The poultry industry, which faces many challenges including high volatility of price manipulation after the country’s feed mills, has witnessed decline instead of growth with an overall 40% reduction in the industry due to poorly planned strategies.
Industry experts attribute this decline to the poorly planned and poorly managed broiler industry, lack of ideal husbandry practices, unsanitary conditions, poor biosecurity, quarantine, return on investment (ROI) and risky feed transactions, among others. . They highlight the volatility of the industry, where chicken prices often fluctuate between Rs 550 per kilogram (kg) to Rs 250 per kg due to various reasons, occasionally shooting up due to poor supply and demand mechanism in the local market.
In discussions with The Express Tribune, they note that the poultry industry has been facing challenges for over six years now, with the industry’s growth rate of 7% to 8% per annum declining by 40%. The feed industry has shrunk to barely 5.5 or 6.5 million tonnes a year compared to 9 or 9.5 million tonnes produced six years ago.
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CEO of Hi-Tech Group of Companies, Dr. Muhammad Arshad, believes that tuning the return on investment (ROI) will logically lead to the industry reinvesting at least 50% of its profit in commercial broiler farming and regaining an expansion of 6-8%. %, as it used to be when feed gains from listed rations were 8% to 10%.
“The poultry industry is facing a phase of decline, one of the main reasons being unviable feed prices, making it a more capital intensive industry. Feeds are sold on a credit basis, mostly risky transactions where failure often occurs. Feed mills practically function as banks, with feedstock suppliers as depositors and customers as borrowers. If the banks do not charge an adequate markup [the feed industry does not make adequate profits], they become unable to make further loans. Moreover, if the borrowers [feed buyers] do not repay on time, the bank’s investment will further decrease,” he explains.
Since the feed industry does not make adequate profits, it lacks the financial capacity to offer more credit to customers, which sharply reduces the volume of the industry. Dr Arshad points out that a few years ago, when the industry was growing, profits of 8% to 10% were made on quoted feed prices, while now these profits are only around 3%.
“This is an integrated system operated by the entire poultry industry, including feed mills, poultry farms, volatile broiler rates and more. In addition to supply and demand, the government manipulates poultry prices to set or create a political narrative in the short term, which impacts the industry in the long term. During Ramazan, the government cuts prices, taking a heavy toll on small farmers. This system is dependent on luck; once the weather is cold, the birds get some infectious diseases and the numbers go down, the entire chain of industry or system has to face heavy losses,” says Mohammad Usman Ghani, Director, Salva Feed Mills Private Limited Okara.
He notes that demand for poultry drops significantly ahead of Eidul Azha, when mutton and beef are in demand, impacting lackluster sales in every part of the industry. Stressing that this is a vulnerable sector requiring government support, Ghani suggests export incentives, opening letters of credit (LC) for importing essential chicken feed ingredients and stopping price manipulation in the broiler market, which matters a lot.
