How broiler chicken industry has become India’s most organised and vertically integrated agri-business

Contract farming

The DOCs at Verma’s farm come from a broiler hatchery of the IB Group at Mundgaon in Dongarghar tehsil. This Rs 11,000 crore-turnover concern, officially ABIS Exports (India) Private Limited, also supplies the feed for his birds and farm cleaning chemicals (copper sulphate, formalin, bleaching  powder and hydrochloric acid).

The broiler feed comprises a pre-starter (400 gm for 12 days when the chicks grow to 400 gm), starter (1,200 gm from 12 to 25 days, when they reach 1,300 gm) and a finisher (after 25 days). In all, the birds consume around 3,300 gm of feed to grow to 2 kg and 4,000 gm for 2.5 kg. At the end of the rearing period, the IB Group/ABIS takes back the mature birds. Their marketing is its responsibility. Verma is paid a minimum “growing charge” (GC) of Rs 10/kg. That can go up if market prices go up or he produces birds with lower mortality rates, above average body weight and less feed consumed for every kg (also called feed conversion ratio, an indicator of management efficiency).

Raghuvendra Verma at his 11,000-bird environmentally-controlled poultry house in Devkatta village of Chhattisgarh’s Rajnandgaon district. (Express Photo by Harish Damodaran)

Last year, Verma received an average GC of Rs 14.89/kg, which, on 320,865 kg, translated into a gross revenue of Rs 47.78 lakh. After deducting expenses – mainly on labour, electricity, diesel and rice husk (used as bedding material for the chicks) – of close to Rs 2.5 lakh per cycle or Rs 15 lakh annually, he netted Rs 32-33 lakh.

Verma has invested Rs 90 lakh on the two EC sheds having automatic feeding and drinking lines (one pan for every 30 birds and one water nipple for 10-12 birds), exhaust and air circulation fans, cooling pads, lighting and diesel brooders (to provide heat and keep the chicks warm in the initial few days).

Each enclosed shed also has a control panel for regulating the feeding, brooding and lighting systems, besides maintaining the required temperature, humidity and ventilation levels. The optimum temperatures for bird growth are 32-34 degrees Celsius in the first three days, gradually reducing to 26-28 degrees during 12-24 days and 24 degrees or below after 35 days.

EC versus Open

Digeshwar Sinha (30), a five acre-farmer from Shikari Tola village in Khairagarh tehsil of Khairagarh-Chhuikhadan-Gandai district, has a smaller 3,300-sq ft “open” poultry house for 2,500 birds.

With a basic shed, feeders and drinkers, fans, sprinklers and jute curtains to beat the summer heat, wood shavings-fired bukharis or gas brooders (each for 800-1,500 birds, as against diesel brooders that can cater to 5,000), and no automation, his investment is only Rs 9 lakh.

Open houses require more space for each chick (1.3-1.4 sq ft, compared to 0.65 in EC sheds). The birds reared here have generally higher bird  mortality rates (10-12% versus 3-5%), while taking longer to weigh 2 kg (34-35 versus 32-33 days) and 2.5 kg (40-42 versus 37 days).

Sinha, however, manages the farm well mostly with his own labour. In his last cycle, only 71 out of the 2,520 birds died. The ones marketed had a total weight of 5,954 kg or 2.43 kg average.

Digeshwar Sinha at his 2,500-bird “open” poultry house in Shikari Tola village of Chhattisgarh’s Khairagarh-Chhuikhadan-Gandai district. (Express Photo by Harish Damodaran)

With 9,480 kg of feed consumed, his conversion ratio of 1.59 was within the 1.45-1.6 range for EC houses. While the base GC for open houses is Rs 8/kg, the IB Group paid him Rs 13.25/kg. Minus expenditure of Rs 21,000 on Rs 78,890 of gross revenue, his net income from that batch – he, too, does six in a year – was nearly Rs 58,000.

The Rajnandgaon-headquartered ABIS Exports – the first name is derived from the initials of its founders: Amir, Bahadur, Iqbal and Sultan Ali – has 30,000-odd broiler farmers like Verma and Sinha across India. They are supplied DOCs (each costing Rs 28 and pre-vaccinated for Gumboro/Infectious Bursal Disease and Newcastle Disease), feed (Rs 40/kg) and technical inputs (through line supervisors making 5-6 visits during every cycle).

The company also markets the fully-grown birds that are directly lifted from their farms by traders.

The above integrated contract farming model was pioneered by the Coimbatore-based Suguna Foods. Out of the estimated 14 crore DOCs placed every week in broiler farms all over India, IB Group/ABIS and Suguna account for 1-1.1 crore each. Other major broiler integrators are the Venkateshwara Hatcheries (VH) Group, Baramati Agro and Premium Chick Feeds (all in Pune) and Shalimar Group (Kolkata). Each does 30-60 lakh of weekly chick placements.

The ultimate integration

The broiler integration companies have turned poultry farming – traditionally based on rearing 10-20 free-range/backyard breed birds fed on agricultural byproducts and kitchen waste – into a commercial enterprise even for smallholders. Almost 40% of the IB Group’s 30,000 farmers own EC houses, having anywhere from 9,000-10,000 to 24,000-25,000 chicks with an initial investment of Rs 450-500/chick.

The broiler industry is arguably India’s most organised and vertically integrated agri-business today. Dairies may procure milk directly from farmers, but don’t supply them cows or buffaloes. The poultry integrators have their own feed plants as well as commercial broiler hatcheries.

IB/ABIS has 10 hatcheries – two in Rajnandgaon and the rest in Rajpura (Punjab), Muzaffarpur (Bihar), Jagdishpur (Uttar Pradesh), Jalpaiguri (West Bengal), Nagaon (Assam), Jajpur (Odisha), Aurangabad (Maharashtra) and Kolar (Karnataka).

These can load over 65 crore eggs annually for hatching into chicks, which are dispatched the same day to reach broiler farms within 12-15 hours. The company has eight feed plants and also India’s largest soyabean processing unit with a daily 2,000- tonnes crushing capacity at Badnawar (Madhya Pradesh). It supplies de-oiled cake, the residual meal after oil extraction and the main protein ingredient in poultry feed.

The hatcheries artificially incubate the eggs laid by hens at a parent farm that has both female and male birds. These fertile eggs are put inside “setter” machines for 18.5 days at the right temperature and humidity (to mimic the natural environment provided by broody hens for the embryos inside to develop).

From there, they are transferred to the “hatcher” machines, where the chicks come out after 2.5 days.

The IB hatchery machines are all imported from European companies – Petersime (Belgium), HatchTech and Royal Pas Reform (both Netherlands). The vaccine injection, into the eggs (not birds) after the setting stage before going to the hatcher, is done by a separate ‘In-Ovo’ machine.

Backward and forward integration

The likes of Suguna, IB/ABIS and VH not only have parent farms (where the female chicks are reared for 24-25 weeks and then mated/inseminated for laying eggs till 64-68 weeks) and broiler hatcheries (where the eggs turn into DOCs). They even have the grandparent (GP) farms with male and female birds, which lay the eggs producing the parent stock.

IB Group has two GP rearing farms-cum-hatcheries at Shivpuri and Kariyagondi in Rajnandgaon district. These, in turn, obtain their GP chicks from Aviagen, the world market leader in broiler genetics. The Huntsville (US)-based company has a great-grandparent (GGP) farm and hatchery at Udumalpet (Tamil Nadu) that produces the GP stock chicks of its ‘Ross 308 AP’ broiler breed. The pure lines or pedigree stock chicks for growing the GGPs and hatching their eggs at this facility are imported by Aviagen India from the US.

The broiler chickens produced and sold in India are largely of foreign pedigree stock like Ross, Hubbard and Cobb. The Ross and Hubbard lines are owned by Aviagen, while the VH Group has a joint venture with Cobb-Vantress, also a US poultry genetics company, for breeding broilers “suited to Indian agro-climatic and management conditions”. Only Suguna Foods has developed its own ‘Sunbro’ pure line broiler breed.

The Indian broiler industry is highly “backward integrated” – more than dairy – but isn’t as “forward integrated” as the latter. Dairies sell branded pouch milk, curd, ghee, butter, cheese and ice-cream, whereas broiler chickens are predominantly wholesaled and even retailed as live birds in the “wet market” or roadside shops.

“Forward integration is the next step. We need to move to branded sales of dressed, chilled and packed chickens, apart from ready-to-cook and ready-to-eat meat,” said Zoya Afreen Alam, director of ABIS Exports.

That calls for a special effort at inducing consumer behavior change and may take time – like it did with fresh pouched milk and curd.