While contract farming is yet to take firm roots in the country, the model is firmly established and growing in the broiler meat industry.

Around 25 firms including Venky’s, Suguna, IB, Sneha Farms, Sampoorna, Maa Integrators and Unnat have thrived in this business over the last few years, under a model where they bear the bulk of the cost of poultry production, while farmers are paid rearing charges. On an average, Rs 8-10/kg is being paid by these integrators to the farmers for a “live, weight bird” and roughly half of it is farmers’ profits.

These private entities lift broiler birds of around 2 kg of body weight from the farm gate. The rearing period of a bird ranges between 35 and 38 days. The integrators either sell the produce in the wholesale market or the raw meat is processed for making value-added products.

“The integration model ensures that farmers are insulated from fluctuations in market prices. They remain assured of getting predetermined fixed prices,” Ricky Thaper, vice-president, ABIS-IB Group, which is into contract farming, said.

According to Prasanna Padgaonkar, general manager (poultry), Venky’s India, which started the contract farming model from 2004-05, the model worked well for the poultry farmers during Covid-19 pandemic when prices crashed in the market. “Had it been an individual farmer, it would have been difficult for her to survive. Under the contract farming model, the integrator takes the risk,” Padgaonkar said.

The integrators provide day-old broiler chicks, feed, medicine and technical support along with rearing charges to farmers. There are also other incentive structures for farmers, like extra payments in case of a sharp spike in market prices.

Average bird holding capacities of poultry farmers in India ranges between 5,000 and 10,000 birds per shed.

As per the Department of Animal Husbandry and Dairying, more than 80% of India’s poultry meat is produced by organised commercial farms and the rest is produced by backyard poultry, mostly in the rural areas. Out of commercial broiler production, major poultry companies who follow vertically integrated operations have a share of around 60-70%.

Suresh Chitturi, chairman, International Egg Commission and CMD, Srinivasa Hatcheries, says many small farmers have been protected from market volatilities due to contract farming.

India’s poultry meat production was estimated at 4.44 million tonne (mt) in 2020-21, as against 4.34 mt achieved in the previous fiscal.

The poultry sector provides for employment to around 6 million small and medium farmers (who own farms with 5,000-10,000 broiler size).