Pakistan Poultry Industry History & Prospects

Prepared By : Kashif Hussain

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History & Birth Prior to 1963 the native breed "Desi" was mainly raised which produced a maximum of

73 eggs per year under local conditions. An improved breed "Lyallpur Silver Black" was

evolved in 1965-66 in the department of Poultry Husbandry, University of Agriculture,

Faisalabad. The layers of this breed are capable of producing 150 egg/year and gaining

1.4 kg weight in 12 weeks of age under favorable management and feeding conditions.

Poultry in Pakistan was kept as backyard business for household needs. In early sixties

the need of commercial poultry was felt which resulted in 1963, in the form of a national

campaign to enhance the production of feed products in the country. Under this campaign

the government announce a tax exemption policy on the income derived from poultry

farming. Pakistan International Airlines (PIA) in collaboration with Shaver Poultry

Breeding Farms of Canada started first commercial hatchery in Karachi. Simultaneously,

a commercial poultry feed mill was started by Lever Brothers (Pvt), Pakistan Ltd., at

Rahim Yar Khan, which was followed by other pioneers like Arbor Acres Ltd.

Special emphasis was laid by the Government on development of poultry industry in the

country during 1965-75. The Government made major policy decisions to provide all

possible facilities to poultry industry in the annual development plans. The incentives

provided to poultry farmers/poultry industry included.

1. Tax exemption on income derived from poultry farming.

2. Import of flock and incubators was permitted under free list.

3. Allotment of state land on lease for poultry farming at very nominal rates.

4. Established poultry research institutes at Karachi and Rawalpindi through Food

and Agricultural Organization (FAO) of the United Nations to facilitate research

services specifically concerning disease control programs.

5. Two meatless days were announced to encourage poultry meat consumption.

6. Subsidy on grains to form low cost quality ration, through UNDP-grains.

7. Loan through ADBP for the construction, of poultry sheds.

8. Established directorates of Poultry Production in Karachi and Punjab to provide

extension services to the poultry farmers.

9. Establishment of Federal Poultry Board to coordinate government and industry

activities in the poultry business.

The subsequent development of Pakistan’s Poultry Industry can be divided into six

phases

Phase 1: The Introductory Period 1965-1970.

During this period the early poultry ventures, involving risks were supported by

Government policies that exempted poultry production form national tax levies and

permitted producers to import genetically improved breeding stocks and equipment such

as incubators. A number of catalytic forces shaped the early development of the poultry

industry.

These forces included potential profits in the industry, availability of technologies and

supportive government policies resulting form the perception of a protein deficiency in

Pakistani diet. The government of Pakistan also established the Directorate of Poultry

Production at Karachi, which provided extension services to the growing numbers of

poultry farmers. The early development of the industry was also characterized by

emerging problems including rising feed costs, disease outbreaks and consumer

preferences for Desi birds.

Phase 2: Institutional Development 1971-1975.

As poultry production became a significant enterprise in the agricultural economy of

Pakistan, the government strengthened institutions serving the new industry. The Federal

Poultry Board was established to coordinate government and industry activities, in the

layer and broiler business. Research services were offered through the Poultry Research

Institute with the assistance of UNDP/FAO funds. The Directorate of Poultry

Development was established in Punjab similar to that in Karachi. Poultry Producers

struggled with the adverse effects of government programs e.g. the ban on export of

poultry products and the consequences of some major planning flaws such the

establishment of poultry estates clustered together without adequate sanitation and health

control. This phase is characterized by both the greatest success of the poultry industry

and its greatest failure. A dramatic increase in poultry production resulted due to diverted

investments form the nationalization of industries in other sectors. At the same time the

clustering of production units led to large disease outbreaks and the lack of marketing

facilities due to ban on export of poultry products limited industry growth.

Phase 3: The Production Boom 1976-1980.

The government of Sindh followed a policy to attract investment in poultry farming by

offering estate land under ten year leases. At the same time, the nationalization of other

industries contributing the entry of capital into poultry industry, particularly in the

Punjab, resulted in the poultry production boom. Commercial egg production increased

from 624 million eggs in 1976 to 1223 million eggs in 1980. Broiler production increased

form 7.2 million birds to 17.4 million birds during the same period. The increase volume

of production was forced through limited marketing channels. Serious financial setbacks

to poultry farming in Pakistan culminated from discontinuation of poultry exports;

disease problems; high relative prices of poultry feed; deteriorating feed quality; and

limited supply of feed ingredients. Poultry farmers faced with financial problems and

seeking remedial measures formed the Pakistan Poultry Association in 1979 on the

advice of the Federal Poultry Board.

Phase 4: Depression and Adjustment 1981-1990.

Disease problems posed a serious threat to the sound development and consolidation of

the industry. The large Karachi poultry estates began to close in 1984 and a number of

poultry farms closed in other areas of Sindh. Production showed a decreased growth or

even depression during early 1980 particularly of increases in the Punjab, Balochistan

and NWFP. However, in the later part of 1980’s starting form 1985 industry seemed to be

readjusted with much rise in poultry number particularly in broilers. Faced with disease

problems, lower productivity and numerous environmental and climatic difficulties, some

of more successful farmers decided to produce under more modernized conditions and to

establish their poultry farms in cooler, less polluted area of the country. Breeding farms

in Karachi and Punjab thus relocated to Abbotabad, to the base of the Murree Hills and to

the Valley of Quetta. The farmers also built houses with controlled environments for

breeders, broilers and commercial layers.

Phase 5: 1991 to 2000

In this period was a disaster due to diseases, in 1990 the farmers suffered a great loss due

to Hydro pericardium syndrome specially the farmers of Broiler and Broiler Breeder

Birds. In 1991-92 an other disease Gumboro attacked the chicks of broiler, layer and

parent flock that resulted in great mortality. With the passage of time efforts to reduce the

incidence of these diseases and prophylaxes regarding vaccination and bio-security were

done, this also resulted in establishment of new medicine companies and the importation

of vaccines form abroad started. At national level institutes like Poultry Research

Institute, Veterinary Research Institute and Agriculture University Faisalabad also done

efforts to reduce these diseases.

In 1995 a new disease Avian Influenza appeared in Murree and Abbotabad and mortality

in parent flock rose up to 80% due to this disease and set a challenge to the scientists at

national level. Conferences at the diagnosis of this disease were conducted in which

scientists discussed their point of views, after great loss measures were adopted that

resulted in controlling the disease. In 1996 parent flock increased in number due to

absence of planning that resulted in depression in the market and the price of chicks

decreased several times its cost of production. This depression in Poultry market

continued in 1997 as result of ban on serving of lunch in marriage parties that reduced the

demand of poultry products in the market up to 40%. Slowly in 1998 it started improving

and by increase in price of chick the companies got a great profit. 1999 again a syndrome

like influenza broke that cause great loss in some areas while some areas were safe.

Phase 6: Automation Stage 2003-2009.

During 2005 and 2009 the poultry industry witnessed a major transitional change from

the old style open house commercial farming to the controlled house farming. Most of

this change occurred in the broiler industry.

Automation in the grand parent and most of the breeder farming was already there, but

when the farming community felt the production benefits in the controlled house farming

of the breeder farmers, the progressive commercial farmers started switching over to the

controlled and semi controlled house farming.

Till 2006 a considerable number of commercial broiler farmers had switched over to the

controlled houses and they started getting a huge comparative and competitive advantage

over the orthodox house farmers.

This comparative advantage in production and profits attracted the rest of the farmers

who could afford to install these farming equipments (A controlled shed of 30,000

broilers used to cost Rs. 6 Million in 2006) and suddenly after 2006 started the mushroom

growth of controlled houses.

After 2007 many investors who were not poultry farmers basically, entered in the arena

tempted by the huge profits. Within last two to three years an immense number of

controlled house farms have been completed and are operational.

Poultry sector is one of the most organized branches of the agro-based sectors of

Pakistan. Poultry at present contributes 40 percent of the total meat consumption and

generates employment and income for about 1500,000 people.

Poultry is the cheapest available meat protein source for our masses and as such, is an

effective check upon the spiraling animal protein prices also. Unfortunately Poultry

Sector of Pakistan has suffered heavy losses due to scare of Avian Influenza (Bird Flu)

since 2006 onwards.

Current situation (Automation Boom)

At the end of 2009 a total of a total of 1800 controlled house units of 30,000 broiler birds

are reported to be operational in Punjab only.

Following is the area wise distribution of these sheds

Lahore & adjacent towns 600

Okara Sahiwal ,Pattoki 200

Faisalabad 200

Multan & adjacent south belt 260

Gujranwala & adjacent cities 150

Rawalpindi & adjacent cities 150

Others 250

POULTRY PRODUCTION STATUS (Economic Survey of Pakistan 2008-2009).

Unit Types. 2006-07 2007-08 2008-09

Commercial Poultry

Layers Millions 24.82 26.56 28.42

Broilers 370.70 407.77 448.55

Breeding Stock 7.25 7.61 7.99

Day old Chicks 387.20 425.92 468.51

Eggs “ 6682 7136 7620

Meat 000 Tons 456.95 501.30 550.00

Total Poultry

Day old chicks. Millions No’s 418 456 499

Poultry Birds. “ 477 518 562

Eggs. “ 10197 10711 11258

Poultry Meat. 000 Tons 554 601 651

Poultry Sector is one of the vibrant segments of agriculture industry of Pakistan. This

sector generates employment (direct/indirect) and income for about 1.5 million people.

Its contribution in agriculture growth is 4.81% and in Livestock growth 9.84%.

Poultry meat contribution is19% in the total meat production of the country. The current

investment in Poultry Industry is about Rs. 200.00 billion. Poultry sector has shown a

robust growth at the rate of 8-10 percent annually which reflects its inherent potential.

PROVINCE WISE POULTRY STATISTICS

BROILER Grand Parent & Parent

2006-2007 2007-2008 2008-2009

A. Broiler Grant Parent. 200,000 175,000 135000

Punjab 100% 100% 100%

B. Broiler Parent Stock. 8.0 M 7.5 M 5.5 M

Punjab 68 % 75% 79%

Sindh 2% 2% 3%

N.W.F.P 30% 23% 18%

Baluchistan - - -

C. Commercial Broiler 800 M 720 M 550 M

Punjab 75% 75% 75%

Sindh 20% 20% 20%

N.W.F.P 4% 4% 4%

Balochistan 1% 1% 1%

LAYER 2006-2007 2007-2008 2008-2009

D. Layer Grant Parent. 4000 - -

Punjab. 100%

E. Layer Breeder. New 428000 225,000 ** 290000

Molted 250,000 275,000 170000

Punjab 75% 75% 75%

Sindh. 20% 20% 20%

Frontier - - 5%

F. Commercial. Layer 35.5 M. 34.0 M 30.0M

Punjab 70% 70% 70%

Sind. 25% 25% 25%

N.W.F.P 4% 4% 4%

Balochistan 1% 1% 1%

FEED

. Feed 5.5 M.T 5.0 M.T. 3.8 M.T

G. Punjab. 82% 82% 82%

Sindh. 18% 18% 18%

N.W.F..P - - -

. Baluchistan. - - -

* Reduction of Broiler is due to early culling of PS.

** Effect of reduced P.S. will be seen next year on commercial layer.

Source : Dr. Mustafa Kamal Big Bird Poultry

Factors affecting Profits of poultry farmers

Major factor are the rates of the poultry meat and eggs which ultimately depend

on the number of poultry grand parents and breeders in the country. Essentially

what this means is that as the demand of the poultry products is almost the same

so it’s the total poultry production in the country that plays a major role in

deciding the fate of the farmers.

The management of the individual farmers. Since it’s a livestock business and it

very vulnerable to diseases resulting in mortality in worst cases and poor

production in average to mild cases of mismanagement and poor bio-security.

The poultry acumen of the farmers. Depends on the on-hand experience,

education, oversight of the industry and the level of information available about

the breeders etc. When to rear a flock and when to hold back is the most deciding

factor in commercial broiler farming.

The nature of the finances involved in the project. It is observed that those

farmers who have invested their own money in the business make more money

than those who get it financed from the feed distributor etc. The reason behind

this phenomenon is the level of effort being put in by the farmers.

Afghanistan trade plays a pivotal role in determining the total demand of the

poultry products in the country. So if the border seals off it has a very negative

impact on the profits of the farmers.

The cost of the rearing the birds by the commercial and breeders is also a major

factor in determining the profit margin of the farmers. It depends on the following

sub factors;

The prices of the grains especially maize and the soybean meal in the

country which in turn naturally depend on the production, availability and

other market forces affecting on their prices. These prices of grains affect

the rates of poultry feeds which is about the 70% of the overall rearing

cost.

The prices of electricity and now a days mostly diesel prices due to load

shedding. This plays a major role especially in case of controlled houses.

The pandemics like bird flue (H5N1) can suddenly wash away almost certain

profits of the farmers in days.

All other general business environment factors are as much applicable on poultry

sector as on other businesses.

Opportunities & Threats

Opportunities

1. Shortage of layer breeders in the country resulting in lower population of layer

birds in the country and its going to be a good year or two for the layer farmers.

2. Hyder G.P and Noor G.P had wiped off in last two years and this year the chick

prices are still expected to remain high due to balanced breeder population and

overall increase in the rearing cost of breeders. So this year is not going to be too

much risky for the good broiler farmers.

3. Layer Breeders farmers have huge potential of making money, some new Grand

Parent company is also expected to step in sensing the gap.

4. Broiler breeder farmers are also expected to earn modest to high profits because

no matter whose hands operate the controlled houses, the will remain operational

and thigh demand for day old chicks will be there.

5. Two or three big poultry concerns are stepping in processed meat market to

compete K& Ns and they are also trying to get licenses to export the meat to gulf

and other countries.

Threats

1. High cost of rearing is the major threat to the poultry industry at this moment

especially that of poultry feeds which is responsible for the 70% expense of the

farmer. The other allied costs which are threatened to be increased are;

The price of diesel is increasing and most of time the sheds are running on

diesel due to power crises.

The corn prices are expected to increase due to low acreage of cultivation

as many of the corn farmers have preferred to cultivate wheat in Rabi and

are planning to cultivate Cotton and other crops in Kharif. This will put

tremendous pressure on the supply of corn to the feed millers and the

prices will go up.

As stated earlier there is no overproduction of breeders in the country so

there are least chances of the day old chicks falling.

2. Due to the shortage of corn, feed millers will be forced to buy even the poor

quality corn with fungus on it. This is expected to negatively impact the

performance of the flocks and so on their profits.

3. Threat of bird flu is always hanging over this industry which can wash away all

the projected profits and turn the industry to disaster.

4. If the war on terror intensifies in the border areas with Afghanistan which is a

huge probability it can cease the borders and so our trade of eggs and meat with

this country.

Predictions of Poultry Pundits about 2010

Layer farmers are expected to make good to excellent profits this year due to

shortage of layer breeders in the country.

Broiler open-house farmers are in a great threat of making losses in most of the

flocks except a few flocks.

Controlled house farmers will outperform the traditional ones through their

productions and cheaper inputs like chicks, feed and medicines. But as whole it

will be a lot riskier year where great management and all the positive factors

stated above will be needed to be profitable.

The mushroom growth of the controlled houses will be stabilized with the

expectation that the new entrants who are merely investors and not good farmers

will suffer huge losses due to bad management, wrong decisions and high cost of

rearing.

The losses of controlled house farmers with poor management will result in

ceasing the production and renting out the sheds. On an average a controlled shed

of 30,000 birds will be rented out in Rs.1 Million per anum. Because the good

farmers with less finances and the altogether new entrants will try their luck by

operating these sheds.

The good farmers with ample track record of good management are expected to

make moderate profits even in these tough circumstances.

The layer breeder farmers will grab huge profits and the broiler breeder farmers

will earn modest to good profits this year.

HBL Poultry Product: Current Gaps & Suggestion for Improvement *

Sr. # GAP Suggestion. 1

Eligibility Criteria: Experience

Only verbal confirmation of the farmers that they have 3 years experience should not be considered enough and a proper evidence in shape of Feed Mill account statement or other receipts of last years should be taken. And the experience of last 5 years should be made mandatory

2

Minimum farm capacity

It should be; Broiler 15,000 birds Layers 10,000 birds Breeders 10,000 birds

3 Minimum Loan Requirement It should be enhanced to Rs. 1 million 4

Cash Flows

Only the cash flows showing the business to be feasible is not enough . He should provide the details of his at least last year’s flock details with the receipts from the middlemen to whom he had sold out his flocks. It will help the AFO to analyze the farmer’s management capabilities. For example if the most of the farmers made good money during last flocks and he did not. It shows that there is some thing wrong with his management.

5

Eligibility

The farmers who need finances for the sheds that they have got on rent should be asked to show a cash inflow of at least Rs. 0.8 Million per anum from other than poultry sources.

6 Minimum Debt Equity Ratio Minimum debt equity ratio should be enhanced to 65%-35% from 70%-30%.

7 Monitoring & Review

If the loan is given for more than one year a general Profit & loss statement of all flocks should be taken at the end of each year.

*There could be an altogether new product for the controlled house Poultry Farms and so for the Tunnel

Farming with these farming nature specific contents different from the normal Poultry and Agriculture

farming.