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pakistan poultry industry -
1. Prof. Dr. Sarzamin Khan
Fulbright Fellow
Department of Veterinary Population Medicine,
University of Minnesota,
Saint Paul, MN 55108, USA
BY
An overview of the Poultry
Industry in Pakistan
2. • Broiler Parent Stock Placement 12 Million
• Broiler Day Old Chicks 1.2 Billion
• Broiler (Table Birds) Produced 1.05 Billion*
• Average Annual Growth 12.5%
• Live Weight 1.84 Billion Kg
• Broiler Meat including Giblets 1.34 Billion Kg
• Per Capita Poultry Meat Availability 7.4 Kg
• Layer Parent Stock 0.75 Million
• Table Egg Layers 40 Million
• Total Table Egg Production 11.2 Billion*
• Feed 7 Million MT
Data Source: Pakistan Poultry Association
3. • Contribution to GDP 1.7%
• Feed Grain Consumption (Maize, Rice Tips, etc.) 3.5
Million MT
• Feed Grain; Maize, Jawar Consumption %age of
Total Production (Rice Tips – 20% of Rice Production) 61%
• Farm Table Eggs Per Capita 62 Eggs
• Live Poultry being put through value addition Less
than 5%
4. • The main objectives of ACADEMIA is education / Training of students to cater to the
needs of the poultry industry through enhancing egg and meat production in the
country.
• The Department of Poultry Production is the only of its kind in Pakistan with
maximum possible research infrastructure in all areas of poultry science (Broiler,
layer, broiler breeder, indigenous birds, quails, hatchery, processing, and feed
production).
• The academia also conducts problem oriented applied research by the students and
faculty to solve the problems of stakeholders.
• The academia also has a close liaison with the Pakistan Poultry Association (PPA) and
leading poultry farmers, breeders, poultry feed millers and hatchery men.
• The department also arrange meetings of on regular intervals, where academia and
industry joins for viable strategies to overcome recent challenges faced by industry.
5. • The academia offering four year BS. (Hons.) Poultry Science, and courses for
Doctor of Veterinary Medicine and M.Sc. Zoology degree programs, the
Department is also offering M. Phil. and Ph.D. Degree programs at post
graduate level.
• The applied and problem oriented research findings are communicated to the
stake holders through meetings, group discussions, seminars, student’s articles
in various magazines.
6. • EXTENSION SERVICES
• Besides teaching and research work, the department is also providing
extension services in the form of technical advices to layer, broiler and
breeder farmers, hatcheries, Poultry Processing plants and allied groups.
• A close liaison has been established between the department and
different national and international groups of poultry industry which
helps in identifying the real issues and problems of Poultry industry.
• The research findings based on problem oriented research is
communicated to the stake holders through meetings and group
discussions.
7. Research and Training Facilities
• The research and training facilities at ACADEMIA include
• Broiler Unit
• Hatchery Unit
• Feed Mill Unit
• Poultry Marketing and Extension Unit
• Breeder Unit (Floor rearing and cage rearing system)
• Layer Unit (Floor rearing and cage rearing system)
• Quail Unit (Floor rearing and cage rearing system)
The Broiler, Layer, Breeder and Hatchery unit are located keeping in view
the international standards of bio-security.
The Broiler, Breeder and Layer units are equipped with a bio-security
building having shower-rooms, data analysis lab, feed store, generator
room, office and researcher’s room.
8. Rank Country
Production (1000
MT)
1 United States 17,012.00
2 China 14,050.00
3 Brazil 12,835.00
4 EU-27 9,550.00
5 India 3,420.00
6 Mexico 2,975.00
7 Russian Federation 2,950.00
8 Argentina 2,022.00
9 Turkey 1,700.00
10 Thailand 1,560.00
11 Pakistan 1,050.00
Source: U.S. Department of Agriculture
9. • Poultry is by far the largest consumer of agro-residue and by-
products, such as, oilseed meals, wheat bran, rice polishing, broken
rice, corn gluten meal, guar meal, fish meal, animals’ by-product meal
• During 2012-13, about 7 million ton of poultry feed was produced,
comprising about 3.5 million tons of these residues and by-products;
thus providing extremely valuable contribution towards reduction in
the cost of principal food items, like edible oils, Atta, rice, fish, sugar,
fructose, etc.
• Thus, poultry not only made possible their availability at lower prices
to the consumers, but also enabled the agro industries to pay a
higher price for the crops which served as an incentive to produce
more
10. • In addition to the agro residue utilization, poultry sector, during
2012-13, consumed about 3.5 million tons i.e. 61% of Maize and
Rice Tip Production.
• The increase in production was sustained by higher prices offered
by the poultry sector, which has directly benefited the farmers in the
rural areas of Pakistan to produce more
11. • 1.7 Million Jobs:
Poultry, during 2012-13, has provided approximately 1.7 million jobs to
skilled, semi-skilled and unskilled workers deep into the rural areas; thereby
reducing the influx of the rural population into urban areas in search of jobs
• Low Investments:
In addition, since it can be started with low investment, it is an important
means of self-employment and provides an opportunity to women to be self-
employed. It has thus played an important role in poverty alleviation by
improving rural economy
• Produced Across the Country:
Poultry, as an alternate food, is now produced in remote areas of the country,
like, Gilgit, Skardu, Turbat, Kalat, Mastung, Parachinar, Tahrparkar, D. G. Khan,
Loralai, Zohb, Mianwali, etc. Thus, poultry has contributed to the national
economy in many surpassing ways
19. • Since poultry products, Day Old Chicks, Broilers and Table
Eggs are perishable generic products, they are sold as a
commodity.
• The prices are truly governed by demand-supply in a free
market mechanism.
• The demand is highly elastic; a decrease in price widens the
consumer base and an increase in price narrows the
consumer base.
20. • Both broiler and egg demand are influenced by the prices of
supplementary food items like beef, mutton, pulses, etc. and also
reacts to fluctuating climate changes and Islamic calendars. For
instance, during the month of Muharram, Ramadan, Safar and Zul
Hajj chicken meat demand goes down and during the month of
Shaban, Shawwal and Rabi-al-Awwal, being wedding season, demand
goes up.
• Demand also changes with the percentage increase in per capita
income. Egg demand decreases during summers and with the school
closures and increase during winters.
21. Eggs:
• At current prices, per capita income and inflation rates, a 1%
decrease in the egg prices is associated with a 0.5% increase in
consumption.
• A 1%* increase in income is associated with a 2% increase in per
capita consumption of eggs.
• On the supply side, a 1% increase in price elicits a 1% increase in
the quantity of eggs produced/supplied per capita.
• The analysis also shows that the farm price of eggs relative to the
price of wheat, a proxy for returns relative to feed costs, is a
significant supply variable for egg production.
* The Pakistan Poultry Industry – A Policy Analysis Framework
by Chemonics Int’l Consulting Division and USAID
22. Broilers:
• A 1%* increase in broiler prices results in 0.9% decrease
in per capita consumption of chicken meat at current
levels of red meat consumption, prices, income and
inflation. Conversely, a 1% increase in price elicits a 0.7%
increase in per capita production/ supply.
• A 1% net increase in income is associated with a 2.2%
increase in chicken meat demand/consumption.
* The Pakistan Poultry Industry – A Policy Analysis Framework
by Chemonics Int’l Consulting Division and USAID
23. • 2004 saw a 40% reduction in production due to severe losses and
adverse impact of Bird Flu.
• On revival of demand, in the face of 40% lower production, a sharp
increase in prices elicit a very rapid expansion and modernization,
increasing from 483 million broilers in the year 2003 to 830 million
in the year 2008.
• Once again in 2007, faced with Bird Flu and a substantial increase in
feed prices, industry suffered heavy losses.
• Day Old Chicks were distributed Free of Cost and eventually
embryos were pulled out of incubators and destroyed resulting in
closure of more than 50% broiler breeding farms, dropping the
production back to 430 million broilers.
24. • Broiler prices registered a sharp increase registering a peak of Rs
130/Kg and ever highest Day Old Chicks monthly average price of Rs
68.66 during April 2010, once again bringing about a sudden revival
and further expansion.
• By the end of 2012, the supply had increased to 1.05 billion broilers.
• During 2013, Day Old Chicks prices slummed as low as Rs 1/chick
against the cost of production of Rs 35 and were given away free as
well.
• Broilers were being sold at Rs 20-30 below cost of production.
• In the face of wide spread New Castle disease outbreak, the sector
had gone through serious losses.
25. • Modernization of broiler farms, for reasons of bio-security and
efficiency, commenced in 2005.
• During 2005-10, some 1400 automated poultry sheds came into
production with most modern technology adopting controlled
environment houses, automation in heating & cooling, ventilation
along with automatic feeding and drinking systems.
• At the end of 2013, there were over 6800 automated poultry houses.
• The Advantage of regular uninterrupted supply benefited to the
consumer
• The advantage of efficiency in cost was negated to the farmers on
account of prolonged outages of electricity in rural areas
necessitating use of a generator and an additional stand by
generator of the standby, producing electricity at a cost of over Rs
42/unit.
26. 1.4 billion broilers by 2018
The sector at current rate of growth, by the end of 2018, would be
producing 1.4 billion broilers from current 1.2 billion
• In order to sustain the existing growth rate of 15% production, the
production of feed ingredients have to be increased particularly of
corn at 15% per annum
27. • Disease Control
• Diagnostic Facilities and Services have not increased at the same
rate as the demand for services.
• Well equipped Government Veterinary Laboratories capable of
carrying out serology and virus isolation need to be established at
district levels in all intensive poultry producing areas of the country.
28. • Market Interventions Counter Productive:
• Ministry of Food & Agriculture has already advised the Provincial Chief
Secretaries against price fixation and control of poultry products.
• Nonetheless, frequent price fixation and controls by the Administration
by use of coercive measures of arrest and fines, particularly in the
absence of any relief during periods of severe losses, is unjustified.
• Hoarding or manipulation of perishable generic commodity produced by
over 30,000 farms is not possible.
• It sends wrong signals to the farmers and discourages them to place
replacement flocks. The practice must be forcefully discouraged.
29. • Product Prices in a free market economy is the only source that
issues a directive to the producer to increase or decrease his
production.
• A high price yielding higher profits signals a need to expand
production; a price that is bearish is indicative of over production and
signals the producer to reduce production.
• A market intervention, which may reduce the prices, would make the
producer grope in the dark; the result would be distortion.
• The market forces are so strong that their direction cannot be
successfully diverted by intervention.
• Eventually the market intervention will cost the consumer very dearly
and, of course, many of the producers would be out of business.
30. • Live Bird Markets
Live bird markets have neither expended nor are capable of handling
growing production. Distribution of live birds costs not only the
producers, but also the wholesalers, retailers, consumers and the
national economy on account of transit mortalities and loss of
weights
• Law & Order Situation
Due to law & order situation in the country, it is not unusual that a
truck load carrying over 2,000 chicken and over 10,000 Day Old
Chicks is hijacked in Punjab
• Price Instability
The frequent boom and burst to be prevented by bringing in stability
through poultry processing. Value Addition – The Next Step Forward
31.
32. • Generic Commodity Converted to Branded Products
• Price Stabilization
• Diversification in Products
• Convenience
• Competitive Pricing
33. Branding Benefits
Safeguarding Brand Equity brings about:
Quality Assurance: Free of Bacteria, Virus, Toxins, Chemicals
and Drug Residues (Vertical Integration)
Food Safety (Vertical Integration – An Important Factor)
Over 250 Known Food borne Illnesses; some important
ones are:
Botulism
Campylobacteriosis
E-Coli
Hepatitis
Salmonellosis, Etc.
Cause: Bacteria, Virus, Parasites, Toxins, Drug Residues
34. • Means to Enhance GDP
A Live Bird worth Rs 242,(1.69 $) after value addition, generates
sales revenue of Rs 512 (3.58 $)
• Exportable Products
• Brings Foreign Exchange Earnings
• Safeguards Health of the Nationals
• Less Illness – Reduces Subsidies for Public Health Care
35. • Possible after Processing only
• World Halal Food Trade in 2012 was worth US$ 3.5 Trillion
(FAO/WHO)
• Countries of our interest, because of being in close proximity or being
Muslim countries, requiring Halal products, imported chicken meat in
the year 2011 to the tune of US $4.27 billion, growing approximately
@ 8-10% per annum
• Pakistan, being predominantly a Muslim country, stands to benefit
from growing demand of Halal food world over
• US$ 440 Million from 10% Value Added Exports
10% Export of the Current Live Birds, when converted to Value Added
Products i.e. 80,000 MT @ US$ 5500/MT, could earn over $440 Million
per annum
36. Free Trade Agreements
• Free Trade Agreement should, in fact, be Fair Trade Agreements.
• No FTAs and MFN may include poultry and poultry products unless
both the countries have same regulations and protocols ensuring both
countries have level playing field to have equal opportunities to export
to one another.
• The poultry sector must be taken on board for evaluating protocols
and regulations for every FTA or MFN where poultry is to be included.
• In the face of power outages and existing rate of import duties on
inputs, level playing field would be difficult.
37. Fiscal Incentives
• Fiscal incentives for modernization of poultry production
• Sales Tax Refund on Import of Plant and machinery not available to
poultry
• Exemption from 5% Sales Tax levied on import of Plant & machinery
in the budget of 2014-15 was available to registered persons
• Poultry farmers, not being producer of taxable goods, are being
denied registration, hence exemption
• FBR may provide registration or alternatively accept NTN as an
evidence of being taxpayer
• Since Poultry Plant, machinery and equipment being specific
requirement of poultry and can under no circumstances used for any
other purpose
• To assist small producers commercial importers having sales tax
registration be provided the benefit of refund of sales tax
38. Fiscal Incentives
• Sales tax on soybean meal to be withdrawn
• All poultry feed stuff including oil seed meals, such as canola meal,
sunflower meal, rape seed meal and all of the feed stuff including
vitamin amino acid are exempted from sales tax
• Soybean meal is the only exemption which is subject to 5% sales
tax
• International prices of soybean have been bullish fluctuating
between $500 to $700 per metric ton, 5% sales tax substantially
increases the cost of poultry feed.
39. Fiscal Incentives
• Withdrawal of Zero Rating of Sales Tax on Processed and Value
Added Products has increased the cost of production by Rs 5 –
40/Kg. This would reduce the demand and defeat the economy of
scale.
• The UK VAT Act 1994 Schedule-8 Group-1 specifies food of a kind
used for human consumption is Zero Rated. The term food includes
products eaten as part of a meal or as a snack. Food items are not
only exempted but are zero rated and entitled to input tax credit.
• In USA too, many States exempt all food items whether processed
or unprocessed from payment of VAT.
• Restoring Zero rating would encourage additional units in
processing.
• Only additional 8% processing would yield Rs. 3.8 billion in taxes.
40. Fiscal Incentives Need to Enhance Import Duty
• The Indian Example: On entry of and commencing imports by
multinational fast food chains, the Indian Government clamped
100% import duty on importation of value added products. Our
Government reduced the import duty from 50% to 25%. Though
the bonded rate of duty filed by the Government of Pakistan under
WTO regime was 100%
• Government of Pakistan reduced the import duty from 50% to 25%
• The bonded rate of import duty filed by Government of Pakistan
under WTO regime is 100%
• In view of higher cost of production and above all to encourage
poultry processing, rate of import duty may be enhanced from 25%
to at least 50%
41. • There is an apparent massive under-invoicing with regards to import
of processed chicken meat from China
• Boneless, Skinless Chicken Breast meat imported @ US$ 0.70/Kg
• Pakistan’s live bird cost: Rs 140/Kg
• Pakistan’s Skinless Boneless Breast Meat Cost: Rs 385/Kg
• The US FOB price of Halal, non-stunned, hand Zabiah Boneless,
Skinless Chicken Breast meat US$ 5.56
• There is no example of $0.70/kg anywhere in the World
• Proceedings for under-invoicing be instituted, both under the
Customs Regulations and State Bank Regulations
• Minimum import price for frozen Skinless Boneless Breast Meat to be
fixed at US$ 4.25/kg, Skinless Boneless Leg meat at US$ 3.75/Kg and
Skin-on Whole Chicken to be fixed at US$ 1.80/kg
42. Fiscal Incentives
• Imported inputs for producing value added products covered under
PCT Headings 0904.1200, 0910.9100, 1905.9000, 2103.9000 and
2501.0090 are subject to 15% to 35% rate of import duty and 17%
sales tax
• On the other hand, finished products under FTA with Malaysia are
duty free and from China importable at 16% import duty
• Import duties and sales tax on the above PCT headings needs to be
withdrawn for the poultry processing sector under specific
requirements
• Provide competitive support against other countries
43. • Imports of Poultry Products from Malaysia are not Halal
• Malaysia’s Halal Regulations allows stunning of chicken before
slaughter – a regulation not approved by the Government of
Pakistan
• Pakistan’s Halal regulation forbids stunning of birds before slaughter
• Requires birds to be hand slaughtered
• Requires feed to be free of pork products
• Certificates accompanying import consignments of chicken products
do not clearly state that the birds were hand slaughtered and were
not stunned
• Certificates do not certify that the chicken were fed a diet free of
pork by products
• Certification for Imported Halal Chicken products must state clearly
Chicken were Hand Zabiah without Stunning and were fed on feed
free of pork products
44. Country 000's of US$
UAE 670,362
Saudi Arabia 1,768,589
Oman 188,593
Kuwait 316,500
Yemen 166,347
Russia 596,742
CIS 322,782
Qatar 147,107
Egypt 92,584
TOTAL: 4,269,606
Source: FAO
45. ESTIMATED PRODUCTION OF BROILERS PER ANNUM A No of Birds 1 Billion
BIRDS SOLD IN LIVE FORM
Average Weight of a Live Bird B Kg 1.75
Average Selling Price C Rs/LWKg 138.15
Average Selling Price per Bird - (B x C) D Rs 241.76
REVENUE from live Chicken: (A x D) Rupees 242 Billion
INITIAL VALUE ADDITION –
BIRDS SOLD AS DRESSED WHOLE CHICKEN
Average Price of Raw Skinless Carcass E Rs/Kg 277.22
Live bird yield of 55% F Grams 962.50
Meat Value per bird (E x F) G Rs 266.82
Bye-parts Recovery per Bird H Rs 24.71
Revenue per bird (G + H) I 291.53
Percentage Addition over live 21%
REVENUE - Form Dressed Whole Chicken (A x I) Rupees 292 Billion
46. BIRDS SOLD AS BONELESS MEAT
Average Price of Raw Meat L Rs/Kg 497.00
Boneless Meat per bird at yield of 22.70% M Grams 397.25
Meat Value per bird (F x G) N Rs 197.43
Drumsticks, wings, bone carcass & bye parts Recovery/Bird O Rs 107.89
Revenue per bird (H + I) P 305.33
Percentage Addition over live 26%
REVENUE – From Boneless Meat (A x P) Rupees 305 Billion
VALUE ADDITION TO MEAT
Average Price of Value Added Products Q Rs/Kg 511.58
Birds required to Produce Boneless Meat for 1 kg of Value
Added Products
R 1.26
Price of Value Added Products per Bird (Q / R) S Rs 404.58
Drumsticks, wings, Bone Carcass & Bye parts Recovery/Bird T Rs 107.89
Revenue per bird (S + T) U Rs 512.47
Percentage Addition over live 112%
REVENUE – From Further Value Addition (A x U) Rupees 512 Billion
47. Country's Total Broiler Production Birds 1,020,000,000
Broilers Processed Birds 20,000,000
Processing Target: Additional 8% Birds 81,600,000
Next 5 Years' Total Processing Birds 101,600,000
At target level proceeds from Sales of Live Broilers through Wet Market would be
Average Selling Price on Live Weight (FY 2012-13) Rs/Kg 131.88 A
Average Weight of Live Bird Kgs 1.75 B
Average price per Bird Rs/Kg 230.80
(A x
B)
Sales Proceeds at Target level of 101,600 thousand birds would be Rs (b) 23.40
AND BEING IN UNORGANISED SECTOR REVENUE FOR EXCHEQUER IS
ZERO
Cont’d…
48. Incremental Revenue For Exchequer IF Target Broilers are
PROCESSED Processing
Industry
Organized
Sector
Wet Market
Unorganized
Sector
Benefit
To
Exchequer
Rs (b) Rs (b) Rs (b)
Income Tax 2.10 - 2.10
Tax withholding on Supplies of packing material, marketing
services, employees, utilities, food ingredients etc. 1.00 - 1.00
WPPF, WWF, EOBI & Social Security 0.50 - 0.50
Import Duty 0.20 - 0.20
Total 3.80 - 3.80
Contribution towards GDP
Sales Proceeds Rs (b) 45.60
Business generation for other industries
Packing Material Rs (b) 1.50
Marketing Rs (b) 2.60
Food ingredients Rs (b) 2.90
Total Rs (b) 7.00
Jobs Creation
Number of employees 14,600
Above estimate is based on single processing units performance of 2012-13
49. PCT ITEM ORIGIN
IMPORTE
R NAME
AGENT
NAME
CONSI-
GNER
ASSESSED
VALUE
ASSESSED
UNIT VAL
DECLARE
D UNIT
VAL
DEC’D
VALUE
QTY UNIT
CASH
NO
CASH
DATE
B/E
TYP
E
POR
T
0207.4500
FROZENCHICKENBREASTBONELESSSKINLESS
CHINA
PAK
FOODS
HAPPY
LINKER
S
HANTONEINDUSTRYLIMITEDTRUSTCOMPANY
18900 0.70 0.70 18900 27000 KG 7131
21 May
2014
HC KAPE
18900 0.70 0.70 18900 27000 KG 7131
21 May
2014
HC KAPE
18900 0.70 0.70 18900 27000 KG 9299
21 May
2014
HC KAPE
18900 0.70 0.70 18900 27000 KG 9299
21 May
2014
HC KAPE
50. 2003-04 vs. 2013-14
Items
Price per Kg Inflation Corrected
Price (Rs.) *
Inflation Corrected
Increase (%)2003-04 2013-14
A B C D
Chicken 58.67 168.23 110.15 10.15
Eggs (Farm) – Per Dozen 42.81 92.39 50.01 (49.99)
Beef (with bone)** 55.19 250.27 189.56 89.56
Mutton (Avg. quality)** 111.53 354.80 254.80
* Deflated to the extent of (%): 99
Current Price per Kg (B) – (Previous Price per Kg (A) x Deflation %) = Inflation Corrected Price (C)
168.23 – (58.67 x 99%) = Inflation Corrected Price (C)
(168.23 – 58.08) = 110.15
Inflation Corrected Price (C) - (Previous Price per Kg (A) / (Previous Price per Kg (A) x 100 = Inflation
Corrected Increase (D)
110.15 – (58.67 / 58.67) x 100 = Inflation Corrected Increase (D)
110.15 – (1 x 100) = 10.15
**Data Source: Economic Survey of Pakistan