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Poultry industry — meeting the protein needs of the people

Though the growth remained slow in the global production of meats, according to a UN report, the poultry sector outstripped other meats by a factor of five. Poultry industry analyst Terry Evans reports on figures that suggest that well over a third of the 320 million tonnes of global meat production was poultry. Global production of all meats is expected to show an increase of only 0.2 percent in the coming years, but poultry meat output is forecast to rise by almost 1 percent coming close to 116 million tonnes, according to the latest Global Information and Early Warning System (GIEWS) report, prepared by the Food and Agriculture Organisation of the United Nations (FAO). The GIEWS report does not look further ahead, but based on USDA forecasts of a 1 percent increase in world broiler production in 2017, it would appear that total poultry meat output next year will come close to a record 117 million tonnes.
Contribution of poultry sector in Pakistan’s economy is not all that bad despite odds. As every financial mangers knows financial planning and scheduling is an important tool for running the economy and, therefore, it is essential that every decision for smooth sail be made very cautiously after thoroughly reviewing the ground realities and taking all the relevant stakeholders on board. One-sided decisions, ignoring these two factors, generally lead to disorder and confusion resulting in economic mess. Our domestic poultry industry is an instance. A direct victim of a ’very generous’ import policy, this sector of our economy, instead of getting government protection, has been deprived of even a level playing field. Whether it’s a case of fiscal anomaly or lack of understanding about the problems of the industry, local entrepreneurs are fighting the battle of survival.

Surprisingly enough, customs duty ranging from eleven percent to sixteen percent and regulatory import duty of 20 percent plus Sales Tax of 17 percent has been levied on ingredients used in locally-produced value added chicken, making a total impact of 59.12 percent; while finished poultry products can be imported free under the Free Trade Agreement (FTA) from Malaysia and at 10 to 16 percent Customs Duty from China. Naturally, some of those involved in the business of value added poultry products stopped local production and started importing fully finished products from Malaysia under their brand name. As a result, seven poultry processing plants could not sustain unfair competition and finally had to pack up.

According to Founder Chairman of the Pakistan Poultry Association (PPA) Khalil Sattar, the outcome of this phenomenon is exceedingly demoralizing. Explaining the impact through a simple formula, he said, “A 40-feet container of 25 tonnes of chicken breast meat will adversely affect local production of 183,480 broilers, 2,042 parent breeders and 830,000 kilograms of poultry feed, which means a blow of Rs58.71 million to the GDP and, above all, slaughter of 36,000 man-hours of the bread-earners. Therefore, if imports are not checked forthwith, the entire poultry industry in general and the emerging poultry sector in particular will suffer a serious setback.”

Pakistan is the 11th biggest chicken-producing country, but strangely enough less than five percent of the total poultry is being processed whereas the other 10 countries process 90 to 99 percent. Highlighting the problems of the poultry processors, Mr Sattar said, “We have to pay heavy labor costs, hefty overheads, huge electricity and gas bills, taxes etc. The sum works out to be Rs20 to Rs40 per kilogram depending on the product. On the other hand, cost to the unrecognized live bird and street-side slaughter wet market is not more than Rs4 per kilogram. On the other hand, the unorganized sector pays no taxes at all whereas the organized sector pays all kinds of taxes and produces safe and healthy products. Such gross discrimination has made the survival of the genuine poultry industry a bit too difficult.”

The modern chicken industry all over the world produces nutritious, wholesome, high-quality products that are more affordable. Much of the success of the industry can be attributed to a more efficient structural organization, improved production and processing technologies, and a continuing responsiveness to consumer demands. Despite being fully aware of the fact, the government, instead of encouraging and supporting the organized poultry sector to flourish, has withdrawn zero rating status for value-added, processed, frozen and packed poultry products. As a result, the costs have gone further up. Poultry farming is now considered to be one of the most essential and dynamic component of the worldwide food production.

 

The poultry culture is seemingly in the phase of rapid expansion. The broiler and chicken farms are all a part of this phenomenal expansion. The poultry farms in Pakistan have made a significant contribution towards the enhancement of food production strategies and measures. There is no denying the fact that poultry farming is of extreme and undeniable importance to the country, especially in terms of offering better foods and animal proteins in a more accessible and cheaper way.

Mr Sattar is of the view that currently there are only four organized poultry processors in the country processing less than five percent of the total chicken produced in the country. These plants are making endeavors against the heavy odds of an uneven level playing field, and, thus, need full government support. Only a successful poultry processing sector could stabilize the current rollercoaster price of poultry and build up an exportable surplus.

Comparing the policy with India he said that when a multinational fast food chain in India started importing processed chicken and value-added chicken products, the government moved with two objectives in mind; first, to protect its small farmers through the processing sector, and, second, to maintain a favorable balance of trade by saving on foreign exchange expenditure. They levied 100 percent import duty which helped in protecting its local farmers as they were the main producers of the raw material and which also helped conserve foreign exchange. We, on the other hand, reduced import duty from 50 to 25 percent and then signed FTA allowing imports from China at 16 percent Customs Duty and duty-free from Malaysia, hitting the local entrepreneurs below the belt. To strike a balance, he argues, the regulatory import duty on value-added chicken products needs to be increased to at least 50 percent.

The concept of processed chicken is not new in Pakistan. Many firms are now coming up with innovative means of providing healthier poultry and its byproducts for consumers. Though the brands supplying value-added chicken products to local and multinational retail outlets are numerous and the trend is on the rise, the pioneers of this industry are facing many obstacles because of import duties. Owing to this many have quit production and have found it more lucrative to import value-added chicken and market it under their name. However, some local players are still committed to pressing on with their operation.
According to a rough estimate poultry industry in Pakistan is worth about Rs800 billion and 1.5 million People are direct beneficiaries, in form of employment in this sector. It is a matter of fact that economic activity is only boosted when .there is harmony of efforts through cooperation of all connected segments and their unilateral focus on the output. To bridge the gap of Animal Protein availability, every effort is being made to introduce latest technology in the poultry sector in the form of introduction of genetically superior quality chickens; environmentally controlled houses; innovative techniques in processing of chicken and feed manufacturing; effective vaccines & medicines, which are equally comparable with the imported brands. Despite mounting difficulties and insurmountable pressure of custom duties, the poultry sector is making its headway towards growth and progress.

Commercial poultry farming started in Pakistan in the early 1960s and showed rapid growth over the decades. The demand and supply mechanism governed the prices of poultry products in Pakistan, but there has always existed a huge variation of price of poultry products on a monthly basis, suggesting the influence of seasonal variations being more pronounced than for any other commodity. Seasonal highs and lows in the prices of poultry products have become a regular feature and need to be resolved in order to ensure the stability of the industry.

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