Alternative protein strategy for poultry feed, an economic approach towards feed formulation

Poultry industry is heavily influenced by feed commodity prices, trade negotiations, currency fluctuations and economic growth of the importing markets. Firstly, it was Covid then poultry product prices dropped on fears of linking chicken consumption to the virus transmission. Further Avian influenza outbreak of Jan-Feb 2021 hit it when the sales were just recovering.

After that, the second wave struck, and now when the industry was getting back on its feet the feed prices have spiked up due to the Russia-Ukraine war.

High feed prices have already resulted in an increase in the prices of animal protein such as chicken, milk and milk products, and seafood. Prices of soybean and maize are rising sharply, the two key inputs that are used in feed in the poultry industry as a source of protein and energy.

The main driver of increasing feed costs has been soybean and maize. Feed accounts for 70% of variable costs, wherein maize forms 55-60% of the feed while soyemeal forms 30-35% approximately. In the last six-month maize prices have gone up by more than 50% while soybean prices rose by 60-70% in the past 1 year.

Due to the conflict with Russia, the imports of de-oiled cakes have stopped which is largely used as a protein source in chicken feed. The industry is sensitive to fluctuations in the ingredient prices, mainly feed which accounts for 70% of the variable costs. The industry margins are taking the toll led by spike in soyabean and maize costs in FY2022.

Chicken prices have also gone up by 25-30% since January, the experts expect a further increase of 20-50% in different parts of the world in March due to acute shortage of feed and fresh supply chain issues.

High prices of SBM, Maize, de-oiled cakes and essential amino acids drive the feed prices and so the cost of animal protein. According to the FAO data, global meat production is predicted to be 16% higher by 2025 and global feed processing market growing at a CAGR of 3.92% from 2020 to 2027. The surge in consumption and demand of livestock products such as eggs, meat, dairy & dairy-based products are expected to upswing the demand for feed among the farm animals. With the ever increasing demand of animal protein and consumption of competitive feed ingredients like soya, maize and other cereals; we are challenged to search unconventional alternatives or adopt sustainable strategies.