After WTO ruling, Doubling farmers’ income agenda under threat

After WTO ruling, Doubling farmers’ income agenda under threat

 Indian Poultry and allied Industries heading for Shake-up

Follow on twitter : @vijaysardana

In 2014, Global Poultry export trade was about USD 28.33 billion and in 2016 it came down to USD 23.68 billion. This is putting pressure on the governments of major poultry producing countries to open new markets for them. Brazil and US are two major suppliers to the world.

India is one of the largest consumers' market in the world. Global players are looking at India with lot of excitement. Global Poultry industry is also waiting in wings to enter Indian market. Recent WTO ruling will faciliate the entry.

Due to various regulatory restrictions India was insulated from global competition, but now this will change soon. In 2015, India had lost a case at the World Trade Organisation when the trade body ruled that India’s ban on import of poultry meat, eggs and live pigs from the world market suppliers like US was “inconsistent” with the international norms. India was given 12-18 months to implement this ruling, after which the US can begin exports of these products to India. India tried to put forward her case and asked for revision but as expected there was no relief.

In changed global geo-political situation, Government of India will also not resist imports because of several reasons, when we are seeking market access to improve our exports. Today, as a country we should relook at our bargaining power on trade matters.

According to Senator Chris Coons, the Indian market is one from which the US has been effectively excluded for a number of years and US has to think about how we might access the Indian market for this tasty high-quality American agricultural export.

Now with political determination in USA, the only hope to protect Indian poultry farmers from large scale imports is our complicated ‘so called industry friendly’ legal system and so called ‘effective and efficient’ inspectors’ system. The role of our systems and inspectors are quite effectively visible in our poor export performance and industrial growth in last so many years and poor-quality products available to citizens of India. Still there is no desire to dismantle the inefficient outdated system. This is what is responsble for poor economic and export growth.  China had done the same 30 years ago today they have seen the benefit, we have launched 'Make in India' without dismantling the rusted systems. Should we expect results?

If we still believe that we have good system and efficient inspectors and no corruption, why exports are going down and why industry is suffering from corruption with every approval which are essential part of every law designed in India for the benefit of rent seeker? 
Actions speaks louder than the words.

Why import threat is real?

India not complying with a 2015 WTO order on poultry import ban is a “troubling issue”, the US president’s nominee to be the next envoy to India has said, underlining that if confirmed, this would be one of the top trade issues for him. “That is a troubling issue,” Juster said when Senator Chris Coons asked about hurdles in exporting US poultry products to India. During his confirmation hearing, the new Ambassador to India Mr. Kenneth Juster assured members of the Senate Foreign Relations Committee that this would be one of the top trade issues for him in Delhi. To achiveve this goal, US goverment will put full weight behind hm, if they are serious. 

In my assessment and from some reports, they will use all options to support US poultry industry because the local poultry industry is facing serious problems and subsidy burden of US governemnt towards poultry sector is going up.

Now when US ambassadors are posted with clear and specific task in hand, will they not deliver? Do we have such system in India to ensure accountability and performance of India Ambassadors? If not, why not?

India may get rejected consignments of the  the world market

Our outdates and inefficient systems will not be able to detect what type of Chicken is coming to India. The food safety inspectors will be managed by clearing agents and traders the way they are doing for other products. That is why most of the supermarkets are flooded with products with tempered fake stickers and they are visble to the conusmers but not to the inspectors. 

FSSAI has no system to ensure transparency like in other countries where they issue Food Alerts. India is the only country where whatever comes to port is cleared and never destroyed and rejected. If proper screening and rejection is happening, why no information is shared on FSSAI website to inspire confidence. Why FSSAI is keen to hide the culprits and is not shring iformation with citizens. Even Parliamentary standing committee wants transparency but FSSAI management is not keen to oblige even the Parliament of India. In this situation where is the hope of safe food to masses. Unless there is weekly update on FSSAI websites about rejects and food alerts are issued there is no way citizens can trust FSSAI and its functioning. FSSAI must make its accountable to citizens, not surrender to inspectors and lab. analysts.

Implications of Poultry imports into India on rural economy:

Indian Poultry industry consumes 70% of maize produced by Indian farmers and almost 80% of Soybean meal produced in India. Large scale by-product from agro-based industries goes to poultry feed and livestock industry. Any downward impact on domestic prices on poultry will have ripple effect. Price realisation by farmers will go down and this will lead to rural distress not only in poultry farmers but also for maize and oilseed farmers. This will reduce tjhe hope of doubling farmers' income in the country.

USA and EU provide huge subsidy to Poultry, soybean and maize farmers. The same subsidised product will come to India and will hurt Indian farmers. Are we ready with counter strategy as a country? If yes, let us understand the same from policy makers because millions of peoples’ livelihood is at stake. Rural economy is at stake. Till date we have no agriculture and livestock policy, who will provide us hope?

What is the way forward?

Mumbai, Chennai, Cochin and Kolkata will witness the shake-up soon when imported poultry products will land in these cities by container loads and distributed by organised retailers at massive discounts. These port cities with massive purchasing power and huge market for imported volumes are ideal for dumping ground for poultry products from the world market. Indian suppliers will be marginalised to low margin commodity markets.

India poultry industry may not be able to fight back because it is highly fragmented. There is no mutual understanding among players how to take the poultry industry forward. Poultry industry associations have reduced themselves to event managers and rarely undertake strategic discussion on how to face the competition. There is no effort to expand the industry. The whole fight is how to increase market share and margins without doing market expansion. This is a classic situation of every inward-looking industry which lacks vision and innovation.

Now, we are at a situation where some of the largest global player are knocking at the doors. Indian organised retail industry will be more than happy to support imported products because of better margins and quality assurance and promotion support extended by global players. Consumers will be happy to have global products in domestic markets. Consumers will be induced and educated by sellers on why and how to consume their products. Consumers will be incentivised to change habits. I can see lot of action in urban centres in coming weeks.

What Indian Poultry Industry should do now?

Government of India is not keen to promote any kind of slaughtering business in India. In this situation let us not expect government will have any interest in supporting poultry industry. We have not seen any action to support poultry industry in last three years. Like any other food industry, we will be left with low margin commodity markets like wet market that too for lower income consumers.

Now, when consumers are not able to pay more, how much money will reach the poultry farmers. Who will pay premium for corn and Soybean meal? This is a serious situation when we are talking about doubling farmers income. 

Please note: The poultry industry of India is at par with global poultry industry when it comes to production performance, which we measure in terms of Feed Conversion Ratio (FCR), but still suffering due to lack of clear policy and market development work.

Major Shake-ups ahead

The only option left with poultry industry is change the mindset and work on building marketing organsiation. All major players should come together and work on national strategy and guide policy makers. Today they don’t work with each other because of various personality issues. Now, the competition is bigger than their collective power, they can’t afford to fight back individually.

Large poultry players will be left with only two options left - either they will join the competition or they will become low cost commodity players and their balance sheet will be at the mercy of monsoon. 

Please recall and evaluate what is happening to edible oil industry, telecom industry, automobile industry, organised retail industry, private dairy industry, food industry, textile industry, auto component industry, etc. Who is dominating the market? Indian companies or companies with forign funding or foreign collaboration. 

All players with meaningful brand and distribution but weak on innovation left with no option but to become acquisition and merger targets. Unfortunately, in poultry we don’t have many players to face global competition. With shrinking margins and no focus on human resource development and innovation, they will lose their fighting back spirit as well.

Time to Act:

Everything is not gloomy, there is scope for players those who wish to invest in product development, human resource development and innovations to meet expectations of consumers in market by ensuring food safety, antibiotic free suppliers in hygienic packing and delivery systems with reasonable premium.

Government departments must change their attitude as well. So far they have a mindset of regulator and desire to dictate everything to business players, they must change their approach to act as facilitator. We all tell industry how to operate in global market, why we don’t tell inspectors and officer how to operate in globalised market place. This will be major climb-down for them from the power politics. Who will bell the cat?

We have already lost 30 years. China was behind us 30 years ago, now they are 30 years ahead of us. How must time we will take to change ourselves, means to move this elephant called India. Any thoughts?

Poultry industry will be a new theatre to witness the action in coming weeks. Get ready for the action.

If this does not happen, it means the new US Ambassador to India Mr. Kenneth Juster will fail in his assurance to the members of the Senate Foreign Relations Committee of US government, even with WTO ruling in their favour. So, chances are he will put his best foot forward.

Will US stop with poultry market access or will extend their agenda on GM products as well, time will tell?

Please feel free to share your views and comments, how to handle the emerging situation. As you know, keeping quite never leads to the answer to the problem...

Feel free to share to create serious debate in the country in vital issues.