December 21, 2011

Pakistan reports 30% unregistered feed, grain mills

Pakistan has reported that about 30% of its grain mills businesses and animal feeds manufacturing units are not formally registered with any trade union or association.

Sixty three percent of the businesses in the segment do not prepare financial statements whereas, 15% of the remaining have an audit of financial statements.

According to an update analyses show that the grain mills and animal feeds manufacturing units operate in a highly competitive market with a maximum amount of businesses having more than 10 competitors. The majority of segment relies on more than five suppliers who are not consistent in meeting and do not have a regular stream of customers. The businesses have no control on the pricing policy for their exports, which is government set, usually below the costs incurred by the mills. A large proportion of SMEs in the segment use banks to meet business needs, but are not paying for any insurance products.

International Finance Corporation of World Bank Group and State Bank of Pakistan in a joint study suggested creating awareness of SME specific products in the target market, the management will aggressively advertise various promotional programmes and sponsored events: Workshops will also be conducted to create awareness amongst business owners with Agriculture finance unit of the bank.

At present, study report pointed out that the Grain Mill Products and Animal Feeds segment in Pakistan is relatively unorganised with sales primarily generated via shops/premises and as in case of other such SME segments, having limited financial and banking history. The grain mill products and animal feeds segment is largely dispersed around the areas where they have high demand of their products. Animal feed mills are mostly located near poultry farms and grain mills are located close to their raw materials. This segment has limited exposure to financial institutions; however, demand for this segment is expected to increase substantially, given strong historical sales and increase in population.

According to joint study, animal feed industry has not yet developed to any sizeable extent in Pakistan. Feed is a major cost, of about 70% in livestock and dairy farming and its demand is continually increasing. Most of the farmers have about 75% of small land holdings on which most of the livestock population is concentrated.

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