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DISCLAIMER
The purpose and scope of this Pre Feasibility Study is to introduce the Project and
provide a general idea and information on the said Project including its marketing,
technical, locational and financial aspects. All the information included in this Pre-
Feasibility is based on data/information gathered from various secondary and primary
sources and is based on certain assumptions. Although, due care and diligence has been
taken in compiling this document, the contained information may vary due to any change
in the environment.
The Planning & Development Division, Government of Pakistan, M/s. Arch Vision
Consulting Engineers who have prepared this Pre-feasibility study, or National
Management Consultants (Pvt.) Limited who have quality assured this document do not
assume any liability for any financial or other loss resulting from this Study.
The prospective user of this document is encouraged to carry out his/ her own due
diligence and gather any information he/she considers necessary for making an informed
decision
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TABLE OF CONTENTS
ACRONYMS .................................................................................................................. iii
EXECUTIVE SUMMARY ...........................................................................................iv
CHAPTER 1 INTRODUCTION...................................................................................11.1 OBJECTIVE ANDSCOPE OF THE STUDY....................................... ................................... 31.2 METHODOLOGY ............................................................... ....................................................... 31.3 STUDY TEAM....................................................... ................................................................ .... 4
CHAPTER 2 MARKET/ NEEDS ASSESSSMENT ...................................................52.1 LIVESTOCK POPULATION............................................................................ ......................... 52.2 POTENTIALANDPROSPECTSOFLIVESTOCKPRODUCTION ........................................ 72.3 POTENTIALFORMEATEXPORTS ............................................................ ............................ 9
2.4 DOMESTICDEMANDFORMEATINPAKISTAN....................................... ........................ 132.5 LOCAL LIVESTOCK AND MEAT MARKETING........................................................ ...... 142.6 CURRENTFRESHMEATCHAIN....................................................... ................................... 15
2.7 CLOSINGTHEDEMAND-SUPPLYGAP .................................................... .......................... 162.8 STATUSOFINDUSTRIALMEATPROCESSINGINPAKISTAN ....................................... 172.9 GOVERNMENTINCENTIVESFORTHESECTOR........................................................ ...... 192.10 FUTURE POTENTIALS IN MEAT MARKETING .............................................................. 19
CHAPTER 3 TECHNICAL EVALUTION................................................................213.1 CATTLEFARMING........................................................ ......................................................... 213.2 ESTABLISHING MEAT PROCESSING FACILITIES ......................................................... 28
CHAPTER 4 GOVERNANCE AND MANAGEMENT STRUCTURE.................39
4.1 GOVERNANCE STRUCTURE........................ ..................................................................... ... 394.2 MANAGEMENT STRUCTURE ..................................................................... ......................... 414.3 LIVE ANIMAL PROCUREMENT & TRANSPORTATION ................................................ 43
4.4 PLANT OPERATIONS .............................................................. ............................................. 434.5 MARKETING & SALES................................................................ .......................................... 444.6 FINANCE DEPARTMENT ................................................................. ................................... 454.7 HUMAN RESOURCE & ADMINISTRATION................................... .................................. 454.8 TRAINING NEEDED....................................................... ........................................................ 45
CHAPTER 5 FINANCIAL EVALUATION.............................................................46
5.1 CAPITAL COST OF THE PROJECT............................................. ...................................... 465.2 PROJECTED PROFIT & LOSS ACCOUNTS ................................................................... .. 495.3 PROJECTED CASH FLOW .................................................................... ............................... 505.4 PROJECTED BALANCE SHEET................................................................... ........................ 51
5.5 INTERNAL FINANCIAL RATE OF RETURN ................................................................. 52
5.6 RATES OF RETURN....................................................................................... ....................... 525.7 PAYBACK PERIOD................................... ..................................................................... ........ 535.8 FUNDING OF THE PROJECT.............................................................. .................................. 53
CHAPTER 6 CONCLUSION ....................................................................................54
LIST OF TABLESTABLE1LIVESTOCK POPULATION (MILLIONS)............................................................ ................. 5TABLE2PROVINCE-WISE LIVESTOCK POPULATION OF PAKISTAN ........................................ 5
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TABLE3AVAILABILITY OFLIVESTOCK AND POULTRY PRODUCTS....................................... 6TABLE4ESTIMATED GROSS MEAT PRODUCTION BY ANIMAL TYPEAND
PROVINCEWISE,2002-2003................................................................ .................................... 7TABLE5WORLDMEATPRODUCTIONIN2003 .................................................................... .............. 9TABLE6EXPORTPOTENTIAL:MIDDLEEASTSUPPLYANDDEMANDGAPIN
METRICTONS......................................................... ................................................................ 11
TABLE7EXPORTPOTENTIAL:MIDDLEEAST-MEATIMPORTSTOTALBEEFANDBEEFVARIETYMEATIMPORTS.................................................................. ....................... 12
TABLE8EXPORTPOTENTIAL:SOUTHEASTASIA(MAJORIMPORTINGCOUNTRIES)TOTALBEEFIMPORTS...................................... ................................................................ ... 12
TABLE9CURRENTIMPORTPOTENTIALFORNON-TRADITIONALMARKETSBEEFANDBEEFPRODUCTS................................... ............................................................... .................. 13
TABLE10SUPPLY DEMAND GAPS IN MAJOR LIVESTOCKPRODUCTS OF PAKISTAN....... 14TABLE11MAJOR CHARACTERISTICS OF SELECTEDBEEF BREEDS IN PAKISTAN ............23TABLE12BREED CHARACTERISTICSNEEDED ....................................................... ....................... 24TABLE13CONTAGIOUS & INFECTIOUS DISEASES OF CATTLE............................................... 26TABLE14PRODUCTSANDBY-PRODUCTSFROMTHESLAUGHTEROF
A400KGBEEFCATTLE........................ ............................................................... ................ 32TABLE15CAPITALCOSTCATTLEFARMANDMEATPROCESSINGUNIT .................................46TABLE16PROJECTEDPROFIT&LOSSACCOUNTS......................................................................... 49TABLE17PROJECTEDCASHFLOWS..................................................... ............................................. 50TABLE18PROJECTEDBALANCESHEETS..................... ............................................................... ..... 51TABLE19PROJECTEDIFRR .......................................................... ........................................................ 52TABLE20RATESOFRETURN...................................................... ......................................................... 52TABLE21PAYBACKPERIOD ...................................................... ......................................................... 53ANNEXURE-1 PAKISTAN A PROFILE
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ACRONYMS
ADB Asian Development Bank
ASEAN Association of South East Asian Nations
BSE Bovine Spongiform Encephalopathy (Mad Cow Disease)
CAR Central Asian Republics
CEO Chief Executive Officer
FAOSTAT Food & Agricultural Organization of UN Statistics
FMD Foot and Mouth Disease
GCC Gulf Cooperation Council
GDP Gross Domestic Product
GNP Gross National Product
GoP Government of Pakistan
IFC International Finance Corporation
IFCN International Farm Comparison Network
IRR Internal Rate of Return
MINFAL Ministry of Food, Agriculture and Livestock
PISDAC Pakistan Initiative for Strategic Development And Competitiveness
Rs Pak. Rupees
SAARC South Asian Association for Regional Cooperation
SBP State Bank of Pakistan
SECP Securities and Exchange Commission of Pakistan
SMEDA Small and Medium Enterprise Development Authority
SPS Sanitary and Phyto Sanitary
SWOG Strategic Working Group
UNICEF United Nations International Childrens Emergency Fund
WTO World Trade Organization
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EXECUTIVE SUMMARY
Pakistan has not been able to exploit its large livestock population to become a major player
in the international meat trade. The major reasons include; non-availability of indigenous
meat breeds, lack of proper animal husbandry, absence of modern abattoirs and meat
processing plants and the low priority which was accorded to this sector by the policy
makers in the past.
The Government of Pakistan has recently announced a Livestock Development Policy
which addresses legal framework and development strategies and action plans for farmers,
using livestock as supplementary source of income. The policy aims to bring about a radical
change in the current livestock production system which is expected to help in the
exploitation of potentials in the livestock sector. Under this policy the import of dairy and
livestock machinery, not manufactured locally, is allowed duty free; in addition, the policy
aims at encouraging the establishment of slaughterhouses in the private sector and allows
access to credit for the small farmer.
The total market for meat products in the Middle East is currently estimated at US$12.0
billion while the international market for halal foods is estimated at US$150.0 billion
which is expected to grow to US$500.0 billion in the next few years. In addition the current
demand-supply gap in Pakistan is estimated at 4.1% per annum.
This Pre Feasibility Study explores the possibility of setting up a cattle farm of 2,000 heads
of cows and buffalos and 5,000 heads of sheep/ goats, in addition it will also have a modern
abattoir and meat processing plant capable of processing 1,500 heads of sheep/goat and 200
heads of cow/buffalo per day.
The Project is proposed to be established on a 150 acre piece of land in Gharo near Karachi
on the National Highway. Ample supplies of water are available which is essential for both
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the cattle farm and the slaughter house and meat processing plant. The cattle farm will
develop a hybrid meat breed by crossing the local indigenous breeds with high meat yielding
animals from other parts of the world. The feed lot system will be used as range land is not
available also it is proposed to develop special feeds at the farms which can be commercially
sold at a later date.
Pakistan suffers in the international markets as meat slaughtered in the traditional abattoirs
fails to meet international standards. In order to overcome this handicap, it is proposed to
have a modern abattoir plus meat processing plant. It is not recommended that initially a
completely automated plant be installed so as not to offend religious feelings of thestakeholders. The plant will be able to process 1,500 heads of lamb/ mutton and 200 heads of
beef per day working on a double shift basis. Recovery of usable by-products will form an
important part of the process and it is expected that the quality of the by-products like skins,
offals, blood, heart, kidneys will be superior to that obtained from the conventional
slaughter houses.
In order to assure availability of live animals for the meat processing plant, it is proposed to
develop strong links with the traders of live animals as well as with farmers in the vicinity of
the plant. A campaign will be launched to convince the local dairy farmers not to cull the
infant male buffalo calves as these can fetch a premium price in the international markets
because of their tender meat.
The total cost of the project is estimated at Rs.600.0 million with a payback period of about
2.2 years.
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CHAPTER 1
INTRODUCTION
Agriculture is the largest sector of Pakistans economy, contributing nearly 22%
of the total output (GDP) and employing around 45% of the total labor force.
Livestock contributes nearly 50 percent to the value addition in the agricultural
sector, and almost 11 percent to Pakistans GDP. Livestock is the main supplier
of basic raw materials to the Pakistani food processing industry, with milk being
the most important sub-sector; the value of milk produced is higher than the value
of two major crops, that is, wheat and cotton. Livestock production is an integral
part of the rural economy of Pakistan. More than 6.5 million families consistingof 30-35 million people are involved in livestock farming. Also in rural Pakistan,
it complements agriculture income by converting crop residues, agriculture by-
products and wastes into milk, meat, wool, hair etc.
Inspite of the big potential of the large livestock population, meat industry in
Pakistan has not been able to make its mark in the international meat trade; the
primary reason for this has been the lack of corporate cattle farming and the
absence of modern state of the art abattoirs and meat processing plants. In
addition, Pakistan has also not been able to enter the Halal Food Market which is
estimated at US$500 billion although it enjoys a unique position because of its
strong Islamic character.
Analysts and livestock marketing experts agree that there are massive
opportunities for Pakistan to tap into and network with international distributors
to cater to the demand for halal meat and other halal foodstuffs globally.
Considering this potential, there is no doubt that there are ample opportunities for
Pakistani entrepreneurs to involve in livestock production and marketing. While
the demand for halal meat and other foodstuffs is growing internationally, the
demand in the Gulf countries alone exceeded $12 billion in 2005. There is,
therefore, a huge market for international distributors and producers to create
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opportunities to build the essential relationships to do business in the region.
Pakistani entrepreneurs can penetrate this growing market, having a clear edge
over other countries because of proximal location to the Gulf countries. Besides
generating additional foreign exchange, this would also serve the needs of the
growing number of Muslims settled in many countries who look for halal meat
and other foods. This pre-feasibility study gives necessary background and
information necessary to plan for investment in the cattle farming and meat
processing sector of the halal foods market.
The proposed project consists of a cattle farm and a modern abattoir complete
with a meat processing unit. The cattle farm will have a herd of 2,000 cows/
buffalos and 5,000 heads of sheep/goat. This farm will develop meat-breeds by
creating a hybrid between the local breeds which are predominately draught/milch
animals and western meat-breeds. In addition it will work with the local farmer
community to save the male calves, which are culled at infancy, by helping to
provide an assured outlet for young cow/buffalo meat which because of its
tenderness has good export potential.
The project will also consist of a modern abattoir with a capacity to slaughter and
process 200 heads of cattle and 1,500 heads of sheep/goat per working day. All
animals will be slaughtered under the Islamic traditions. The plant will have a
high level of hygiene which will enable its production to be exported to the West.
Initially it is proposed that live animals be bought from the local market and sell
the processed meat both locally as well as in the Middle East.
The total cost of the project is estimated at Rs.600.0 million with a payback
period of approximately 2.2 years.
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1.1 OBJECTIVES AND SCOPE OF STUDY
The objectives of this Pre-feasibility Study are to help determine the viability of
setting up a modern cattle farm and a modern fully automated meat processing
plant. This Pre-feasibility aims to: Identify current markets and determine gaps; Identify potential animal breeds and animal husbandry techniques with
reference to the development of meat breeds;
Identify the markets for processed meat and to develop a framework forsetting up a modern meat processing unit; and
Study the financial viability or otherwise of modern cattle farming andmeat processing.
1.2 METHODOLOGY
The methodology employed for this study consists of review of published data as
well as exhaustive interviews of the stakeholders including farmers, dairy and
cattle experts, dairy and meat marketing companies, multilateral agencies and
Government of Pakistan officials as well as those belonging to MINFAL and the
Governments of Punjab and Sindh. We would also like to thank those individualswho are currently involved in the meat chain and who were willing to share
there skepticism about the possibility of Pakistan becoming a major player in the
international meat trade under the present conditions. Lastly, we would like to
bring on record the cooperation extended by those Individuals and companies
who though no longer associated with the Industry, were willing to share their
opinions and experiences to facilitate new entrants coming into the industry.
The data collected has been analyzed using quantitative and qualitative
techniques, where required necessary assumptions have been made which have
been mentioned in the report.
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1.3 STUDY TEAM
The study team comprised of experts in the fields of dairy and cattle breeding,
animal husbandry, meat processing, economics, engineering, food processing,
international marketing and finance.
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CHAPTER 2
MARKET/ NEED ASSESSTMENT
2.1 LIVESTOCK POPULATION
Pakistan possesses a herd of about 26 million cattle, 28 million buffaloes, 26
million sheep, 62 million goats, 387 million poultry, four million equines and
700,000 camels. Livestock population is increasing with a positive annual growth
as is evident from the following tables.
TABLE -1
LIVESTOCK POPULATION (MILLIONS)
Species 2001 - 02 2002 03 2003 04 2004 -05 2005 -06*
Average
Growth
Rate
Cattle 22.8 23.3 23.8 24.2 25.5 2.4%
Buffalo 24.0 24.8 25.5 26.3 28.4 3.7%
Sheep 24.4 24.6 24.7 24.9 25.5 0.9%
Goats 50.9 52.8 54.7 55.6 61.9 3.9%
Poultry 306.9 314.3 315.58 372.0 386.5 5.2%
Source: GOP (2006); Ministry of Food, Agriculture & Livestock (Livestock Wing)* Projected estimates:
TABLE -2
PROVINCE-WISE LIVESTOCK POPULATION OF PAKISTAN
(thousand of Heads)
Region Cattle Buffalo Sheep Goat
Punjab 10,580 16,591 6,094 22,965Sindh 8,231 9,753 5,057 14,763
NWFP 5,576 1,672 3,595 11,203
Balochistan 1,619 377 10,940 12,999
Total (Pakistan) 25,954 28,393 25,686 61,930
Source: Medium Term Development Fund - 2005-2010
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Per capita availability of milk and meat is 160 liters and 20 kg per annum while
actual and projected availability with demand and supply of livestock and poultry
products is as under:
TABLE -3
AVAILABILITY OF LIVESTOCK AND POULTRY PRODUCTS
(Production in thousand tons)
PRODUCTS 2001 02 2002 03 2003 04 2004 05 2005 06
Average
Annual
Growth
Rate
Milk 27,031 27,811 28,624 29,438 31,295 3.15%Beef 1,034 1,060 1,087 1,115 1,175 2.73%
Mutton 683 702 720 739 782 2.90%
Poultry Meat 355 370 378 384 463 6.10%
Source: Ministry of Food, Agriculture & Livestock (Livestock Wing)
A comparison of livestock products in 2001 - 02 and 2005-06 shows that milk
production has increased rapidly mostly due to significant increase in the
population of larger ruminants in the country. Production of beef also shows a
considerable increase, probably due to a greater off-take of male animals, whilst
mutton production has not increased as rapidly as might be expected from the
increase in the number of goats.
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2.2 POTENTIAL AND PROSPECTS OF LIVESTOCK
PRODUCTION
2.2.1 BUFFALO AND CATTLE
There are 28.4 million buffaloes in the country. Nili-Ravi is predominantly raised
in Punjab and Kundi in Sindh. In the last livestock census (GOP, 1996), Nili-Ravi
and Kundi buffaloes were reported to be 34 and 21% of the population
respectively, while rest were grouped as non-descript. Buffalo population has
increased by nearly 5.0 million in the last five years. The buffalo is not only a
draught animal; it is also a vital source of milk and meat. India with a similar
climate is the largest exporter of buffalo meat in the world having exported a total
of 425,000 metric tons of boneless buffalo meat in 2005; it is worth mentioning
that the total buffalo population of India is estimated at 93.0 million. The averageweight of the Nili-Ravi is 800 Kg for the male and 600 kg for the female,
similarly the average weight of the Kundi is 600 Kg for the male and 375 Kg for
the female. As the buffalo has been replaced as a draught animal because of the
mechanization of agriculture, the population of the male buffalo has declined;
most of the buffalo meat which is available consists of animals which have
completed their useful life, and as such has a lower price.
TABLE - 4
ESTIMATED GROSS MEAT PRODUCTION BY ANIMAL TYPE
AND PROVINCE WISE, 2002-2003
(in thousand tons)
Type of Animal Production
Description NWFP Punjab Sindh Balochistan Pakistan
Cattle 147 203 125 20 495
Buffaloes 100 261 198 5 564
Sheep 28 53 43 98 222
Goats 85 178 114 101 478
Source: GOP, MINFAL, Updated data on Livestock and Livestock Products in
Pakistan, September 2003.
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Similarly there are 25.5 million cattle in the country with a positive population
growth rate. More than half of the cattle population is non-descript. Sahiwal, Red
Sindhi and Cholistani are the distinguished dairy cattle breeds. The draught breeds
besides Thari (also called as Tharparkar and partially dairy-cum-draught breed),
include Kankaraj, Bhagnari (Sind), Bhagnari, Lohani (Balochistan), Dajal,
Dhanni and Rojhan of Punjab. Here again, like in the case of buffalo, the local
breeds are predominantly draught in nature, however local cattle crossbred with
Holstein and Jersey has resulted in a sizeable population of cross breeds which
have better dairy and meat characteristics as compared to the indigenous breeds.
According to estimates of the FAO (Food & Agricultural Organization) the total
population of cattle and buffaloes is estimated to increase to approximately 54.0
million by 2015 while the production of meat from cattle and buffaloes is
estimated at 3.2 million tones in 2015, almost doubling from the 2000 production
figure of 1.7 million tones. In addition, one major area which has not been
adequately developed is the fattening of male buffalo calves for export markets.
The meat of calves, as compared to that from end of useful live adults, is more
tender and carry a price premium.
2.2.2 SHEEP AND GOATS
Sheep with a population of about 26 million have 28 breeds of which 12 are
fat-tailed. Punjab and NWFP have seven each; Balochistan and Azad Jammu and
Kashmir four each. Goats numbering about 62 million have 25 breeds. Being
grazing animals, water courses, road side plantation, fallow lands, stubbles, crop
residues and vast rangelands are the main source of feed supply while very little
stall feeding is practiced except in few dairy breeds of goats or sheep during
pregnancy.
There are a number of systems for sheep and goat raising in Pakistan. These
include nomadic, transhumant and sedentary flocks and households with a few
sheep and goats. Nomadic flocks are constantly moving in search of grazing,
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whereas transhumant flocks have a fixed base to which they return in winter of
each year. All female progeny are kept for flock replacement or build-up but
nearly all males are sold before one year. There is therefore great potential to
undertake exploitation of transhumant production system in the form of fattening
of sheep and goats and its processing for exports besides meeting local demand.
In the current scenario, however, export of Pakistani sheep and goat will continue
to be limited to the Middle Eastern Countries where the demand is generated by
the Pakistani expatriate community.
2.3 POTENTIAL FOR MEAT EXPORTS
Opportunity for Pakistan to develop its international meat trade very rapidly
exists, however Pakistan will need to develop separate strategies for its bovine
and sheep/goat meat exports. At the moment the world meat production figures
are as follow:
TABLE - 5
WORLD MEAT PRODUCTION IN 2003
(million tons)
Meat Type Production
Beef 62
Mutton 12
Poultry 77
Pig 97
Total 247
Source: Small & Medium Enterprise Development Authority (SMEDA)
Historically, there have been four major bovine meat producing clusters:
North America (USA and Canada) South America (including Brazil, Argentina and Uruguay) Oceanic countries (Australia and New Zealand) Europe (British Isles and continental Europe).
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Food and Agricultural Organization (FAO), a body of the United Nations, has
estimated world bovine meat production in 2003 at 62 million tons carcass weight
equivalent (cwe). World statistics of bovine meat is always denoted as Carcass
Weight Equivalent. Carcass Weight Equivalent is roughly 1.66 times boneless
meat weight. The four bovine meat producing clusters in 2003 produced 35
million tons.
Due to the Mad Cow Disease or Bovine Spongiform Encephalopathy (BSE) crisis
of the 90s, Europes meat export has declined substantially. Further as a result of
the European Unions decision to reduce agro subsidy gradually and eliminate it
over the next 5 10 years, bovine meat prices in Europe have already risen and
with a strengthening of Euro are not viable for exports. Infact with declining
production in Europe, it has, for the first time in 2003 become a net importer of
bovine meat. It is expected that Europe, in the next 5 years, will become the
biggest new market for bovine meat with expected annual imports to reach over a
million tons by the end of 2010.
North America, with one incidence each of BSE in USA and Canada in 2003 and
another in Canada later, lost most of its export markets, importantly Japan. It is
not expected that North America will come out of the crisis, with more incidences
of dormant BSE likely to surface; moreover investments in the sector are not
being made. However, USA and Canada continue to be very large bovine meat
consumers, majority of which is produced domestically. The total production and
consumption of USA and Canada in 2003 was 13.3 million and 13.5 million tons
respectively.
Bovine meat production in South America particularly Brazil has expanded
substantially to fill the world bovine meat supply gap. The total production in
South America was 12.7 million tones out of which Brazil accounted for 7.2
million tons which included 1.2 million tons of export. Due to their improving
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economies, domestic demand in the South American countries is growing rapidly,
leaving exportable surpluses lower while firming up prices.
Draughts in recent years in Australia has reduced the production of bovine meat
but this is expected to reverse in the next few years. Interestingly, data shows that
per capita consumption of bovine meat is very high in countries where production
is high. Countries in the Middle East, West Asia, North Africa and South East
Asia have a comparatively low per capita consumption but it is expected to grow
substantially in the next few years resulting from economic growth and changing
lifestyles and eating habits. This is good for Pakistan which can avail this
opportunity for tapping into rapidly growing markets
The growing world market for meat is valued at US$81.0 Billion. Middle Eastern
countries especially provide a good opportunity for Pakistan as a supplier of Live
Cattle and Meat. The Supply and Demand Gap for the Middle East is shown
below:
TABLE - 6
EXPORT POTENTIAL: MIDDLE EAST
SUPPLY AND DEMAND GAP IN METRIC TONS
(in thousand tons)
Country Production Consumption GAP
Saudi Arabia 25,630 75,630 50,000
Egypt 440,000 533,000 93,000
Bahrain 1,440 4,600 3,220
Oman 4,148 18,000 13,852
UAE 9,500 43,185 33,685
(Source: United States Department of Agriculture 2004)
The actual imports in the Middle East for Beef are as follows:
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TABLE 7
EXPORT POTENTIAL: MIDDLE EAST - MEAT IMPORTS
TOTAL BEEF AND BEEF VARIETY MEAT IMPORTS
(metric tons)
2000 2001 2002 2003
Saudi Arabia 32,327 36,360 51,728 52,122
Egypt 195,841 130,692 140,240 113,915
UAE 50,722 31,103 37,263 30,765
Kuwait 57 19 71 144
All Others 68,930 70,571 65,246 93,595
(Source: World Trade Atlas)
In addition to Middle Eastern markets, potential exists for the development of the
markets in South East Asia; the Export Potential for these markets is given below:
TABLE- 8
EXPORT POTENTIAL: SOUTH EAST ASIA (MAJOR IMPORTING
COUNTRIES) TOTAL BEEF IMPORTS
(metric tons)
2000 2001 2002 2003
Malaysia 86,649 85,561 92,475 99,460
Philippines 87,579 82,291 82,200 83,341
Indonesia 38,383 20,151 25,477 30,605
Singapore 16,718 15,895 20,637 21,856
All Others 6,403 4,272 5,427 9,459
Total 235,732 208,170 226,216 244,721
(Source: World Trade Atlas)
In addition to the above markets which have clearly identified demand patterns,
there are some non-traditional markets in which Pakistan can have a first-mover-
advantage, these and their estimated potential demand is as follows:
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2.4 DOMESTIC DEMAND FOR MEAT IN PAKISTAN
Considering the present trend and increasing local demand, it is expected that in
future, demand for livestock products will increase at higher rates induced by
various factors. First, the growth in population will bring direct increase in the
demand for livestock products. Secondly, the animal based products are required
for fulfilling the protein and calcium requirements of the population on health
grounds. Thirdly, in Pakistan, the income elasticity of demand for meat and milk
has been greater than unit, implying that with the rise in per capita income, more
than proportionate expansion in the demand for animal based products is
expected. Fourthly, the changes in consumption patterns induced by rural-urban
migration and general development, for instance modernization of cities,
introduction of the concept of food streets in cities like Islamabad, Lahore and
Karachi, increase in the number of hotels and restaurants in urban centers etc will
also be expected to generate additional demand for animal based products.
TABLE 9
CURRENT IMPORT POTENTIAL FOR NON-TRADITIONAL
MARKETS BEEF AND BEEF PRODUCTS
(metric tons)
Country Current Imports
Iran 30,000
Algeria 50,000
Syria 30,000
Indonesia 50,000
Thailand 30,000
Philippines 80,000
Russia 100,000
Ukraine 50,000
Kazakhstan 25,000
Kyrgyzstan 25,000
Tajikistan 25,000
Total 495,000
Source: All India Meat & Livestock Exporters Association (AIMLEA)
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Keeping in view the future requirements, it is very likely that the supply-demand
gap in animal based products will get widened with the passage of time as is
evident from the table below:
TABLE10
SUPPLY DEMAND GAPS IN MAJOR LIVESTOCK
PRODUCTS OF PAKISTAN
(million tons)
2003 2020Products
Supply Demand Gap Supply Demand Gap
Milk 27.8 31.32 3.52 43.43 98.91 55.48
Beef 1.05 1.21 0.16 1.43 3.74 2.31
Mutton 0.70 0.80 0.10 1.03 2.50 1.47
Note: The information was extrapolated from the projected demand and supplyestimated by MINFAL, from1999-2000 and 2004-05
Source GOP, 2003.
2.5 LOCAL LIVESTOCK AND MEAT MARKETING
In Pakistan local livestock markets have been established by municipal and local
authorities but the right to manage the market is let by tender to a contractor.
Under this system the collection of fee takes priority over the provision of
services and amenities to market users. Stock brought to the local market by flock
owners or by small traders, who have made purchases locally, is sold un-graded
and un-weighed, and generally on an age and condition basis. The stock often
passes through the hands of one or more intermediaries who are essentially
brokers, before purchase by the wholesale or retail butchers for slaughter.
Livestock and meat marketing is however characterized by the following:
a) It is virtually completely in the hands of the private sector.b) Absence of reliable data on the main marketing channels, on the number of
livestock and quantities of meat that enter them, and on the price formation.
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c) Inadequacy of marketing infrastructure, slaughterhouses and meat markets.d) A shortage of high and medium level commercial type management available
to the public sector, and the absence of public sector marketing institutions.
However, the marketing system procures and transports large volume of stock
employing large number of traders who penetrate the most remote corners of the
country. Off-take entering the market suggests that the system is effective and
technically reasonably efficient.
2.6 CURRENT FRESH MEAT CHAIN
Livestock are slaughtered in recognized/unrecognized slaughterhouses and on
private premises. They are subject to only limited official control by the
municipality staff. Majority of such slaughterhouses, except a few in the
provincial capital cities, consist of simple sheds with little or no water supply and
electricity. Floors are normally damaged, drainage is poor and cleaning and
maintenance virtually non-existent with no holding or inadequate holding
facilities for the stock
Lack of suitable slaughtering facilities and unsatisfactory slaughtering techniques
cause considerable losses in meat as well as invaluable by-products like blood,
offals, hides and skins. Animals are slaughtered in places which are frequently
polluted with blood, intestinal contents and dirty effluents and are not well
protected against insects and germs. Meat produced under such conditions loses
its keeping quality and can become a source of bacterial infection and food
poisoning particularly in summer months. In the absence of inspection, meat from
sick or parasitic infested animals may well be a vector for spreading diseases,
affecting human beings as well as animals. In addition, by-products are not
properly handled / utilized and instead of being an asset, are considered a source
of annoyance. This traditional method of slaughtering also means that meat from
Pakistan in unable to pass the strict hygiene standards of the major export
markets.
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2.7 CLOSING THE DEMAND-SUPPLY GAP
There are two options to fill in the widening gap between production of livestock
and demand; either expand the import of animal based products or increase the
production of these products domestically. The import option is costly in terms ofincreasing foreign exchange requirements; therefore, the only choice left is of
increasing domestic production.
Almost 60% of total red meat supply is from cattle and buffaloes. Buffalo beef is
increasing in proportion to total supply. Cattle are kept primarily to provide milk
and farm power requirements; beef is produced as a by-product, predominantly
from slaughter of redundant milch and working animals and from culled male
calves. Production of buffalo beef has however surpassed cattle beef in view of
off-take from increasing buffalo population as compared to cow population. The
increased usage of tractors has resulted in a decrease in the on-farm requirement
of oxen-power.
Meat production covers all three aspects of livestock farming:
1. Selective breeding program with improved sires.2. Crossbreeding program of local cattle with exotic beef breed.3. Feed Lot Program.
In addition following alternatives are also available for increasing meat
production:-
a) Fattening of redundant working animals and cows before disposal;b) Fattening of male buffalo calves that are being slaughtered presently at the age
of just 2-3 weeks to save milk depriving the country of enormous beef
potential,
c) Fattening of marketable lambs and kids for about 100-120 days beforeslaughter.
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d) Cross bred steers of exotic dairy breeds and redundant exotic dairy cows canbecome a good source of beef production. Without doubt the dairy breeds are
the most important source of supply, and of those Friesians are most
numerous. The Friesian has shown itself, beyond all doubt, to possess the
attributes required, and when fattened at 18 to 20 months of age it is
economical to both butchers and the consumers.
2.8 STATUS OF INDUSTRIAL MEAT PROCESSING IN
PAKISTAN
In the past a few interventions in public sector for provision of improved
slaughtering and meat processing facilities were either provided or contemplatedbut did not yield any fruitful results for a number of reasons:
A) SLAUGHTERHOUSE, SIHALA
The first industrial abattoir in Pakistan was completed in 1969 at Sihala, some 35
km from Islamabad. It has a slaughtering capacity of 600 sheep and goats and 60
cattle per shift and is fully equipped with chill rooms, by-products processing
units and ancillary services. The plans to operate the new plant were however
opposed by the butchers who refused to deliver their stock to the abattoir
authority for slaughter and dressing. The plant had been operating under the
supervision of the Punjab Livestock Development Board till recently. Local
butchers only used part of the premises, slaughtering under their own
arrangements.
B) INDUSTRIAL ABATTOIR, KARACHI
The countrys other industrial abattoir was constructed at Landhi, near the cattle
colony, some 35 km from Karachi. The plant had designed capacity of 4,000
sheep and 400 cattle per shift of 8 hours and the plant was comprehensively
equipped for by-product processing and had cold storage facilities. The plant has
not operated because, as in Sihala, the butchers refused to deliver stock to the
authority for slaughter and dressing.
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C) SEMI-MANUAL SLAUGHTERHOUSE, QUETTA
A new slaughterhouse of semi manual type with improved facilities for hygiene,
sanitation, handling of meat, hides/skins and other by-products catering for 1200
sheep/goats and 240 large ruminants per shift had been established at Quetta
during 1997 under an ADB assisted Livestock Development Project. The facilities
which were to be let out by the Quetta Municipal Corporation through leasing or
out right sale for operation by the private sector have still not been utilized and
are lying unutilized as such.
The main reason has been, as per past practice, the butchers, retailers or
wholesalers wanted to avail and use such facilities of the slaughterhouse on
individual basis and were not ready to work as distributors of the new set up
which was envisaged as a separate administrative unit created for the efficient
operation and management of the modern slaughterhouse. Moreover the said
situation appears to also have arisen because of the introduction of a totally new
and untried technology without adequate prior consultation or planning with the
powerful established interests in the meat trade.
This is however a story of the past decades when export of meat had not started
and these modern slaughterhouses had to depend on local consumers who had
long clientele association with traditional butchers. With the opening up of the
international markets, a few semi-automatic plants have been established in the
private sector for the slaughtering and processing of meat for exports, these are
however in their early stages and will need to improve quality standards.
Pakistan has been unable to make its presence felt in the international meat trade
as it has been unable to get certification for its meat primarily because of the
unhygienic conditions in which meat is slaughtered/ processed in Pakistan. If the
country is going to make its presence felt in the international markets it will have
to improve slaughtering and meat processing facilities.
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2.9 GOVERNMENT INCENTIVES FOR THE SECTOR
After the green revolution in agricultural production in the 1960s and the on-
going white revolution in the form of increased production of milk in the dairy
sector, the Government of Pakistan is trying to promote the next pink revolutionwhich aims at increasing domestic production of meat. A number of measures
have been undertaken by the government, these include:
A new Livestock Development Policy which addresses legal framework anddevelopment strategies and has an action plan for farmers using livestock as
supplementary source of income. The Policy aims at the development of small
and medium enterprise (SME) and large businesses in the livestock sector.
The policy aims to bring about a radical change in the current livestock
production system and will help in exploitation of potentials of the livestock
sector.
Two private sector led companies namely Livestock and Dairy DevelopmentBoard and Pakistan Dairy Development Company have been established to
increase the pace of development in the livestock sector.
Import of dairy and livestock machinery/equipment not manufactured locally,is allowed duty free.
To provide access to credit to small holders, micro credit schemes have beeninitiated through commercial banks.
Establishment of slaughterhouses and temporary quarantine stations isencouraged in private sector.
2.10 FUTURE POTENTIALS IN MEAT MARKETING
There are bright prospects of export of Halal meat to Middle Eastern countries.
Pakistan is expected to be preferred on account of cultural, religious and distance
concerns. Moreover, great demand in Saudi Arabia on the eve of Hajj can also be
met by imports from Pakistan. Some of the Muslim countries import large
quantities of livestock products from other countries. However, Pakistans
contribution to export to these countries remains insignificant; nevertheless,
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Pakistan being located in proximity of the Persian Gulf countries can easily
penetrate these markets provided quality products and reliable supplies are
ensured.
In addition to the market for live animals and frozen meat, the international
market for halal processed/ready to eat foods is increasing at a rapid pace. With a
huge expatriate Pakistani population spread all over the world, it is expected that
demand for ready to eat-home-cooked-style Pakistani food has good potential;
some Pakistani entrepreneurs in these foreign markets are selling such pre-
prepared foods and are fairly successful, however their growth is being limited by
high input prices of halal meat as well as other inputs like spices, vegetables,
labour etc.
That Pakistani foods have good acceptability internationally can be gauged from
the success of the manufacturers of pre-packaged spices, expatriate Pakistanis as
well as locals are enjoying delicious Pakistani cuisine prepared in halal meat
using these ready to use spice mixes.
Pakistan has a great advantage in the halal food market that all meat available in
Pakistan is slaughtered using Islamic method and no other form of slaughtering is
allowed / practiced in the country. In addition the total absence of Pig / Horse
meat means that there is no danger of the abattoir which is slaughtering halal meat
of ever being used for the slaughter of other unlawful animals, other Muslim
countries can also claim this, however they for most part are importers of live
animals / processed meats and as such cannot compete with Pakistan in the
international meat market.
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CHAPTER 3
TECHNICAL EVALUTION
There are three major components of the project. One involves farming of cattle,
the second deals with meat processing including slaughtering of animals and
packaging of the processed meats, and the third component deals with the
marketing of the processed meat both domestically as well as for export. All three
components are part of the integrated project although they maybe operated
independently.
3.1 CATTLE FARMINGCattle farming on scientific lines is one aspect of the livestock sector which has
received very little attention in the past. Realizing a large market for cattle in the
Gulf Countries as well as Saudi Arabia, especially the increased demand during
Ramadan and the Hajj and Eid ul Azha period, it seems pertinent to start cattle
farming on a large scale so as not only to export cattle but also to produce meat
for local and international markets. In addition to the international halal food
market which is estimated to grow to US$500 billion in the near future, thedomestic demand for meat in Pakistan is growing at 6% per annum while the
supply is growing at 1.8% per annum.
CAPACITYFor achieving an annual off-take of about 1,000 healthy beef animals which
besides export on the eve of Hajj can also be slaughtered locally to supply quality
beef and its premier cuts, a viable cattle farm of 2,000 cattle is envisaged. It is
proposed that the farm be set up on the National Highway linking Karachi with
Thatta near Gharo in Sindh Province. The proposed area is characterized by the
availability of fresh potable water in addition to land holdings being in large
chunks, the greatest advantage would, however, be in its nearness to the largest
concentration of buffalos in Sindh which is at the Cattle Colony in Karachi and
from which it is proposed to integrate the development of a supply chain which
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will ensure that infant male calves are not culled but reared for meat. The farm
can also subsequently, raise sheep and goats, which have high export potential to
the Middle East. It is proposed to have a flock of about 5,000 sheep and goats to
produce an off-take of a desirable number of heads of marketable sheep and goats
annually. It is proposed that these animals be sold only on Eid-ul-Azha in
Karachi, the annual off take of sheep and goats is usually about 35% of the herd.
LAND REQUIREMENTFor the proposed farm, an area of about 150 acres would be required. The project
does not consider production of its own fodder, as for feeding a herd of 2,000
cattle, and approximately 5,000 heads of goat and sheep a very large area under
cultivation will be needed. The economics of dedicating such a large tract of good
agricultural land would reduce the viability of the project, as such feed lot method
is being suggested. Major part of the land would be used for construction of
animals/dairy sheds, pens and paddocks for different categories according to age
and sex groups besides other infrastructure and allied facilities.
Sheds and paddocks for the animals will be made airy for protection of the
animals from extreme temperatures and strong winds. Adequate supply of water
for drinking and cleaning will be necessary. The sheds will be designed to
maintain hygienic conditions. The animals will be dehorned for easy handling and
avoiding accidental injuries to other animals, handlers or structures. In addition,
the farm will utilize the animal waste for the production of bio-gas and it will be
disposed off in an environmentally friendly manner as compost or natural manure.
BREEDINGIn Pakistan the local indigenous breeds are mostly draught animals with no
specific meat breed in Pakistan, some of the dual purpose and heavy built breeds
of cattle can be selected for the purposes of this project:
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It would be seen that some of the above native cattle breeds of draught type i.e.
Bhagnari, Tharparkar, Kankrej and Dajjal (an off shoot of Bhagnari) are quite
massive and heavily built which is evident from their body weight as compared to
milch type cattle breeds. These breeds possess good beef potentials and are being
TABLE 11
MAJOR CHARACTERISTICS OF SELECTED BEEF BREEDS IN
PAKISTAN
Adult Weight (kg)Breed Type Areas ofConcentration
Male Female
Age at
Maturity
(days)
Milk Yield
(Lit)/
305 days
1.RedSindhi
MilchWestern Sindh,
Lasbela530 326 852 1,675
2.Sahiwal MilchSahiwal, Okara,
Multan,Faisalabad
544 408 861 1,852
3.Bhagnari(Kachhi)Balochistan
DraughtBhag, Sibi
Nasirabad andNorthern Sindh
650 480 966 950
4.Dhanni Draught
Attock,Rawalpindi,
Chakwal,Jhelim
412 285 910 800
5.Lohani DraughtLoralai, D. I.
Khan315 253 900 613
6.Rojhan Draught
Suleman Rangemountain, D. G.
Khan, D. I.
Khan, Kohat,Bannu
370 267 - 735
7.Tharparkar DualTharparkar and
surroundingareas
470 285 891 1,584
8.Cholistan Milch Cholistan area 470 341 609 1,471
9.Kankrej DualSouthwest partof Tharparkar
591 432 - 1,200
10.Dajjal DraughtDajal area of D.
G. Khan587 400 - 900
Source: Government of Pakistan Publication
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raised in an area having summer temperatures ranging between 43-48 oC and
sometimes even rising to 52-53 oC. Heat tolerance and tendency to fatten even
under poor feeding conditions has made these breeds much more suitable for
utilization as beef breeds. Cross-breeding with exotic beef breeds would achieve
cross bred animals possessing more hybrid vigor. This is necessary to overcome
the problem of late maturity, long calving interval and daily weight gain in Feed
Lot System, which is the only drawback that local cattle breeds possess and
render the projects uneconomical. The following table would clearly illustrate the
breed characteristics:
CROSS BREEDINGA number of exotic beef breeds like Aberdeen, Angus, Simmental, Charolias and
similar other breeds are reported to have yielded good results when used for
crossbreeding. Base population in different groups numbering 100 to 150 heads of
each local draught breed would be maintained under the project and frozen semen
of breeding proven sires of above exotic breeds will be imported for cross-
breeding. Only those crosses will be reared and fattened, which would possess
hybrid vigor for yielding best results. Some percentage of male and female off-
spring of the hybrid breeds can be maintained at the farm as a nucleus herd for
future. Establishing an artificial insemination centre with trained technicians at
the farm would therefore be an integral part of the project.
Although local cattle breed Thari or Tharparkar which is a dual purpose animal
would appear to be most appropriate, the final breeding policy will only be
TABLE - 12
BREED CHARACTERISTICS NEEDED
Sr# ParametersLocal draught
breedsCross-breeds
1. Age of cow at 1st calving 1200 -1400 days 770 - 800 days
2. Calving interval 450 - 500 days 420 - 500 days
3. Dry period 170 - 200 days 125 - 145 days
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developed in consultation with the Animal Breeding and Genetics Specialists in
order to achieve desired results.
The project envisages production and marketing of one year old steers which,
with proper cross-breeding program, can achieve a good source of income from
the sale of quality beef. In addition to the cattle, it is proposed to breed male
buffalo calves that are currently being culled at infancy and of which a huge
supply is available at the Cattle Colony in Karachi. Buffalo is a great friend of
man. It is not a draught animal only, it also gives milk and meat at affordable
prices. The buffalo meat has a great water holding and binding properties, and is,
therefore, used for industrial purposes in the production of sausages, patties,
nuggets, corn beef, etc. A large part of the meat in the Philippines, Thailand, Iran
etc., is used for the production of corn beef.
FEEDFeed supplies are available according to different feed formulae to be chalked out
keeping in view the prices, nutrient value and availability in the market. Daily
requirements would be worked out for each category and class. Balanced
concentrated feeds containing minerals and vitamins are being prepared in the
country by a few reputed Feed Mills, which can also manufacture feed as per own
formula and supply order. In the future, it is proposed to develop in-house feed
formulation capabilities.
Fodder and wheat/rice straws would be purchased/ contracted from the nearest
markets at the time of harvest. Straw is a common crop residue and is fed to cattle
as roughage but it is low in nutrients. Treating it with Ammonia or Urea
improves the quality of the straw and has a marked effect on cattle weight during
the fattening period. A restricted feeding regime for steers will be developed
which will lead to an improved feed/gain ratio.
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MEDICATION AND VACCINATIONBesides encountering non-contagious diseases of digestive, respiratory, urinary,
gynecological and obstetrics, surgical and other non-specific nature which would
require symptomatic treatment from a veterinarian, regular vaccination of the
whole herd against following contagious and infectious diseases will have to be
carried out as a prophylactic measure: -
Fresh stocks of vaccines can be procured either from government run Veterinary
Research Institutes operating at Lahore, Peshawar, and Quetta or from the open
market. Pakistan has the advantage of being free from Foot and Mouth Disease
which is a major factor in the demand for Pakistani meat in the export markets.
HOUSINGInitially cattle sheds will provide shelter to the animals. This will be followed by
one or two dairy sheds to be used for milking purpose of lactating animals only.
Cattle sheds are economical and durable and provide a simple structure
TABLE - 13
CONTAGIOUS & INFECTIOUS DISEASES OF CATTLE
Sr. # Name of disease Period of vaccinationImmunity
period
1.HemorrhagicSepticemia
May and JuneNovember andDecember(twice in a year)
Six (6) months
2. Black QuarterMarch and April(once in a year)
One year
3. Anthrax August One year
4. Rinderpest
Initial vaccination atthe age of six monthand second vaccination
at the age of Two years
Life long
5. Foot and Mouth diseaseFebruary and MarchSeptember and October
Six months
Source: Ministry of Food and Agriculture, Government of Pakistan
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comprising brick walls on three sides and poles in front covered with a roof of T-
irons and asbestos sheets. For a cow, 40 sq ft covered and 80 sq ft open space will
be required, whereas calves will be provided 20 sq ft covered and 40 sq ft open
space.
A dairy shed will have a provision of 3.5 feet wide and 6 feet long space for each
cow to be arranged in two rows with other structures like 2 feet wide manger on
each side with feed trolley channel along mangers, central passage and drains. A
separate calving pen, sick pens, dispensary, feed stores, office and garages will
also be provided at the farm according to its strength.
LAYOUTProper lay out of the farm buildings, paddocks, office, stores and residences
would be prepared keeping in view the environment, climate, wind direction,
proximity to market and road.
Feedlot design involves integrating each of the following standard components
into a functional operating system:
Feeding systemgrain, silage and other commodity storage and processing equipment, feed mixing
and delivery trucks, feed alleys, troughs and self feeders.
Watering systemwater source, pumps, mainlines, temporary storage, pen reticulation system and
water troughs.
Cattle management systemreceivable and induction facilities, cattle lanes, production pens, hospital yards
and dispatch facilities.
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Effluent management systempens, drains, sedimentation system, retention pond, effluent treatment utilisation
and disposal areas.
Manure management systemmanure cleaning and transport equipment, manure stockpile and screening
facilities, bio-gas production and utilisation area.
Staff/ business facilitiesoffice, weigh bridge, car park and amenities.
ENVIRONMENTLivestock manure and other bye-products of the processing stage pollutes the
environment. It is necessary to establish facilities to compost the manure to
stabilize it and make it pleasant to handle. It can then be used as a soil amendment
and nutrient source for crops, fetching a good price.
3.2 ESTABLISHING MEAT PROCESSING FACILITIESPakistan does not have a modern meat processing plant due to which the country
suffers as current facilities are unable to pass the stringent health requirements of
the European and the US health authorities. This effectively shuts Pakistan out of
the lucrative halal markets of the world where a large expatriate Pakistani
community lives.
The processed meat industry incorporates a range of activities, from simple
slaughtering and butchering of various species for human consumption through
to complex cooked, preserved and fermented products. These processes add value
to the product by dividing it into smaller units or transforming them into more
complex products. As part of the project it is proposed to have a modern meat
processing unit which will process 150 cattle head per day along with 1,000 goats
and sheep.
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3.2.1 LOCATION OF THE PLANTIt is proposed to locate the meat processing plant near the cattle farm in Gharo
near Karachi in the province of Sindh. The cattle and the sheep/goats will be
purchased from the local animal markets the biggest of which is located about 30
minutes from the proposed location. The processing plant will be located on the
road which leads to the main cattle market and through which nearly 90% of the
animals which are sold in the Karachi Cattle Market pass. It is hoped that in a
short period of time, the Plant can develop into a first stop for traders heading for
the main market trying to sell directly to the Plant.
In addition, the plant is proposed to be located in an area which is well connected
to the international markets as the Karachi International Airport would be less
than an hours drive from the Plant, this will ensure that export shipments fully
comply with international requirements. The main market for domestic meat is
located in Karachi which has got a thriving food catering/ restaurant/hotel
business in addition to a population of more than 16.0 million inhabitants, having
the highest levels of education and international exposure. It is expected that the
market will readily accept the packaged meat concept.
3.2.2 THE SLAUGHTERING PROCESSThe live weight of the cattle slaughtered for meat can vary from 250 kg to 600 kg
depending on the age and the breed of the animal The basic slaughtering
procedure for beef cattle has become more automated and efficient over the past
few decades. Most improvements have occurred in slaughtering, hide removal,
evisceration and splitting techniques.
The basic process for the slaughtering and processing of cattle is shown in Figure 1;
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FIGURE - 1
SLAUGHTERING PROCESS
Pre-handling of Cattle: Cattle are delivered to the abattoir in trucks and
unloaded into holding pens, where they are rested for one or two days before
slaughter. Any cattle classed as dirty are washed. Veterinarians will subject the
animals during rest period to ante-mortem examination; only after approval the
animals will be slaughtered.
Dhabia or zabiha of the animal: Prior to the slaughter, the animal's eyes and
ears are checked to ensure that the animal is healthy and suitable for slaughter. If
the animal is deemed to be healthy, it is first given water to drink (in order to
quench its thirst) and is then pointed towards Mecca to be slaughtered.
According to Islamic tradition, the conventional method used to slaughter the
animal involves cutting the large artery in the neck along with the esophagus and
trachea with one swipe of a no-serrated blade. This method of slaughter serves a
dual function: it provides for a relatively painless death and also helps to
effectively drain blood from the animal. The latter is important because the
consumption of blood itself is forbidden in Islam. This method of killing the
animal is cleaner and more merciful to the animal. During the blood draining
process, the animal is not handled until it has died. Once the animal has died, it is
then shackled by a hind leg and hoisted on to the overhead rail or dressing trolley
any blood still left in the animal is collected in a trough.
Delivery and
holding of livestock
Slaughtering under
Islamic Method
Hide removal/
dehairing
BoningTrimming and
carcass washingEvisceration
Chilling Packaging Cold storage
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Dressing and hide removal: The bled carcasses are conveyed to the slaughter
hall where dressing and evisceration takes place. The first stage of the this
process, dresssing, can be performed as the carcass hangs from the overhead rail,
or the animal can be unshackled and laid in a cradle. The head and hoofs are
removed, the head is cleaned with water and the tongue and brain are recovered,
hide is then removed and conveyed to the hide processing area where it is
preserved by salting or chilled in ice.
Evisceration: The carcasses are then opened to remove the viscera The stomach
(paunch) and intestines are emptied of manure and cleaned in preparation for
further processing. Edbile offal (tongue, lungs, heart and liver) is seperated,
washed and chilled. The carcass is then split, rinsed and conveyed to a cold
storage area for rapid chilling.
Cutting and Boning: Carcass cutting and boning often takes place after chilling
since a carcass is easy to handle and cut when it is chilled. Boning is the term
used to describe the process of cutting meat away from the bone
Inspection: Carcasses and viscera are inspected to determine if they are suitable
for human consumption. Each carcass and its components are identified and kept
together wherever possible until inspection is complete.
By-products: At various stages in the process, inedible products such as bone,
fat, heads, hair and condemned offal are generated. These materials are sent to a
rendering plant for rendering into feed materials.
Table 14 below shows the major products and by products from the slaughter of a
400 kg cattle or buffalo.
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TABLE 14
PRODUCTS AND BY-PRODUCTS FROM THE SLAUGHTER OF
A 400 KG BEEF CATTLE
Description Weight (kg) Percentage of LCWLive carcass weight (LCW) 400 100%
Boned Meat 152 40%
Inedible material for rendering (bones,fat, head, condemed offal etc.)
155 39%
Hide 36 7%
Edible offal (tongue, liver, heart, etc.) 19 5%
Blood 12 3%
Miscellaneous 26 6%
3.2.3 BY-PRODUCT PROCESSINGThe mechanized slaughter houses produce huge quantities of offal and digesta
from the slaughtered animals which could be profitably utilized for production of
value added products, like Meat-cum-Bone Meal (MBM), Tallow, Bone Chips,
Pet Foods and methane as a source of energy for value addition in most of the
modern plants. MBM contains about 50% of good quality protein and is a cheap
source of protein for poultry feeding. It is a good source of lysine and other
sulphur containing amino acids. Similarly, tallow is a cheap source of energy for
broiler production vis--vis the vegetable sources which are expensive. Tallow is
also used for soap manufacturing. The rendering plant cooks the byproduct at 133
degree Celsius at Bar 3, which completely sterilizes the MBM.
Pakistan has a large number of dogs and cats, which are kept as pet animals;
however, there are only very few companies which have recently come forward
for producing pet food. The international market is vast and demand for pet foods
runs into billions of dollars. The slaughterhouses produce large quantities of raw
material for pet food, which need to be commercially exploited.
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3.2.4 SPACE REQUIREMENT Waiting yard (Lairage) 40,500 Sq.ft.
Sheds for large animals
Sheds for sheep/goats
Covered Area (excluding Admin block) 9,000 Sq.ftAnte mortem room
Doctors room
Slaughtering area 20,000 Sq.ftButchers:
Dressing rooms
Lockers
Bathrooms
Setting area for Rigor mortis process
Chillers
Cool area for chilled carcasses ready to deliver
Administration block 2,500 Sq.ft.
Parking area/ ground 10,000 Sq.ft
Edible Offal processing area 10,000 Sq.ft
Total Area 90,000Sq.ft.
Capacity of waiting yard is calculated on the basis of the following yardstick:
3.2.5 SPECIAL CONSIDERATIONS IN THE CONSTRUCTION OF THEPLANT
For the success of the venture it is important that the Plant comply with
international standards, some of these include:
Area/Animal(Sq.ft)
Animal/Shift(Nos.)
Required Area(Sq.ft)
Sheep/goat = 15 1,250 18,750
Large Animal = 50 125 6,250
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The plant needs to be designed, built, and equipped to meet internationalsanitary standards. This applies particularly to the layout and product flow,
which determines shapes and relative locations of processing areas.
All slaughtering and edible product handling needs to be carried out insingle-storey structure having a smooth, flat, non-toxic, non-absorbent
floorings and brick walls. The walls need to be finished on the inside to give
an impervious, washable surface. Floor will be finished with non-slip and
impact-resistant surface. Inspection and work areas will be furnished with
standard level of illumination.
Mechanical ventilation which is required in all edible meat processing areasand all openings will be screened.
Double self-closing doors to be provided from dressing floor to edible offal,casing and skin department. Doors to be equipped with buffer rail on both
sides for meat trucks to pass through.
All equipment that would come into contact with animal products shall be ofstainless steel. No wood will be used for any purpose within the production
areas for either edible or non-edible products. Washbasins and sterilizers will
be carefully located and access to the processing area should be confined to
control points using a strict hygiene routine.
Chiller rooms will be built adjacent to the main building and will be designedto chill beef and mutton carcasses. Consequently, meat or cooling rails will
be fitted to internal support frames. Chillers will have the capacity to bring
down carcass temperature quickly so that the chiller can be vacated for the
next days product.
The refrigerating plant will be as simple as possible without unduesophistication. Reciprocating compressors and a two-stage ammonia system
will be involved. Each compressor will be of sufficient capacity to carry the
entire load.
The processing of inedible by-products will be carried out in a separatebuilding adjacent to the main building, having concrete floor with drains and
brick walls. Natural ventilation will be sufficient. The buildings required to
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house utilities and provide storage for skins will be of similar construction as
that of cleaning room, engine, and maintenance and vehicle workshop.
Covered livestock pens will be provided only for one days stay. Pens willhave a concrete floor with a minimum slope of 1 in 50 towards an outside
drain. It will have sanitary curbs and water troughs. A standard suspect pen
(for animals suspected to be diseased) and a race leading to the slaughtering
floor will also be provided.
Water will be supplied from a tube well delivering 27,000 liter per hour.Provision has also to be made for an on-the-ground storage tank of 300,000
liter and an over-head tank of 40,000 liter. To achieve the desired standard of
chlorination, a small automatic chlorine-dosing unit will be installed.
3.2.6 SLAUGHTER HOUSE EQUIPMENT1. Weight Scales: Types of scales that measure the animal as well as various
parts of the animal at different stages.
2. Animal testing Equipment: Prior to slaughtering the animal, various checksare made to confirm the meat quality.
3. Tool Kit & Tool Sterilizing Box: Specialized tools designed forslaughtering and cleaning the animal and kept in boxes specially designed for
storing and sterilizing at all times.
4. Blood Mixer: Blood is mixed in the container to avoid coagulating.5. Co- Extrusion Line6. Bleeding table7. Cooling equipment8. Crate Washing Machine9. Degreasing/Clean-up platform: This platform is used for cleaning up half
cattle carcasses. The fat and meat which is cut off is transported away
separately.
10. Cattle splitting saw11. Parameter Combination
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12. Intestine Cleaner: Used for degreasing and declaiming of large intestines,stomachs, etc.
13. Compost Machine14. Restrainer15. Organ spin chiller: Spin chiller is best used for cooling animal giblets16. Parameter Offal Lift: Lift belonging to Paunch cleaning equipment.17. Paunch Carousel: Carousel with automatic discharge of the paunch18. Quartering sheers: Quartering sheers for cattle or halving/ quartering sheers
for animals
19. Stainless Steel Scalding Tank20. Sticking Knife21. Tube rail systems: The systems include:
Overhead beams Mounting consoles Tube rail (straight, bends) Switches Scales Conveyors
22. Waste Water Treatment: Complete unit to recycle the water for sanitarypurpose.
23. Water Treatment Plant: To process water for cleaning purpose of meatproducts processed.
24. Trolleys & Utensils: Various kinds of trolleys for carrying various types ofmaterial with special design utensils to carry different parts of the animal.
3.2.7 MISCELLANEOUS SLAUGHTER HOUSE EQUIPMENT
In addition the Slaughter House will require the following equipment and support
facilities:
Chillers to hold 6 days export kill. Refrigeration Plant. Stand-by generator 150 KVA
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Laboratory Equipment. Maintenance workshop including necessary equipment and tools. Scales.
Vehicles Blast Freezer and edible offals cold store with carton racks and pallets. Skins, casings and Rendering Departments containing deslimer, strippers Engine Room, Refrigeration plant and stand-by generator Water Storage Amenities Block includes washrooms, laundry, kitchen and dining room,
Office Block with offices for General Manager, Chief Engineer, Veterinary
Surgeon, Accounts Marketing Manager, Workshop Manager, VeterinaryLaboratory, Cashier, Stores, etc.
3.2.8 RECOMMENDED STRATEGY FOR SELECTING EQUIPMENT
There are a number of meat processing equipment suppliers available with the
state of art technology like machines that automatically undertake skinning
process and perform other sophisticated processes but it is not advisable that they
be used in the beginning, especially in light of cultural and religious customs.
Such machinery will also increase the project cost to a great degree. It is
suggested that the proposed slaughterhouse should adopt non-sophisticated
technology at first stage and after due consideration and analysis when
management will have experience coupled with demand of importing countries, it
may adopt more sophisticated technologies.
3.2.9 TECHNICAL STAFF REQUIREMENT FOR SLAUGHTER HOUSEAs no modern fully automated Slaughter House exists in Pakistan, the sponsors
will have to train the local labor in its operation. Semi-skilled and unskilled labor
with a family tradition of working in the meat chain are readily available in the
area. In addition, the required managerial staff is also readily available as are the
veterinary staff for checking the animals.
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3.2.10 TRANSPORTATION OF MEAT
It is anticipated that the transportation of processed meat for the local market will
be done in the Companys own refrigerated vans. The meat will be sold in shops
which have the provision for keeping the meat at the correct temperature. There
are a large number of small stores and now supermarkets which deal in frozen
poultry products. These may be solicited for keeping beef and mutton products as
well.
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CHAPTER 4
GOVERNANCE AND MANAGEMENT STRUCTURE
4.1 GOVERNANCE STRUCTUREIt is proposed that a special purpose company be set-up to establish and operate
the proposed cattle farming and meat processing unit. The Companies Ordinance
1984 with amendments thereof, and Code of Corporate Governance issued by
the Securities and Exchange Commission of Pakistan (SECP) regulate
establishment and governance of a limited company (public or private) in
Pakistan.
Corporate Governance is a set of institutional and market-based mechanisms that
encourage controllers of a company to maximize the value of a company for its
owners. The conduct of the corporation is a three-way process involving the board
of directors representing the shareholders, top management and employees. At the
core of corporate governance is empowerment at all levels shareholders, the
board, and top management. The law applicable to a company is the law of the
country.
Principles and rules on corporate governance need to be laid down in the Articles
& Memorandum of Association (Incorporation) and the Regulations of Board of
Directors. The proposed governance structure is illustrated on the following page.
The business of the company is to be managed under the directions of the Board
of Directors. The Board will be responsible for establishing broad corporate
policies and for the overall performance of the company. The core responsibility
of the directors is to exercise their business judgment and to act in what they
reasonably believe to be in the best interests of the company.
The Boards Corporate Governance Committee is required to review the
principles and rules regularly in the light of prevailing best practices and it is
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required to forward suggestions for improvement to the Board for approval.
The Boards Corporate Governance Committee is also responsible for considering
matters of corporate social responsibility and matters of significance in areas
related to corporate public affairs and the company employees and shareholders.
The Boards job should be to create and maintain a structure that will ensure
harmony and cooperation between management and the employees in pursuing
the goals and objectives of the organization rather than simply rubber-stamping
the actions of management.
The Boards Audit Committee will have two fundamental responsibilities;
internally it will oversee the annual external audit to ensure the accuracy and
integrity of the financial statements as required by legislation. It will also ensure
that there are no breakdowns in corporate governance rules and procedures,
including the rules of ethical conduct and internal control. The Audit Committee
would also be the practical monitor collecting information regarding corporate
misconduct and encouraging those with such information to come forward.
FIGURE 2
PROPOSED GOVERNANCE STRUCTURE
The CompanyShare-Holders
Board of Directors
Chairman
Chief Executive
Officer
CorporateGovernance
Committee
Corporate AuditCommittee
PlantManager
ManagerProcurement
ManagerMarketing
ManagerFinance
ManagerCattleFarm
ManagerHR &Admin
Manager Quality Internal Auditor
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4.2 MANAGEMENT STRUCTURE
The paramount duty of the Board of Directors is to select a Chief Executive
Officer (CEO) and to oversee the CEO and other senior management staff in the
proper and ethical operation of the company.
The Board would identify, and periodically update the qualities and
characteristics necessary for an effective CEO of the company. With these
principles in mind, the Board should periodically monitor and review the
development and progression of potential internal candidates against these
standards.
The CEO will be in-charge of the day-to-day management of operations and will
be responsible for ensuring that the company and management functions are
organized, run and developed in accordance with the law, Articles of Association
and decisions taken by the Board, and the Annual General Meeting of the
Shareholders.
The management structure, presented in Figure 6, comprises of various
departments including cattle farming, plant operations, procurement of cattle,
buffalos, sheep and goats for slaughter and processing, quality assurance, human
resource, finance, marketing & sales, internal audit and field staff.
The structure is characterized by clear assignment of responsibilities as well as a
reduced number of interfaces.
The selected CEO will be responsible for delivering policy and performance for
customers, society, staff, suppliers and the business. The core activities are briefly
described as under:
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Cha
irman
Direc
tors
Secre
tary
Genera
lManager
ChiefEng
ineer
ChiefAccoun
tat
Eng
ineer
(QC)
ChiefEng
ineer
Managers
Foremen
Ma
intenance
Eng
ineer
Plan
tEng
ineer
Tec
hn
ican
Jr.
Officers
Staff
Loa
der
QC
- - - 1 1 - - - - 8 1 - 6 4 20 10 -
- - - 1 - 1 - - 2 10 - - 5 5 30 20 10
- - 1 - - - - - - - - - - - - - -
- - - 1 - - - - 2 10 - - 5 - 4 10 2
1 6 - - - - - - - - - - - - - - -
- - - 1 - - - - 2 - - - - 10 10 - -
- - - 1 - 1 - - 1 - - - - 4 10 - -
- - - - - - - - 1 - - - - 4 6 - -
1 6 1 5 1 2 0 0 8 28 1 0 16 27 80 40 12
CHART - 1
HUMAN RESOURCE DEPLO
Processing
Plant Manager
Secretary
Board
- Chairman
- Directors (6)
Live Animal
Procurement
Marketing
Finance
Total
The Company
Corporate Audit
Committee
HR &
Admin
CEO
Cattle Farm
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4.3 LIVE ANIMAL PROCUREMENT & TRANSPORTATIONThis department will be responsible for purchasing live animals from the local
animal markets, the success of the project will hinge on this crucial function, as it
will only be successful in the long run if it is able to have a secure and regularsupply of healthy animals at competitive prices. Other than the main animal
market in Karachi, a sub-office will be opened in Tharparkar near the Indian
border to purchase animals which are brought from India for sale in Pakistan. In
addition to the purchase of the animals, it will also be ensured that animals are not
stressed during transportation. For this purpose the Companys own transportation
will be used. Each animal purchased will be marked by the purchase team to
ensure that it can be if required, traced back to the supplier. As a control measure,
all animals will be weighed and checked to ensure that the correct rates have been
paid for the animals purchased. In addition a team will also visit the farmers to
motivate them to raise their male buffalo calves for meat and prices will be
ensured so that the farmer can become a source of regular supply of quality beef
and mutton. The department will undertake activities to promote livestock
farming to ensure regular supply of live animals on the same pattern as has been
done by the dairy companies.
4.4 PLANT OPERATIONSA Plant Engineer with a degree in food processing will be appointed to run the
meat processing plant after proper training by the plant and equipment supplier.
He will be assisted by qualified and experienced staff including quality assurance
staff h