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Industry Pressured by High Prices, Cheap Imports

by 5m Editor
17 November 2009, at 8:28am

PAKISTAN - Continuing high feed prices and the closure of breeding farms are leading to higher consumer prices and imports of poultry meat.

The majority of grandparent poultry farms have been closed, which has squeezed supply of one-day-old chicks and pushing up poultry prices in the market, according to The News of Pakistan. High poultry feed rates have also played a role in the chicken price increase.

Pakistan Poultry Association's former chairman, Khali Sattar, stated this in a presentation on poultry sector to the Lahore Economic Journalists Association on 14 November.

He said only two grandparent stock producing units out of five were operating and even these units had to curtail their production due to very low demand in 2008. He said prices of one-day-old chicks dipped to as low as one rupee (PKR) during the lowest point in the poultry sector in 2008.

Elaborating his point, he said grandparent and parent breeding stock was like any seed which had a multiplying effect. One grandparent produces 40 parents and one parent produces 120 chicks.

Mr Sattar told the meeting that 40 per cent of parent stock-producing units also closed down in 2008, adding the depression was so severe that the producers culled parent birds each worth PKR1,500 as the cost of feeding them was higher than the cost of one-day-old chicks.

He claimed chicken prices had still not increased to the level that could cover food inflation in the country.

However, he said that poultry farmers are as much concerned about the high chicken rates as were the consumers. He said: "Increase in chicken rates dampens demand and shrinks the industry."

He added that capacities were being increased again and a reduction in chicken prices would occur after four months. He predicted chicken prices to producers might even go below the production cost in 2011 and 2012.

The News reports that Mr Sattar said prices of day-old chicks had eased from a peak of PKR55 to PKR85 as supplies increased but were still much higher due to rise in demand.

He urged the government to waive the five per cent duty on imports of chicken grandparent and parent stocks, which would reduce cost of chicken meat in the country.

However, he cautioned prices would not touch historic lows as long as rates of poultry feed remained high. Poultry feed costs increased by 70 per cent between 2007 and 2009, he said, adding that poultry feed accounted for 80 per cent of the cost of production of poultry farms prior to the abnormal increase in one-day-old chick prices, which was a temporary phenomenon. He said the poultry industry expanded production rapidly from 483 million broiler chickens to 830 million from 2003 to 2005. Chicken meat production during that period increased from 869,000 tonnes to 1.494 million tonnes. Per capita chicken meat consumption, he added, stood at 5.7kg.

He said the chicken processing industry in the country is in its infancy. The processing industry could provide cushion against wild fluctuations in chicken meat rates as it operated in an organised manner and produced meat in a more hygienic way, he said, adding instead of encouraging the chicken meat processing industry the government was creating hurdles in its operations.

Under SRO 1261(I)/2007 implemented from January 1 this year, he said, duty-free imports of all chicken meat products including value-added chicken products like nuggets, burger patties, breast fillet, sausages, etc are allowed from Malaysia. That greatly encouraged imports of finished products from Malaysia.

One local producer of this type of processed product has already stopped production and started marketing imported products. "This is benefiting major multinational fast-food outlets and five-star hotels and sidelining the local chicken meat processing industry," Mr Sattar said.

He added that neighbouring India imposed 100 per cent duty on imports of processed chicken meat in order to encourage investment in local processing units. The News report concludes that he pointed out imports of chicken feed containing porcine by-products is banned in Pakistan but surprisingly, processed chicken meat produced from poultry feed containing pork is allowed.