Oct 13, 2020
The novel coronavirus created a great deal of confusion among meat-eaters. At the beginning of the pandemic, many feared that the virus would transmit through meat, especially poultry, thus leading to a hasty decline in its demand. This tumbled the meat shop owners and the poultry farmers, thus denting their income.
Coimbatore-based poultry farming company Suguna Foods had a no different experience and this lockdown and corona effect posed the biggest challenge to B. Soundararajan, Chairman of Suguna Group, ever.
For poultry industry had never seen anything like this in the past 25-30 years. Before the pandemic, the cost of producing a kilogram of chicken was Rs. 80, but during the lockdown selling the chicken even for Rs 10 was a big challenge.
However, the intervention of the Indian Council of Medical Research (ICMR) in May, saying, “We don’t see the novel coronavirus getting transmitted through any specific food. We eat cooked (food) to avoid other kinds of viruses… this virus (COVID-19) is not linked to food. People can eat chicken… non-vegetarian food,” gave the sector some breather. Soundararajan says, “This increased people’s trust and they started buying meat again, which, in turn, led to some recovery.”
With Rs. 8,700 crore turnover last year, the chairman says that the company’s liquidity played a major role in helping it ride over the crisis.
Suguna Foods’ unique business model of contract poultry farming and its success story has attracted international bodies like International Finance Corporation (IFC) — World Bank’s multilateral lending arm — and the Asian Development Bank (ADB).
In 2007, IFC invested an undisclosed amount through preference shares in the company. And Soundararajan says, “More investments are on the way. They want to set up our feed mills and breeding farms in other countries for which we have tied up with IFC. This year, Suguna Foods also secured a $15 million financing deal from ADB through the subscription of non-convertible debentures. We had been in discussions with ADB since last October. However, before the final agreement could take place, the pandemic broke out. But, they helped in releasing the money timely in September, so that the company could come out of the issues posed by the pandemic”.
Feed Mill Future plans India is among the world’s largest producers and consumers of poultry and eggs. Soundararajan says that the Indian poultry industry has seen an evolution. Thirty years ago, the per capita consumption of chicken was 150 grams, today, it is about 4.5 kgs, but much lesser than the global average of 18 kgs and according to Research and Markets, the Indian poultry industry is projected to reach Rs. 4,340 billion by 2024, growing at a CAGR of 16.2 percent during 2019-2024.
The chairman claims that it will take close to two years for the industry to recover financially as the consumption rises to the pre-pandemic levels. Soundararajan has big plans for Suguna Foods, as he wants to make it a protein leader in India, which provides safe and healthy food. He is also making food and nutrition security an inclusive vision of the business.