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India Maize Summit 2015Session -4 Theme: Processing value added maize-view from

consuming industry .Presented by M.Vijayanand GM-Supply Chain-Suguna Foods

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Current Status

• During the past 9 years ie.between 2006 and 2014 Poultry placements grew by a CAGR of 12.5%.

• RM prices are comparatively softer than the previous year .

• Maize prices across India are stable barring poor quality.

• Maize quality has deteriorated in all Maize growing States i.e. KA /MH/AP/Bihar.

• High fungus levels in Maize-affecting poultry productivity

• Lower chicken prices is a prime concern-feed cost is more than the chicken cost-Un remunerative business.Retail prices are varying between 120-170 and producer has got only around 58/-per kg. average realization in last year.Traders are the only segment in the production –distribution chain who is making profits.

• Isolated cases of Avian flu in some Indian States- and other health issues affected bird mortality & high FCR.

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Poultry Vertical Integaration

Backward Integration Forward Integration

Parent

Breeder

Farms

Feed

Production

HatcheryContract

Farms

(commercial)

Slaughtering / Processing

Market (Own/

Franchise

Retial_

Veterinary

service

For processed meat Market

For WET Market

Meat Production from poultry

Top 5 states - Estimates of Meat production from poultry ( in 1000 tonnes)

Feed mill 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 CAGR

Andhra Pradesh 309 334 363 400 446 499.2 10.07%

Maharashtra 275 280 309 334 346 378.8 6.61%

Tamilnadu 334 356 397 362 350 334.4 0.02%

Haryana 185 220 230 306 324 333.7 12.52%

West Bengal 231 232 252 273 301 328.5 7.30%

* Source: Basic Animal Husbandry Statistics, Dept of Animal Husbandry : GOI

Significance of the Industry

• Poultry Industry is contributing for supplementing farmers’ income along with the main agricultural income.

• Suguna’s unique model of Poultry integration is helping thousands of farmers in 16 Indian States for self-sustaining .

• Suguna is the major consumer of Maize ,almost 1.2 million tons of annual production of 21MMT.

• Suguna- largest buyer of farmer maize and at present directly purchasing maize from farmers in AP,KA,TN and MH .No middle men-Immediate cash payment-Correct weighment-Right realization to farmer.Majority of the farmers are motivated to supply their produce to Suguna entirely.

• Suguna is consuming various Maize by-products like Maize Germs ,Corn oil and Maize cake in bulk .Promoting usage of all forms of maize processing.

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Maize Byproducts used in Feed Industry apart from Maize

PRODUCT PROCESS UTILISATION Ex-PRICE/MT

MAIZE GLUTEN WET MILLING Alternate protein source with more than 60% of crude protein

Rs.42000

MAIZE GERMS DRY MILLING Alternate energy source replacing rice polish with 40% of oil content

Rs.33000

MAIZE GRITS DRY MILLING Alternate energy source in broilers Rs.15000

MAIZE FIBER WET & DRY MILLING

Alternate fiber source in cattle feed Rs.11000

MAIZE OIL EXPELLER Has energy value equivalent to soya oil Rs.48500

MAIZE OILCAKE EXPELLER Alternate energy source in cattle feed with 10% oil of oil content

Rs.22000

MAIZE DOC SOLVENT Alternate protein source in poultry & cattle with 25% of cp

Rs.20000

MAIZE GLUTEN FEED

WET MILLING Alternate protein source in cattle with 18% crude protein

Rs.13000 6

Challenges faced by the industry• Major challenges for the maize procurement are weather uncertainty-

either excess rain fall or drought situation in various States.This year EL nino is forecasted by Australian Weather body during mid 2015.

• In this year in Karnataka the Kharif maize is having high fungus due to unseasonal rains at the time of harvest. Fungus level gone up to 10%. No benefit to farmer-No benefit to consumer. In MH also the quality is affected due to the recent rains. Last Bihar crop effected due to unseasonal rains in harvest time.

• Major threat to maize quality is untimely rains which will affect the feed quality. High fungus results in high mortality of the bird.

• Although the exports are minimum Price volatility is high .

• Alternate grains ie.bajra,broken rice ,jowar are in short supply and every one has to depend on Maize . Bajra crop failed in North this year and broken rice is scarce as there is no custom milling from Govt in Rice producing States .Chattisgarh government restricting rice supplies outside State and removed subsidies on Rice production to farmers.

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• Maize yields in KA, MH and AP has been reduced this year.

• Proper logistic linkage need to established in all areas so that the farmer produce should reach the consumption points in time. Transit wastages and spillages to be minimized.Govt.should install Driers in major Mandis for pre-drying of high moisture maize before selling to market.

• Due to small grain size ,Maize is not having proper nutrition values forcing feed industries to consume more maize so as to balance the feed formula.

• Due to lack of proper storage infrastructure lot of maize is getting spoiled in the field itself and farmers are losing heavily

Why these challenges needs to be addressed

• These challenges need to be addressed immediately for the benefit of both farmer and Poultry industry.

• Maize being a dry crop –doesn’t need much water resources-Farmers need to be encouraged for more plantation of maize instead of paddy. Punjab is showing the way and offering subsidies for maize farmers.

• Farmer need to get the right price for their produce. To motivate them to store maize in hygienic conditions –premium can be paid for low fungus & dry maize like Suguna.

• All weather resistant variety seed has to be developed by seed companies to sustain the nature vagaries. GM trials approved by government for Corn is a good step.

• Yields need to be increased by using proper fertilizers so that farmer can get additional benefit on maize cultivation.

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• Much of the maize produced in the country couldn’t move to the actual consuming centers due to non –availability of railway rake points . Even Rake point is available in some places, Railways are not allotting rakes for maize movement as this is non-priority segment compared to coal and oils.

• To avoid increase in Railway freight rates for maize movement through rakes-Recent Railway freight increase of 10% on grains is a huge setback for industry as inter-state movement of maize is a must for the Poultry industry as different States has different crop arrival time.

• Even for Road transportation of Maize ,using higher tonnage vehicles ie.30-40 MT capacity are to be encouraged as freight cost will be reduced. However Govt. has recently banned the over-loading of vehicles in many States. Current Road conditions are very poor which is adding freight charges.

Possible Solutions to address these challenges

• Domestic consumption of maize to be increased for various segments. Since exports are down this crop year –expected 2 MMT exports –excess maize need to be consumed for value-added products which is having ready demand .

• Suguna is already using Maize gluten, Maize germs, Corn oil and Maize DOC which are value added products and useful for usage through out the year.

• To work closely with various research institutes like NIN,IVRI ,Central Poultry Research Institute etc. in order to develop more value added products out of Maize.

• Necessary incentives from NABARD for constructing Scientific warehouses in all regions for storing Maize so as to reduce the wastages and spillages.- To retain the original quality of maize .FCI is constructing huge Silos across country-Katihar one Silo being constructed for maize storage under PPP ..

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• MSP purchase of Maize by Government-Karnataka and Telangana is a good move to support the farmers - However Govt. should release stocks in right time in market .

• Release of damaged grains by FCI on a regular basis to the Poultry industry which is missing for the past few years.

• Waiver of APMC Cess on Maize & Bajra and also remove the restrictions of free movement of maize from one State to another State-Multiple APMC Cess imposition

• APMC Cess exemption in all States for direct farmer purchases.

• Strong Mandi system and modifications to existing APMC Act . • Closely knitted partnership of Seed companies ,actual

consumers and farmers –to benefit every one.

Thank You

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