Poultry Farm Business SWOT & PESTLE Analysis

What is a poultry farm business SWOT & PESTLE analysis?

A poultry farm business SWOT & PESTLE analysis is an internal skills and resources match-up with your market conditions.

Internal features = Strengths and Weaknesses

vs.

External conditions = Opportunities and Threats, which are divided up into:

• Polical
• Economic
• Social
• Technological
• Legal
• Ecological

It’s a way of gauging your enterprises readiness for converting opportunity into profit and avoiding losses from threats.

Road worthiness or weather proofing – that kind of thing.

It’s deep and exhaustive and should be an honest bench-marking of your operation’s abilities to survive and capitalise on the conditions.

SWOT is an analysis. Therefore it more than listing items of inventory. But more a technical discussion and evaluation.

The desired result would be a solid estimation on whether your organisation as it stands, could stand up.

Let’s take a look at our case study subject, Senthilvela and his organic poultry farm from a distance via the spectacles of SWOT.

Example Template

Strengths

• Entrepreneurial risk taking – Senthilvela sees value and is willing to take calculated risk to convert potential into profit.

  • “Having climbed the career ladder much faster in life, at age 40 Senthilvela K decided to quit his job at IBM – where his annual earnings crossed Rs 1 crore – and take the plunge into poultry farming.” (Source: The Weekend Leader)

• Strong project management background – he is adept at bringing large scale, multi-disciplinary complex programs of organised work to fruit. This will help him adequately manage his growing farming business.

  • “Senthilvela did his Masters in Information Technology from the University of New Castle in Australia while working for a company in Singapore. In 2003, he joined Motorola in the US as a technical consultant for its handset division.” (Source: The Weekend Leader)

• Advantageous location – his farm is situated within 70km of Chennai which is the “third highest city in India by GDP per capita”. Tier I commercial advantage.

  • “[His farm is] near Tirukalukundram in Chengalpet district, about 70 km from Chennai…” (Source: The Weekend Leader)

• Strong income figures – Senthilvela is already posting some strong poultry farm income figures. This shows his sales strategy is already gaining traction and proven conversion.

  • Nirmala Nature Farm currently produces “Rs 1.2 crore annually”. (Source: The Weekend Leader)

• Diversified poultry meat production – he breeds 4 types of native birds, each from a different region. This will help him diversify his audiences and dilute risk of having a one-legged marketing strategy.

  • “Senthilvela breeds four varieties of chicken…” (Source: The Weekend Leader)

• Growth, despite the pandemic – his food production business has essential to life appeal and has grown despite the onset of global pandemic.

  • “20% growth during 2020-21 despite the COVID-19 pandemic.” (Source: The Weekend Leader)

• Solid agri business training – Senthilvela has a wide ranging reservoir of theoretical teaching on organic farming. This will keep him agile in planning the growth and sustainability of his operation.

  • “…attended training programmes conducted by both government and private agencies in the fields of dairy, poultry, fisheries, and integrated farming.” (Source: The Weekend Leader)

• Diverse customer base, with diluted risk – his sales are spread among many commercial buyers. He will therefore avoid catastrophe should he experience any loss of key accounts.

  • “…includes around 50 to 60 wholesalers from Tamil Nadu, Karnataka, Kerala, and Andhra Pradesh.” (Source: The Weekend Leader)

• Large commercial buyers – Senthilvela should benefit from strong brand reputation as he already supplies some of hospitality’s biggest businesses in Tamil Nadu.

  • “Some of the top hotel chains and hospitals in Tamil Nadu are also his customers.” (Source: The Weekend Leader)

• Untapped customer demand – according to his own estimates, Senthilvela thinks he has about 20-times the demand he is currently fulfilling.

  • “While business appears to be booming, Senthilvela seems to have explored only the tip of the iceberg.” (Source: The Weekend Leader)

Weaknesses

• Renting farm land – when Senthilvela started up his poultry farm he began by renting land from a friend. If he still rents, he will have a cash flow disadvantage to owning the land outright, for example.

  • “Eventually, Senthilvela started his poultry farm on a 1.5-acre land he took on lease from a friend” (Source: The Weekend Leader)

• Relatively small scale compared with demand – admittedly Senthilvela thinks he’s currently turning away 95% of demand requested. The output capacity of his farm currently underachieves some way towards customer needs.

  • “He estimates that he has been able to meet only five to six percent of the demand in Chennai and there is a big market out there waiting to be tapped.” (Source: The Weekend Leader)

Opportunities

Political

• Institutional support and recognition – the Government of India and research universities are offering a variety of schemes to verify organically grown produce and preserve the populations native breed chicken. Such programs could grant farms like Senthilvela’s the platform for having authoritative influence in the organic sector.

  • “Senthilvela’s farm is recognised as a Model Farm by Tamil Nadu University of Veterinary & Animal Sciences (TANUVAS) under the ‘One Health Poultry Hub’ project, with the UK as the nodal country.” (Source: The Weekend Leader)

• The Government of India has a strong policy of nurturing domestic organic food production – there is an ‘EU standards’ based organic authentication scheme and a variety of funding programs for organic start-ups. So, plenty of support options for Senthilvela should he choose them.

  • “…strong support of the government…” (Source: iMarc Group)

Economic

• Growing producer interest in cooperative farming – Indian farmers looking to switch from conventional methods to organic practices cite the lack of knowledge and commercial support as barriers. Cooperative farming models, where experienced producers flatten the speed bumps for new comers may help Senthilvela convert recruits to help scale his production efforts.

  • “Hence, I am planning to set up a co-operative by bringing in more like-minded farmers to produce (chicken and eggs) and sell in bulk…” (Source: The Weekend Leader)

• Supplementary income opportunities for rural communities – India’s rural communities can find income boosts from farms like Senthilvela’s. Tapping into his big city demand could be a much needed outlet of commercial trade.

  • “If a small farmer can raise 50 chicks of native breeds on his 10 to 15 cents of land, he can easily make around Rs. 400 every day.” (Source: The Weekend Leader)

• Direct to consumer (farm to fork model) farming is catching on –  with innovative retail platforms taking off, more direct to consumer, face-to-face consumer sales opportunities appear. Senthilvela could use such innovative launch pads for allowing his brand to reach a wider city-based audience.

  • “…organic pop-up markets in many cities.” (Source: SME Futures)

• Squeezed margins from conventional farming supply chain middlemen is prompting direct sales efforts – bypassing involvement of agents and other deal making middlemen presents even further cost savings for organic farmers. Senthilvela already benefits from being the deal maker for his farm business. The popularity of his produce is hitting audiences in cities further afield.

  • “The role played by middlemen has made the production costs very high, which leads them hardly get any reasonable profit….we should adopt ‘Farm to fork’ model by which we can remove the SME farmers from the clutches of middlemen and most importantly indigenous cereals and millets with very high nutritional content will reach the consumers at a cheaper rate,” Sundar notes.” (Source: SME Futures)

• Input cost stability better with native chicken than commercially reared broilers and layers – native chicken breeds feed on commonly available plants, insects and molluscs this is a great advantage to the poultry farming cost model. Conventional farmers experience proportional poultry feed costs as high as 70% total cost of production. Senthilvela’s business model is sheltered from such input price volatility.

  • “I had always reared broiler and layer chickens. But due to hike in feed prices, the profits had shrunk. Many a times I had to sell at a loss. Then I came to know about Kadaknath. When I inquired about it in the market, I came to know that it is more profitable. It is cost effective because it can be reared in the open and fed green feed, said Gulam Mohammed, a resident of Jarwal village in Uttar Pradesh’s Beharaich district. He has been a layer poultry farmer for long, but recently has also taken to farming ducks and Kadaknath.” (Source: Gaon Connection)

• Kadaknath chicken presents even greater profitability – whilst it’s true that Kadaknath chicken (along with other native breeds) take up to 3x as long to rear to marketable size/weight, compared with broilers…they can fetch up to 6x as much in price. 25% of Senthilvela’s farm income is derived from Kadaknath chicken, so he is already taking charge of this trend.

  • “As against most chickens, Kadaknath readies for sale in 4-5 months and fetches easily a price of Rs 1,500-1,800 in the market.” (Source: Gaon Connection)

• Conventional farmers are forced by input price escalation to make the cross over to Kadaknath organic farming – entrepreneurial organic farmers like Senthilvela have this economic driver on their side, which supports the prevalence of disillusioned conventional farmers who could become potential cooperative candidates.

  • “Several poultry farms have shut down because farmers are unable to get prices to cover up their input costs. In such a situation, farmers doing Kadaknath farming are reaping profits. Due to the exotic nature of Kadaknath, its demand is escalating.” (Source: Gaon Connection)

• Kadaknath chicken rearing offers lots of cost saving AND price boosting benefits – Senthilvela and his organic farming peers will benefit from avoiding the typical input burdens of conventional farmers. No vaccines, no cages, no commercially formulated feed…making their organic farming models, cost-lite. i.e. more profit.

  • “Kadaknath is pretty hardy a breed. It just requires a bit of temperature-controlled environment in the beginning. Broiler and layer chicken require vaccination too, which it doesn’t. This chicken can easily be farmed under a wooden shed. A chicken requires about two sq ft space.” (Source: Gaon Connection)

• Vertically integrated breeder and hatchery opportunities for early organic producers – farm’s like Nirmala Nature Farm have the advantage of being first movers in the market. They learn all the problems and survive by finding the best solutions. Having weathered those storms, they naturally become havens of refuge for new entrants seeking a ‘better way’ to get started. Again, a natural transitional step for Senthilvela and his contract farming plans.

  • “…being an expensive chicken, Kadaknath has lower rural demand than urban where it is readily sold. Gulam not only earns a handsome profit by selling Kadaknath eggs and chicken, but also additionally by selling its chicks to other farmers.” (Source: Gaon Connection)

Social

•  Increasing consumer awareness to chemical residue poisoning in food – this means a growing demand for chicken meat and eggs grown by organic methods. What follows this new interests for the early organic convert is then researching to learn about all the varieties of natural options and breeds there are on the market. Senthilvela’s diverse array of native birds gives him LOTS of appeal to commercial and domestic organic buyers wanting options.

  • “But over past few years, the idea of a chemical-free diet is fast catching up with consumers globally, including India – mostly among the urban and well-aware population.”

  • “Consumers are now choosing products based on factors such as safety, quality, nutrition level, etc.” (Source: SME Futures)

• Consumer choice heading more towards food composition – more consumers are adopting concerns for what actually is contained in their food and are finding that there is more in it than the label says. Also, the value of nutritional content often is much lower than expected. This all going back to the intensive farming methods used. This meaning farmers like Senthilvela should gain growth from increasing interest in their product.

  • “Consumers are now choosing products based on factors such as safety, quality, nutrition level, etc.” (Source: SME Futures)

• Compared with other nations, India’s organic consumption is much lower by comparison – meaning that (going by other international markets) India still has some way to go in taking to organically grown produce. Senthilvela is very much on an early wave of this swelling trend.

  • “Agarwal believes that India, a land of 1.2 billion people, consumes only 0.2 per cent of the total organic produce, wherein in the US it is $50 billion market.”

  • “Hence, the Indian market has immense opportunities to grow,” he further adds.” (Source: SME Futures)

• Indian consumers in increasing numbers also are beginning to prefer locally grown produce – so, it’s not just organically farmed foods, but locally produced food that is on the up. The perishable nature of food is such that consumers know, that to get it fresh, it’s got to come from a local farm. They therefore look for local producers.

  • “Apart from all the attention the organic market is reaping, the demand for locally sourced produce in restaurants, markets and households has surged, lately. Organic consumers want first-hand experience of what they are having, to satiate the craving of local ingredients and flavours.” (Source: SME Futures)

• The global pandemic has increased the demand for organic food – the natural immune boosting effects of organically produced foods has gained spotlight attention during the recent pandemic outbreaks. In feat, Senthilvela’s farm business was tipped to grow 20% during the lockdown in India during 2020.

  • “…indirect influence of the pandemic…” (Source: iMarc Group)

• Early adopter organic consumers tend to be more affluent consumers in urban areas & they are growing – so, the key demand driver for organic produce consumption is on the up. Senthilvela’s positive sentiment regarding his business also holds up in light of this.

  • “…strong economic growth, urbanization, and rising income levels…” (Source: iMarc Group)

• Urban residents are increasingly taking out of town visits to the country for country chicken dishes – so, as well as shipping country chicken and eggs out to the Tier I, II & III urban districts. There is scope for Senthilvela to grow by either hosting day trip catering, or supplying country food venues.

  • “We raise country chicken for our own consumption. Of late, however, visitors from the city who come for toddy have been requesting dishes made with it.” (Source: The Hindu)

• Chefs and culinary entrepreneurs in India are backing country chicken and raising demand – curated menus at top restaurants in the city are showing a re-surging appetite in  Indian popular culture for country-bred meats. Senthilvela therefore is more likely to find chefs looking for him, rather than having to go out on a limb to find them.

  • “Chef Ram Prakash R, the founder and culinary director of Gourmet Tamizhan, gives a thumbs up for the nattu kozhi or country chicken.” (Source: The Hindu)

• Animal welfare concern is adding appeal to organic farming methods – consumers are now more understanding that the journey which the livestock takes on the way to their plate has a massive impact on nutritional value and quality of product.

  • “Abhinav explains that it is also a more humane way to raise the birds, as opposed to the broilers who live their lives in small, stacked cages. This kind of rearing only makes the bird gain weight. In a way, it is forced to eat food that is made industrially. The small cage often leads to the bird getting hurt, as it cannot move.” (Source: The Hindu)

Technological

• Internet usage among India’s rural communities (by number of people) has surpassed city residents – this presents a large opportunity for Senthilvela who aims to use the internet as a medium for teaching rural entrepreneurs with his profitable organic practices.

  • “Through digital media, I can reach out to as many as possible, and help them learn the best practices, he adds.” (Source: The Weekend Leader)

• Organic food demand has increased in direct correlation to smart-phone internet usage – an increase of people on their smart-phones for informational browsing related to making purchase decisions has helped the organic trend really grow quite quickly. This trend gives farmers like Senthilvela the opportunity to enter into the consumer conversation online and grow sales.

  • “…surge of smart-phone usage India, coupled with low-cost internet, there has been an increase in access to information about organic food.” (Source: NDTV)

• e-Commerce gives organic producers farther customer reach and sales growth potential – Senthilvela could use e-commerce as a convenient sales channel with buyers in cities farther away.

  • “…e-commerce platforms acted like a facilitator reaching out to potential customers across the country.” (Source: NDTV)

• e-Commerce has been a leveller enabling smaller start-ups to gain substantial market share quickly – because of the sheer proportion of consumers and buyers of organic foods who are habitual users of the internet, the online marketplace has become a very profitable route. Senthilvela could benefit considerably both now and for the future by establishing a footprint for his business online. Potentially massive ROI gains year on year, for little outlay by comparison.

  • “e-commerce platforms also made the sector competitive with more and more players entering into the organic food industry.” (Source: NDTV)

• Medical practitioners advocating Kadaknath health benefits is opening up market further – this is leading to greater awareness of the health benefits of eating organically reared local breed chicken and eggs. This adds expert recognition to the locally reared, organic chicken market.

  • “Dr Govind Kumar of Agricultural Science Centre, Chitrakoot, Uttar Pradesh informed, Seeing its benefits, many farmers of UP have also taken to its farming. Every six months, the Centre offers its training to the farmers. There has been a surge in demand for its meat and egg. Its taste is distinct from broiler and any other native breed. Its meat is extremely beneficial for cancer, diabetes and heart patients. Kadaknath’s 1 kg of meat has 184 mg of cholesterol whereas in other chicken it is about 214 mg. Similarly, kadaknath’s meat has 25-27% protein while other chicken only 16-17%. Kadaknath has about 1% fat whereas other chicken have 4-5% fat.” (Source: Gaon Connection)

Legal

• NIL

Environmental or Ecological

• India’s climate favours agriculture, plus the country has a natural farming reputation – optimal organic farming yield is possible with India’s climate system. Plus, the growing global demand for organic foods and increasing variety of brands and processors means the export market is also a thriving business. Senthilvela’s corporate experience could be put to further use here in forging export relationships with overseas buyers.

  • “Due to India’s favourable agro climatic conditions coupled with the inherited tradition of organic farming, the quality of organic food to export is very high.” (Source: NDTV)

• Demand for local chicken within the local market can have seasonal patterns – local demand for native chicken often has seasonal variation. Senthilvela might stock up for the glut of demand to optimise his sales potential.

  • “In Assam, locals begin to daydream about peppery country chicken curry when the temperatures dip in December and January.” (Source: The Hindu)

• Common fodder requirement for native chicken only – naturally prevalent fodder seems to satisfy much of a local chicken’s diet. Senthilvela could specialise in cultivating such naturally occurring food sources for his flocks to optimise input quality. Also, he would gain from learning the performance effects that different types of food type have.

  • “Explaining its farming cost, Gulam said: This chicken doesn’t require any special feed or much expense. It readily feeds upon common fodder such as berseem and millets. It can even be reared in a garden patch with a little bit of shed. It hardly calls for any expense.” (Source: Gaon Connection)

Threats

Political

• NIL

Economic

New niche with little innovation currently – this comes with disadvantages. Naturally, newly identified profitable business niches get a lot of attention from new entrant entrepreneurs. Many pile in all at once and by doing so dilute the value added. This is happening with the organic produce market in India. The key to survival and to sustainable business growth is catering to consumer choice. This takes much research and development budget initially with trial and error, but will reward in the long run with sustainable competitive advantage. Senthilvela already farms many breeds of native chicken. This could be complimented with other product options as directed by consumer demand. But he must innovate to probe for where the demand is.

• • “It’s a niche sector, all new ventures are accumulating in the limited size of the market. Thus, trimming each other’s share. We must keep innovating to tap the consumers’ demand as per the trends.” (Source: SME Futures)

• High costs, yet premium price justification is as yet largely misunderstood among consumers – simply attaching a premium price tag to a product or service is not enough to open up the wallets of your target audience. You need to tell them why. Give reason to your request. If the reason is valid and valued, then you might just have a sale. Senthilvela could help the entire organic food market gain more traction by becoming the online content champion. This way not only does he set the gold standard for informational enquiries online for organic foods in India, but he also would become a demand generator for his entire value chain. Making his farm business a very VALUED participant among peers.

  • “The key challenge the sector faces is higher cost of cultivation and its subsequent value chains, leading to high price markups.” (Source: SME Futures)

• With squeezed margins, difficult to fuel growth of scale – capital cost of expansion can be expensive with organic farming. Land requirement and labour particularly can be prohibitive to large scale growth. Diligent cost management strategies and collaborative farming models can help get over this hump – quickly and painlessly. Senthilvela is potentially on to a winner with his contract farming / cooperative idea. But firm project management discipline would be needed to achieve uniformity of performance.

  • “Producers of organic products are continually struggling to optimize the scale of their operations, while maintaining profitability.” (Source: SME Futures)

Social

• Benefits of organic food consumption is yet to really penetrate consumer understanding – real traction in organic demand growth and sales is severely hampered by this. Communication is key to opening up this bottle neck. Senthilvela would do well to capitalise on this need.

  • “Although there has been a marked improvement in the level of awareness regarding organic products, many consumers are unaware of its benefits,”  (Source: SME Futures)

Technological

• Transportation and value chain logistical complexity – perishing stock can’t travel that far or kept that long without technologically-enhanced storage and transit environments. This comes at great capital costs. However, with remote-production units across the country, Senthilvela’s contract farming model is poised to maintain local advantage – and met the demand, wherever it arises.

  • “The procurement is not an easy task, there has to be someone in the middle to make it happen. An enterprise owner cannot go directly to a farm to procure things as this is not only a task in a business to do.” (Source: SME Futures)

Legal

• NIL

Environmental or Ecological

• Outbreak of poultry diseases like Avian Flu – if Avian flu or other outbreaks occur, organic flocks like these which have outdoor access might be more exposed to the threat than intensive farms.

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