OPPORTUNITIES IN LIVESTOCK SECTOR IN PAKISTAN
Dr. M. Afzal
Published in "The News" Rawalpindi / Islamabad, Lahore and Karachi on September 18, 2006
Agriculture continues to be the
largest sector of economy and is currently contributing 23.1 per cent to the
gross domestic product (GDP). Livestock is the most important sub-sector of
agriculture with national GDP contribution of 10.8 per cent and 46.8 per cent to
the agriculture value added. Livestock also contributes significantly towards
national exports and 8.5 - 9.0 per cent of total exports belong to this sector.
This sector provides raw material for the industry and livestock creates market
and capital. It serves as a social security for the rural poor as they can cash
it at the time of their need. Livestock also provides security against crop
failure particularly in Barani areas.
The national herd consists of 24.2 million cattle, 26.3 million buffaloes, 24.9 million sheep, 56.7 million goats and 0.8 million camel. In addition to these there is a vibrant poultry sector in the country with more than 530 million birds produced annually. These animals produce 29.472 million tons of milk, making Pakistan 5th largest producer of milk in the world, 1.115 million tons of beef, 0.740 million tons of mutton, 0.416 million tons of poultry meat, 8.528 billion eggs, 40.2 thousand tons of wool, 21.5 thousand tons of hair and 51.2 million skins and hides. The distribution of livestock is not even among different provinces (table 1). Buffaloes are main dairy animal and are mainly raised in Punjab (60.8 per cent) and Sindh (31.8 per cent). Buffaloes are now making inroads in other provinces, Azad Jammu & Kashmir and even Northern Areas. Cattle have traditionally been raised for draught and are distributed in approximately according to areas in different provinces except Balochistan where only 6.4 per cent cattle are present. Balochistan harbours majority of sheep as this province alone has 44.2 per cent of the sheep population of the country.
Table-1: Distribution of livestock in different provinces of Pakistan
Source: Economic Survey (2004-05)
A number of favourable factors favour investment in livestock sector. The demands are increasing for livestock products due to urbanisation and economic development. The current growth rate for milk is 2.9 per cent and for meat 3.2 per cent. The growth rate is expected at 3.2 and 4.3 per cent for milk and meat respectively in next five years with modest public sector investment. The demand for milk and meat is projected at least at a growth rate of 5.0 per cent for milk and 6.5 per cent for meat.
Private sector investment is driven by profit motive. An important factor for profit is lower cost of production. The cost of production for livestock products is generally low in the country. For milk production cost, Pakistan is ranked among the countries with lowest cost of production in the world. The cost of labour is also low as compared to all the developed and many developing countries.
Pakistan is geographically located close to the Middle East and South-East Asia. Both of these regions are deficient in livestock products and depend upon import from other countries. The livestock industry in most of the developed world is highly subsidised. With reduction of subsidies in the wake of WTO, the local livestock sector should have better opportunities to compete.
The government has taken a large number of initiatives for the development of livestock sector in the country. The important initiatives in this regard are:
(1) Approximately 11-15 per cent of credit given to agriculture is used for livestock activities. Collateral issue has been major impediment in availability of credit for the land-less and small farmers. Some banks are bringing new products for these clients and government is building capacity of 5 banks for lending to horticulture and livestock under a project on agribusiness development and diversification project.
(2) Two government-guaranteed private sector companies have been made for increasing facilitation of development of livestock sector. These are Livestock and Dairy Development Board and Pakistan Dairy Development Company.
(3) Important public sector development projects in this regard include strengthening of livestock services (EU-PAK funded Rs1.92 billion), Prime Minister's Livestock Initiative (Rs1.7 billion for working with rural support programmes), Pakistan Dairy Development Company (Rs347 million for model dairy farms, milk marketing and research), milk collection/processing and improvement programme (Rs1.97 billion) and meat development programme (Rs1.8 billion).
(4) Artificial insemination in public sector for the last 30 years has resulted in only 10 per cent coverage of breedable animals. With acute shortage of bulls for natural breeding, the scope of artificial insemination is going to increase. This clearly shows that artificial insemination service in private sector has great scope.
(5) Specialised dairy farms in rural set-ups offer much better profitability as the fodder availability is adequate and crop by-products are cheaper and easily available. Thus setting dairy farms of at least medium size offers good investment opportunity.
(6) Currently most of bacterial vaccines are being produced in both public and private sectors. However, viral vaccines like sheep and goat pox vaccines for livestock diseases are only produced in the public sector.
(7) Seed production and sale of high yielding multi-cut fodder varieties: Availability of good quality seed of fodder crop particularly high-yielding multi-cut varieties is a major problem. In fact there are two lean seasons for fodder in the country. Fodder varieties, which ensure round the year fodder availability, are in high demand. These varieties may initially be imported but later on local seed production of such fodder varieties makes a good investment sense.
(8) Pakistan has well-developed poultry feed industry. However, the cattle feed industry is now emerging. Although there are now about 22 cattle feed production units in the country, these still cater for less than 5 per cent of the required concentrate needs.
(9) Dairy industry is mainly dependent on production of UHT milk. While the market for UHT milk is expected to expand, there is need to diversify the products.
(10) The only way to meet the demand of mutton and beef in the country locally is conversion to feed lot fattening. Previously the price of meat was low and fattening did not result in improved profit.
(11) The future growth of the poultry industry will depend upon vertical integration of different components. At broiler and layer level, the integrated poultry production units will need to go into contract farming.
(12) With improved education and income of the people, the demand for hygienically slaughtered poultry is expected to improve. With increased refrigeration facilities at the retail outlets, the storage of chilled and frozen poultry products is becoming easier. The trend of processed poultry products (chilled/frozen poultry, various cuts of meat, etc) is increasing and there are already 2 processing units of poultry. Keeping in the view the recent trend, the investment in processing units of poultry make a good investment sense.
(13) With a very large livestock population and progressing poultry industry, the demand for veterinary pharmaceuticals is very much there. In fact the total veterinary pharmaceutical market in the country exceeds 500 million rupees annually. Import bill per annum exceeds 200 million rupees.
(14) Business advisory services for livestock are completely lacking in the country. In fact this is one of the major reasons for investors shying away from this sector. Setting up livestock business advisory service centres will be a good investment for professionals.
(15) Milk is traditionally collected by "Gowallas" in the villages and brought to the collection centres of dairy plants, establishment of milk collection centres in the milk pockets with chillers offer a good investment as the quality and quantity of milk procured will be improved.
All said, Pakistan is the 5th largest producer of milk in the world. However, only 2.5 to 3.0 per cent of this milk is being processed. The obstacles in this regard are the collection of good quality milk as well as storage and delivery.
If attention is paid to this sector and effort is made, the country will hopefully be able to tap into the export potential of this commodity and go a long way in improving rural poverty.