Poultry industry — meeting the protein needs of the people

By: K. M. A. Naqshbandi

_: 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

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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

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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.

IMF warns Pakistan over fiscal deficit, external sector

By: Mohammed Arifeen

_: The International Monetary Fund (IMF) has stated that Pakistan should concentrate on two mainstay
of economy namely tightening of fiscal deficit and external side. IMF Mission Chief at the conclusion of
post-program monitoring of $6.64 billion External Fund Facility (EFF) stated pre-election phase could
bring some difficulties. It is hoped that the government will take necessary steps to ensure stability
throughout this period.

The IMF stated that in that context State Bank of Pakistan (SBP) allowed adjustment of exchange rate in
the past few days. The IMF has nothing to do with this and this is an independent policy decision.
Whether Pakistan will be able to manage external side without IMF after June 2018, IMF said that it is
difficult period for Pakistan and success will depend on strength of the polices that are being put in place
including those on exchange rate side and the efforts to contain the fiscal deficit.

Pakistan needs to focus on revenue collection and broaden tax net as tax collection has been very low
from many years. During the tenure of present government tax to GDP ratio has improved from 10
percent to 12 percent. There is potential of 22 percent growth in the revenue collection. Supported by
improved security conditions, energy supply, infrastructure investment and agriculture IMF foresees a
5.6 percent growth for the current fiscal year

The last IMF program was successfully completed with progress in stabilizing the economy both on the
fiscal side and building external safeguards. But structural reforms required much longer. Fiscal deficit is
well in control and also to ensure that the foreign exchange reserves losses are now addressed.

Pakistan has not requested for another IMF program. IMF says that it is now the right time to arrest the
external and fiscal imbalances. Pakistan’s economy is on a strong base and that it would not require
another IMF program. IMF, however, said its mission, staff will prepare a report for the IMF”s Executive
Board for a discussion and a decision.

Pakistan plans launching another international bond in about 45 days to manage external vulnerabilities
and said it would do everything possible not to go for another IMF program in any circumstances.

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