Tag Archives: maize

South Asia’s feed industry growing

The Indian subcontinent long has been one of the world’s most undernourished regions in terms of caloric intake and consumption of animal proteins.

Poverty has not been the sole reason for the latter deficiency. Religion and culture also have played a role.

Over the last 10 years rapid economic development and greater dietary acceptance of meat, particularly poultry, as well as eggs and fish have resulted in sustained high rates of growth in feed processing and in production and trade of maize, soybeans and other coarse grains and oilseeds.

With a combined population of 1.6 billion people, the major countries of South Asia — India, Pakistan, Bangladesh — as well as smaller ones like Nepal and Sri Lanka all have seen average growth rates of 8% to 10% in compound feed production due to dynamic investment in modern feed and livestock operations.

Greater planting and increased yields of maize, most of it for feed use, has resulted in a near doubling of production in just a decade, prolonging the region’s decades-old green revolution.

South Asia’s surge in maize and feed production is examined nation by nation in the survey that follows.
(Data sources: Alltech 2015 Global Feed Survey, USDA, and World Factbook)

Nepal’s first steel grain silos were supplied to Probiotech’s feed and
soybean processing operation about 10 years ago by Scafco Corporation.

India

Population: 1.27 billion

Maize production: 24 million tonnes

Feed production: 29 million tonnes

The world’s second most populous country now ranks fifth globally in maize production, sixth in soybeans (10.5 million tonnes), fifth in feed, third in eggs (84 billion pieces), and fourth in chicken meat (4.5 million tonnes), per USDA data.

Nevertheless, India’s meat and egg consumption on a per-person basis is just a small fraction of that of China or the U.S., with the first and third most people. Thus a long period of sustained growth in the feed and livestock sectors may be anticipated.

A 2015 Rabobank survey projected 8% annual growth in Indian compound feed production for the next five years, slightly higher than expected GDP increases.

Maize production nearly doubled in the period from 2004 to 2014, but production has leveled off since then partly due to a sharp decline in exports to Southeast Asia as international prices fell. The potential for further production increases is still enormous as domestic demand for feed and starch production continues to rise.

Maize yields, though increasing, are still just 2.5 tonnes per hectare, less than half the world average of 5.5 tonnes per hectare. In some top producing states like Andhra Pradesh, where the use of single cross hybrid seed is widespread, yields have nearly caught up to the global average.

Maize is a pan-India crop with production exceeding 1 million tonnes in at least eight states. The two southern states of Karnataka and Andhra Pradesh make up nearly 40% of production. Maize is grown year round but the rainy summer kharif season, dominated by the southwest monsoon, accounts for 70% to 80% of annual plantings.

The government has introduced a minimum support price for maize to help stimulate output, particularly during the dry winter rabi season, helping to even out availability throughout the year.

The city of Gulab Bagh in the northern state of Bihar, with a large rabi harvest, is the site of the country’s largest delivery center and market auction place (“mandi”) for maize with up to 2,000 trucks arriving daily and maize accounting for the bulk of the 2 million tonnes of cereals and legumes traded there annually. Much of India’s maize exports to neighboring countries, including nearby Nepal, are purchased at this mandi.

The Compound Livestock Feed Manufacturers Association of India (CLFMA) reports 233 members comprising a rapidly expanding formal sector. CLFMA estimates the value of feed production at $15 billion. Broiler, layer and dairy made up 38%, 32% and 26%, respectively, of the production per the Alltech Feed survey. However, CLFMA reports that compound feed accounted for only 50% of poultry and 10% of total cattle feed and aquafeed requirements in India.

David McKee, far right, visits a grain trader near Birgunj, Nepal.

Domestic soybean meal consumption has increased to about 5 million tonnes per year, up 50% from the first years of this decade. As a result, India may soon lose its status as an exporter of soybean meal and become instead a major net soy complex importer. During the three years from 2010 to 2012, soybean meal exports made up 59% of total average production of 7.7 million tonnes per year, but exports fell to only 17% of total production from 2014 to 2016.

International players are stepping up their presence in oilseed processing. In May 2016, Adani Wilmar, a joint venture between Asia’s largest agribusiness group Wilmar International and India logistics giant Adani, acquired a two-thirds share in Ruchi Soya, India’s biggest soybean processing company. Adani Wilmar already had eight seed crushing units across India with daily capacity of 7,400 tonnes.

By value, milk is by far India’s most important agricultural commodity and India is the world’s top producer. As breeds with better genetics replace traditional cows with low milk yields, the adoption of compound feed for dairy cattle may be expected to increase at an even quicker pace. India’s enormous wheat and rice milling sectors, processing a combined 150 million to 200 million tonnes per year, are a major source of bran and other byproducts for all types of feed, but particularly for cattle.

Pakistan

Population: 202 million

Maize production: 5.2 million tonnes

Feed production: 6.2 million tonnes

Pakistan’s feed and livestock enterprises constitute the country’s most technically advanced and competitive agribusiness sector, according to many observers. The feed millers association counts over 150 producers of pelleted feed, supplying over 70% of total broiler feed requirement. Poultry production has been almost fully transformed from a backyard to commercial activity in the last couple of decades.

Government market intervention in the corn sector is minimal aside from 40% import tariffs. Production, which is almost exclusively for feed and starch use, has risen two-thirds from 3.1 million tonnes in 2006 to 5.2 million tonnes in 2016, according to USDA data with less than 10% increase in planted area. The high domestic prices boosted by tariffs have stimulated increased spending on inputs. International seed companies are well established in Pakistan. High yielding varieties and hybrids now make up 40% of the planted area and 70% of overall production, according to the most recent USDA report. In the Punjab region, two maize crops are harvested annually and 65% of overall production benefits from irrigation.

The country imported 1.7 million tonnes of soybeans and 700,000 tonnes of soybean meal in 2016 to make up for the short domestic supply of vegetable proteins. Soybean imports were almost nil up to 2014 when the government imposed import tariffs, now fixed at 21%, to support local crushers. Soybean meal imports have fallen by a third since the peak of 1 million tonnes in 2013, but total soy complex imports are still 2.5 times higher than just three years ago.

Prior to the recent surge in soy imports, cottonseed meal had been the main source of vegetable protein, but its production has declined 22% to 1.4 million tonnes since peaking at 1.86 million tonnes in 2014.

Though the predominantly Muslim country faces none of the cultural taboos that prohibit beef consumption in its giant neighbor, broiler meat still dominates as a meat source. A USDA report said that feed conversion rations for broilers have improved from 2.2 kg to 1.6 feed per kg live weight since the early 2000s. About two-thirds of maize production goes to poultry feed. Wet milling for starch production uses up most of the remainder of the crop.

Bangladesh

Population: 156 million

Maize production and imports: 1 million tonnes (author’s estimate)

Feed production: 3.1 million tonnes

The most densely populated large country in the world with about 1,000 people per square kilometer, Bangladesh has made tremendous strides in the last 10 to 20 years not just toward self-sufficiency in rice production, the source of over 70% of caloric intake, but also increasing dietary protein.

Fried chicken outlets like Kentucky Fried Chicken as well as a half-dozen copycats (BFC – Best Fried Chicken, CFC – California Fried Chicken) are ubiquitous in the crowded megalopolis Dhaka.

The poultry sector has several large operators with hundreds of thousands of layers and broilers. Many are integrated with feed milling. The country’s largest agribusiness companies like Meghna Group and City Group are active in soybean crushing. Soy complex imports consisting of beans (1.2 million tonnes) and meal (300,000 tonnes) have tripled since 2006.

Domestic maize production is small but increasingly substituted for the second rice crop in some areas. Most maize comes from nearby Bihar state, one of northern India’s largest producers, in unofficial cross border trade.

Byproducts from 34 million tonnes of milled rice production in Bangladesh constitute a major starch component for poultry feed. In addition to rice bran, automated rice mills in Bangladesh may generate up to 2 million tonnes of rice flour available for poultry feed by grinding off 15% of the endosperm to make so-called miniket, a milled rice category that appears longer and finer and commands a premium price.

Nepal

Population: 29 million

Maize production: 2 million tonnes

Feed production: 750,000 tonnes

The explosion of compound poultry feed production in Nepal in recent years is a case study of economic development improving diets.

Probiotech's food processing complex in Birgunj, Nepal, includes the country's first large compound feed mill.

A dozen years ago there was a single producer of pelleted poultry feed in the country. Today there are said to be over 50 such companies, 20 of which have capacity of 10 tonnes per hour or more, though Nepal’s per capita GDP is still smaller than any of India’s 29 states and territories and its population is less than 15 of those states.

Nepal is mainly a Hindu and Buddhist country. Thus eggs, broilers, and, to a lesser extent, fish, have been the major drivers of increased animal protein consumption.

But this dietary change has been learned behavior transcending just a generation. Mr. Keshab Bikram Khadka, the proprietor of one of Nepal’s largest feed milling companies, Shree Daonne, in the border city of Bhairahwa, is well known under the name Swami Tathagat for his campaign spanning 30 years to teach Nepalese how to cook chicken meat.

Most feed milling is clustered in three large cities on the border, with India on Nepal’s southern lowland plain called Terai, an irrigated zone extending from the northern Ganges plain. Up to two-thirds of maize used in feed milling is imported from India mainly due to quality considerations. The bulk of poultry production is in the Chitwan valley halfway between the Terai plain and the heavily populated Kathmandu valley to the north.

There are at least two soybean crushers. The largest, Probiotech, which was also the original producer of pelleted feed, recently upgraded its plant with dehulling equipment in order to produce the country’s first high protein soybean meal.

Nepal’s grain logistical infrastructure also is improving. There are at least five feed milling companies with steel silos for storage of maize.

Sri Lanka

Population: 22 million

Maize production and imports: 500,000 tonnes (author’s estimate)

Feed production: 770,000 tonnes

At 35 kg per capita, Sri Lanka has the highest rate of compound feed production per capita of any South Asian country. Soybean meal imports reached a record 230,000 tonnes in 2016, twice the level of 10 years ago. Bran from 3 million tonnes of milled rice production and 1 million tonnes of annual wheat imports is available as a feed component.

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Drought impacting maize output in southern Africa

In all but a couple of countries of southern Africa, maize (corn) is the main food staple and dominant cereal crop. With the exception of South Africa, smallholders on non-irrigated land account for most production. Thus, the unprecedented drought afflicting the region the past two years has had a severe impact on food security.

How dependent is each country on maize and how are they coping? Below a nation-by-nation survey, using data from the CIA Factbook and U.S. Department of Agriculture, begins with the region’s economic and agribusiness giant.

South Africa

Population: 53.7 million
2016 production: 13 million tonnes

In a normal year South Africa’s maize crop is from 12 to 14 million tonnes, sufficient for domestic needs with up to 3.5 million tonnes remaining for exports and carryover stocks. USDA estimates a strong recovery to 13 million tonnes in the 2016 crop mainly harvested from late May to mid-July, after 2015 output had shrunk to just 6.5 million tonnes, requiring around 3 million tonnes of imports.

Mpongwe Milling, a subsidiary of Agrivision, is one of the largest corn meal producers in Zambia’s copperbelt. White maize storage is in grain bins supplied over a number of years by SCAFCO USA. Photo by David McKee.

A highly developed port, rail and road transportation system and storage infrastructure for cereals ensures minimum bottlenecks for cereals importation or exportation in most years.

Three or four major food companies each dominate maize and feed milling, respectively, and freely buy from world markets. There are no government grain holdings or market intervention.

Currently the crop consists of about 60% white maize primarily for human consumption and 40% yellow corn used in animal feed. Surplus white maize not needed for maize meal goes for feed use.

Jacques Pienaar, publisher of the grain newsletter Commodity Insights Africa, Johannesburg, forecasts yellow corn production for feed will grow the most as the expanding middle class increases meat consumption. Within 5 to 10 years yellow maize is likely to be 60% of the total crop, he said.

About 90% of South Africa’s corn crop is genetically modified (GM). This sometimes complicates its ability to fill the deficits of several countries in Africa that ban GM cereals. Less than 5% of the crop is self-consumed by farmers.

Zambia

Population: 15.1 million
2016 production: 2.9 million tonnes

Within the last 10 years land-locked Zambia has developed into a second regional corn belt, supplying nearly 1 million tonnes of maize to its neighbors. These exports come at a cost to the national budget that could exceed $100 million since the Ministry of Agriculture subsidizes fertilizer, seed and other inputs while the National Food Reserve Agency (FRA) relies on a network of 600 depots to buy an official target of 500,000 tonnes, but usually more, from smallholders at a guaranteed price after the harvest beginning in April.

During the lean season from November to April, when farmer’s stocks have been exhausted, FRA provides fixed monthly allocations to about 90 industrial mills based on their roller capacity. Since the government pays the cost of storage and transport from surplus to deficit zones, the private sector millers have learned to live with this system that guarantees a certain level of profitability even for inefficient mills. The mills do compete to buy maize on the open market after harvest in order to operate the other six months.

Smallholders account for about 95% of maize production which is almost all non-GMO white maize. Given the heavy government support for smallholders, commercial farmers avoid maize production in favor of more market-based crops under pivot irrigation like wheat, barley and soybeans.

By the end of 2016 the country expects to launch a grain commodities exchange in Lusaka called Zamace. Delivery points will be in the major grain zones with a network of storages issuing negotiable warehouse receipts. Futures contracts will be possible via an arrangement with SAFEX, South Africa’s futures exchange, which is part of the Johannesburg Stock Exchange.

Private grain traders, who are largely shut out of maize markets due to the heavy-handed role of the government, hope that FRA will transfer some of its activity to Zamace to allow for transparent price discovery and operational efficiency.

Taxpayer subsidized maize has also contributed to the rapid growth of Zambia’s poultry sector over the last decade. Up to 300,000 tonnes of white maize is used in feed, though the 2015 commodities crash and a devaluation of the kwacha have precipitated a contraction in egg and broiler demand, reducing feed use.

Malawi

Population: 18 million
2016 production: 2.2 million tonnes

With annual per-capita consumption around 130 kg, Malawi is one of the world’s most maize-dependent countries. Two consecutive years of crop failure drove 2015 and 2016 production down 27% and 21%, respectively, to the lowest in over a decade after a record harvest of 3.9 million tonnes in 2014, per USDA data. The average maize crop since 2009 had been over 3.6 million tonnes and the country had become an exporter of 300,000 tonnes per year from 2007 to 2012. The rainfall shortage has been most severe in the densely populated southern part of the country where farm sizes average only a fraction of a hectare and most farmers cannot grow enough for their own needs.

A commodity exchange, warehouse receipts financing, and market information systems have contributed to the increasing commercialization of the key crop.

On the other hand, a para-statal grain marketing board called ADMARC intervenes in markets to buy at high prices in remote areas and sell at below cost to the poorest population groups, sometimes distorting markets in the process. State grain reserve stocks were depleted during the first year of drought. Since then, high-level negotiations have taken place with Zambia’s government to acquire additional supply from its betterstocked reserve.

In the meantime, international food aid is once again becoming a variable in the food balance equation even after the country had been mostly weaned from such support during the years of record harvests up to 2014.

Angola

Population: 19.6 million
2016 production: 1.4 million tonnes

Maize output is forecast to fall 25% in 2016 after reaching a record 1.9 million tonnes in 2015. Imports are only 50,000 tonnes. Like South Africa and unlike most other countries in the region, large commercial farms, many with pivot irrigation, account for the lion’s share of production. Timely completion of road and rail infrastructure for inland corridors before the oil price bust means that maize and other commodities can be efficiently moved from the central highlands to the population centers on the coast.

USDA estimates over 20% of maize, or about 300,000 tonnes, goes to feed use. For Africa, this is a relatively high share and testifies to the rapid development of a modern poultry sector, thanks in large part to state subsidies.

Mozambique

Population: 24.7 million
2016 production: 1 million

The 2,000-km long country presents a variegated picture when it comes to maize. The cereal competes mainly with imported rice as a daily staple in urban areas and with cassava in rural areas. Industrial roller mills belonging to major food companies in Maputo grind high quality maize imported from South Africa. The handful of commercial millers in the central Beira-Chimoio corridor and the Nacala-Nampula corridor in the north rely on domestic maize grown by smallholders and manage to place only limited amounts of their product on supermarket shelves of the capital.

Commercial farmers launched maize growing with pivot irrigation in the 2000s but gave up when low prices of smallholders in the bush with minimal input costs prevented the modern operations from covering their heavy input and energy costs, let alone servicing debt and amortizing equipment.

Some large maize millers have set up hundreds of buying stations in the bush to compete with poultry producers and traders to obtain sufficient supply. Smallholders have benefited, but El Niño-induced drought has contributed to a 50% reduction in the harvest since the peak in 2011.

Katanga province, DRC

Population: 11 million (2012 census)
Production: 577,000 tonnes (2012-13)

The urbanized, industrialized southern part of Democratic Republic of Congo’s richest province, which is about the size of Spain, mostly relies on Zambia for inexpensive, subsidized maize meal despite major local investment in some modern mills and commercial maize production. In Zambia’s neighboring copperbelt, industrial maize mills have the installed capacity to qualify for sufficient government allocations to supply the Katanga market. Foot and bicycle traders transport thousands of 25-kg bags of untaxed maize meal daily on bush paths across the border for transport just 100 km to Lubumbashi, the country’s second largest city. Katanga’s government requires each copper mining company to plant at least 500 hectares of maize, but provides none of the incentives that Zambia does for its farmers. The mining companies have their maize custom-milled and distribute the meal to their employees.

About three quarters of domestic Katanga maize production of 600,000 tonnes is in the less populated, rainier, remote northern part of the province. The surplus goes to meet demand further in the heart of the vast Congo River Basin.

Madagascar

Population: 23.8 million
2016 production: 450,000 tonnes

The world’s fourth largest island has significant maize production only in its drier, cooler southern third. Rice dominates everywhere else. Smallholders getting an average yield of just 1.5 tonnes per hectare account for almost the entire output. Imports and exports are negligible. The potential to grow much larger quantities is there. A decade ago a South Korean company’s scheme to grab 2 million hectares of land primarily for export maize production led to massive protests and the fall of the government.

Zimbabwe

Population: 14.2 million
2016 production: 350,000 tonnes

The country, which lies at the epicenter of the El Niño-induced drought, had managed a 1.5-million-tonne maize harvest in 2014, the highest in over 10 years, but has seen output plummet 77% since then. Throughout the 1980s and 1990s, Zimbabwe was a regional maize basket, producing 1.5 to 3 million tonnes most years and exporting several hundred thousand tonnes in some.

Following President Mugabe’s dispossession of white farmers in the early 2000s, all agricultural production plunged. This year’s drought-afflicted crop will leave a deficit of several hundred thousand tonnes based on current demand of 1.5 million tonnes of white maize. In most years Zambia is able to make up Zimbabwe’s shortage of non-GMO white maize, often through governmentto-government trade, but Zambia has been banning exports in an effort to limit domestic food price inflation. Globally, the supply of surplus white maize, limited to Mexico and the U.S., is too small to meet Zimbabwe’s demand, even if it accepted GM corn.

Despite a severe liquidity crisis, wheat imports will have to substitute for maize. The last two years they have reached a record 350,000 tonnes. But this does not make up the total food deficit. As so often happens in Africa, drought means that the most vulnerable simply eat less.

Swaziland, Namibia, Lesotho, Botswana

Population: 7.8 million
2016 production: 102,000 tonnes

This quartet composed of two mountainous enclaves and two largely empty desert and semi-arid states are well integrated into South Africa’s maize markets. They have little production themselves aside from 50,000 tonnes in Swaziland and 30,000 tonnes in Namibia versus 75,000 tonnes and 150,000 tonnes of imports for the pair. Botswana and Lesotho import 150,000 and 75,000 tonnes of maize and maize flour. A handful of mills process grain bought from South Africa even when that country must import from overseas.

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