themselves at a disadvantage because of higher feed and transport costs, more expensive vaccines and veterinary care services and the non-availability of credit. Some small units are reported to be shifting from layer to broiler production because output in broiler units can be realized in six weeks.

Despite India's growth in consumption, its per capita consumption of these products is poor: 37 eggs and 1 kg of poultry meat per capita per annum. Here, again, there is considerable variation in per capita consumption between rural and urban areas and also across the region. Per capita consumption of eggs is only 7.7 per annum in rural areas, compared with 17.8 per annum in urban areas. In seven states, per capita consumption is less than 3.5 per annum. Similarly, per capita consumption of poultry meat is 0.24 kg in rural areas and 1.08 kg in urban areas (Mehta, 2003).

An analysis of consumption data originating from National Sample Survey (NSS) shows that 42 percent of households are vegetarian, in that they never eat fish, meat or eggs. The remaining 58 percent of households are less strict vegetarians or non-vegetarians. Over time there has been a slow shift from strict vegetarianism to less strict vegetarianism. The change is more visible in rural areas than in urban areas, and typically starts with consumption of eggs. Between 1987-88 and 1999-2000, the proportion of households consuming only one of the three items-fish, meat or eggs-increased by only one percent in urban areas, while in rural areas this proportion increased by four percent (Mehta, 2003).

Milk production in India increased from 17 million tons in 1950-51 to 84.6 million tons in 2001-02. Therefore, from being a recipient of massive material support from the World Food Program and European Community in the 1960s, India has rapidly positioned itself as the world's largest producer of milk. Milk production in India was stagnant during the 1950s and 1960s, and annual production growth was negative in many years. The annual compound growth rate in milk production during the first decade after independence was about 1.64 percent; during the 1960s, this growth rate declined to 1.15 percent. During the late 1960s, the Government of India initiated major policy changes in the dairy sector to achieve self-sufficiency in milk production. Producing milk in rural areas through smallholder producer cooperatives and moving industrially-processed milk from these smallholder sources to urban demand centers became the cornerstone of government dairy development policy. This policy initiative gave a boost to dairy development and initiated the process of establishing the much-needed linkages between rural producers and urban consumers.

The performance of the Indian dairy sector during the past three decades has been truly impressive. Milk production grew at an average annual rate of 4.6 percent during the 1970s, 5.7 percent during the 1980s, and 4.2 percent during the 1990s. Until 1991, the Indian dairy industry was highly regulated and protected. Milk processing and product manufacturing were mainly restricted to small firms and cooperatives. High import duties, non-tariff barriers, restrictions on imports and exports, and stringent licensing provisions provided incentives to Indian-owned small enterprises and cooperatives to expand production in a protected market.

Despite its being the largest milk producer in the world, India's per capita availability of milk is one of the lowest in the world, although it is high by developing country standards. The per capita availability of milk, which declined during the 1950s and 1960s (from 124 grams per day in 1950-51 to 121 grams in 1973-74) expanded substantially during the 1980s and 1990s and reached about 226 grams per day in 2001-02 The per capita consumption of milk and milk products in India is among the highest in Asia, but it is still growing. It is still below the world average of 285 grams per day, and also the minimum nutritional requirement of 280 grams per day as recommended by the Indian Council of Medical Research (ICMR) (see Sharma, 2003).

Several factors have contributed to increased milk production. First, milk and dairy products have cultural significance in the Indian diet. A large portion of the population is lacto-vegetarian, so milk and dairy products are an important source of protein in the diet. The demand for milk and dairy products is income-responsive, and growth in per capita income is expected to increase demand for milk and milk products.

Despite the fact that dairy production in India is widespread throughout the country and overwhelmingly carried out by small-scale producers, there are still large interregional and interstate variations in milk production (see Figure 2.7 in the appendix to this chapter). Roughly two-thirds of national milk production comes from the states of Uttar Pradesh, Punjab, Rajasthan, Madhya Pradesh, Maharashtra, Gujarat, Andhra Pradesh, and Haryana. However, there have been some shifts in milk production shares of different states. In 2001-02, Uttar Pradesh was the largest milk producer in the country, with about 16.5 million tons of milk, followed by Punjab (8.4 million tons), Rajasthan (6.3 million tons), Madhya Pradesh (6.1 million tons), Maharashtra (6 million tons), and Gujarat (5.6 million tons). The eastern region is lagging behind in terms of dairy development, and imports milk from surplus areas in the West and North.

[6] This section draws on Mehta, 2003 and Sharma et al., 2003, which give appropriate citations for original sources.

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