February 15, 2023
Pakistan's poultry industry in decline as challenges persist
Pakistan's poultry industry — which has been facing multiple challenges for over six years — has witnessed a slump, with its growth rate of 7-8% annually reduced by 40%.
Industry pundits attributed the decline to a mismanaged broiler breeding sector, lack of proper husbandry practices, unhygienic conditions, poor bio-security, weak return on investment and risky feed transactions based on credit, among other factors. They highlighted the sector's volatility, where chicken meat prices often fluctuate from Rs550 (US$1.97) per kilogramme to Rs250 (US$0.89) per kilogramme — while occasionally shooting up due to a poor mechanism of demand and supply in the local market.
The output of Pakistan's feed industry has also shrunk to around 5.5-6.5 million tonnes per year compared to the 9-9.5 million tonnes produced six years ago.
Hi-Tech Group of Companies chief executive officer Dr. Muhammad Arshad, believes that tuning the ROI logically could lead the industry to reinvest at least 50% of its profit in the commercial broiler rearing sector, regaining expansion by 6-8%.
"The poultry industry has been facing a shrinking phase, with one of the main reasons being the infeasible prices of feeds, making it a more capital-intensive industry," Dr. Arshad explained. "Feeds are sold on credit basis, mostly risky transactions where defaults occur frequently. Feed mills practically function as banks, with raw material suppliers as depositors and customers as borrowers. If banks do not charge adequate markup [the feed industry does not earn reasonable profits], they become incapable of extending more loans. Furthermore, if borrowers [feed buyers] do not pay back on time, the bank's investment is further scaled down."
As the feed industry is not earning reasonable profits, they lack the financial capacity to offer more credit to customers, thus significantly decreasing the industry's volume.
Furthermore, the government of Pakistan has manipulated poultry rates "to… develop a political narrative in the short term, impacting the industry in the long term," said Salva Feed Mills Private Limited Okara director Mohammad Usman Ghani. "During Ramazan, the government (reduced prices), taking a heavy toll on small shed farmers."
Ghani noted that poultry demand slumps sharply ahead of Eidul Azha when mutton and beef are in demand.
He added that the poultry industry is a vulnerable sector which needs government support such as incentives for exports, Letters of Credit for importing necessary ingredients for chicken feed and ending the manipulation of rates in the broiler market.
- The Express Tribune