INDIA - Japanese companies are reported to be exploring the potential of joint ventures with Indian businesses for the processing and importation of poultry products.
India exports poultry products mostly to Oman, Germany, Indonesia, Saudi Arabia and Afghanistan, according to Economic Times of India. It also ships small quantities of egg powder to countries such as Japan.
Japan imports 880,000 tonnes a year, or more than one-third of its poultry product consumption of 2.21 million tonnes, mostly from China, Brazil, the US, Thailand and the Philippines.
India's poultry sector that currently reports insignificant exports is hoping for major orders from Japan, one of the world's largest importers of poultry products.
India is the world's second-largest egg producer, with 65 billion eggs a year, and the third largest broiler chicken producer, with 3.8 million tonnes of poultry meat with a total market size of about INR90 billion. In the fiscal year ended 31 March 2014, it earned exports worth INR5.65 billion.
A delegation of Japanese companies, led by Mayekawa Manufacturing, visited India in February and expressed interest in exploring joint ventures with local partners for processing poultry products and importing them, given the cost advantages in the subcontinent.
During the visit, Mayekawa Chairman Yoshiro Tanaka told Andhra Pradesh Chief Minister N.Chandrababu Naidu that his group has alliances with 24 Japanese companies looking to invest some US$9 billion (INR563 billion) in India's food processing sector. Mayewaka makes cooling and freezing systems as well as compressors for refrigerators and heat pumps.
The Indian poultry sector has been reporting a healthy growth of 12 to 15 per cent a year on the back of a rapidly growing middle class and rising incomes. Exports have been low owing to cost disadvantages and global concerns over the quality of Indian poultry products following frequent bird-flu outbreaks.
An unnamed senior executive at a large poultry company told Economic Times: "Thanks to mushrooming global quick-service restaurants like KFC and McDonald's, apart from local QSR brands, the Indian poultry industry had-over the last decade or so begun adopting global quality standards."
Some of India's poultry players that have made large investments in world-class processing technologies include Venky's, Suguna, Godrej, Amrit and Sneha Farms.
National Egg Coordination Committee coordinator, K.V.S. Subba Raju expressed regret that Indian poultry product exports suffered on account of concerns that were blown out of proportion on bird-flu spread and subsequent quality issues, falling to less than INR6 billion last year from a high of over INR15 billion a few years ago.
Sneha Farms Managing Director, D.D. Ram Reddy, who controls more than one-fifth of the market share in Andhra Pradesh and Telangana with over INR14 billion in annual sales, is excited over the fresh business opportunity from Japan.
He said: "We are currently setting up a modern chicken-processing unit near Hyderabad at a cost of INR750 million. We will now explore options on joint ventures with the Japanese importers who have shown interest in Indian poultry products."
According to K. Ravindran, COO of Kolkata-based Amrit group, India will have proximity advantage - which means lower logistics cost - over Brazil in Japan's poultry market. The Amrit group is currently setting up its largest export-oriented processing unit near Kolkata, he said.
Acknowledging the feed stock advantages that Brazil has, being one of the world's largest producers of maize and soybeans, NECC's Subba Raju told Economic Times that India's poultry players have the potential to give tough competition to Brazil if the input costs were contained.
TheMeatSite News Desk