Poultry feed producer demands effective policy framework
Lack of regulation resulting in low quality production going on unchecked
Chicken are pictured at a poultry factory in Lapa city, Parana state, Brazil, May 31, 2016. PHOTO: REUTERS
LAHORE:
Stakeholders of Pakistan’s poultry sector have demanded that the government introduce proper legislation for the sector, especially for those involved in the poultry feed business.
The demand has arisen from feed millers who believe that this segment plays a crucial role in the entire poultry value chain. They directed their ire towards the millers who use non-food grade ingredients to produce the feed and resultantly create problems in the formal sector.
“I believe that the entire poultry sector may witness sluggish growth in coming years till the government intervenes and creates an effective policy framework,” SS Feed Mills CEO Shahzad Ali Khan said in an interview with The Express Tribune.
The government, Khan said, should specify ingredients that can be used in producing poultry feed. This will prevent 30% of millers in the informal sector and home millers using non-food grade ingredients from operating and damaging the reputation of the entire poultry feed industry.
Poultry feed products free of pork fat, meat: industry
“The feed business is operating under tight margins (3-4% profits) and this unorganised sector is creating more problems for us,” Khan said, alleging that rumours circulating on social media about low-quality produce were sparked by the role played by home mixers and millers in the unorganised sector.
For Khan, the sector as a whole is currently passing through a transitional period, where the entire value chain is striving to automate its production procedures and bring them along modern lines. This was possible due to robust investments over the last decade.
According to him, billions of dollars have already been invested and majority of recent investments were meant to upgrade commercial farming, from conventional sheds to environmentally controlled ones, and automate mills.
As per industry statistics, there are around 25,000 environmentally controlled poultry sheds in Pakistan. Average cost of building such a shed is about Rs150 million. This roughly implies a total investment of Rs375 billion or $3.75 billion in poultry sheds.
Apart from sheds, there are more than 100 feed mills operating under the organised sector. It costs between Rs500 and Rs600 million to complete an automated feed mill and, according to Khan, almost the same amount of capital is required to run its operations.
Taking an average of Rs500 million for a mill means that more than Rs50 billion has been invested in this segment as fixed investments. “This sector still falls under the cottage industry despite billions of dollars being invested by the stakeholders,” Khan deplored, adding the huge industry now needs legislative action for further growth.
SS Feeds is a sister concern of SS group of companies which simultaneously operates oil, edible oil, spinning and commodities businesses for the past 25 years with annual turnover of Rs8 billion in 2016.
The group’s feed business was initiated in 2016 with the help of Chinese company Muyang Holdings Co Ltd with an initial investment of Rs600 million to set up a fully automated plant on turnkey basis.
Poultry shortage feared in coming weeks
The industry currently is producing surplus feed. According to Khan, the annual feed production is around 15 million tons whereas consumption stands at around 10 million tons.
As recent sluggish performance of the sector is forcing some small and medium-sized players to switch their business, Khan said in future only those groups will survive which will invest in the entire poultry value chain including breeder, layer, commercial farming, feed mills and processing.
“In recent years, several producers have started investing in the entire value chain and some foreign companies are also successfully making profits. The processed chicken industry currently stands at around 4% of the total industry and this is the sector which will flourish in future,” Khan said.
He added that they are also planning to expand to other segments of the poultry industry.
Published in The Express Tribune, September 5th, 2017.
Stakeholders of Pakistan’s poultry sector have demanded that the government introduce proper legislation for the sector, especially for those involved in the poultry feed business.
The demand has arisen from feed millers who believe that this segment plays a crucial role in the entire poultry value chain. They directed their ire towards the millers who use non-food grade ingredients to produce the feed and resultantly create problems in the formal sector.
“I believe that the entire poultry sector may witness sluggish growth in coming years till the government intervenes and creates an effective policy framework,” SS Feed Mills CEO Shahzad Ali Khan said in an interview with The Express Tribune.
The government, Khan said, should specify ingredients that can be used in producing poultry feed. This will prevent 30% of millers in the informal sector and home millers using non-food grade ingredients from operating and damaging the reputation of the entire poultry feed industry.
Poultry feed products free of pork fat, meat: industry
“The feed business is operating under tight margins (3-4% profits) and this unorganised sector is creating more problems for us,” Khan said, alleging that rumours circulating on social media about low-quality produce were sparked by the role played by home mixers and millers in the unorganised sector.
For Khan, the sector as a whole is currently passing through a transitional period, where the entire value chain is striving to automate its production procedures and bring them along modern lines. This was possible due to robust investments over the last decade.
According to him, billions of dollars have already been invested and majority of recent investments were meant to upgrade commercial farming, from conventional sheds to environmentally controlled ones, and automate mills.
As per industry statistics, there are around 25,000 environmentally controlled poultry sheds in Pakistan. Average cost of building such a shed is about Rs150 million. This roughly implies a total investment of Rs375 billion or $3.75 billion in poultry sheds.
Apart from sheds, there are more than 100 feed mills operating under the organised sector. It costs between Rs500 and Rs600 million to complete an automated feed mill and, according to Khan, almost the same amount of capital is required to run its operations.
Taking an average of Rs500 million for a mill means that more than Rs50 billion has been invested in this segment as fixed investments. “This sector still falls under the cottage industry despite billions of dollars being invested by the stakeholders,” Khan deplored, adding the huge industry now needs legislative action for further growth.
SS Feeds is a sister concern of SS group of companies which simultaneously operates oil, edible oil, spinning and commodities businesses for the past 25 years with annual turnover of Rs8 billion in 2016.
The group’s feed business was initiated in 2016 with the help of Chinese company Muyang Holdings Co Ltd with an initial investment of Rs600 million to set up a fully automated plant on turnkey basis.
Poultry shortage feared in coming weeks
The industry currently is producing surplus feed. According to Khan, the annual feed production is around 15 million tons whereas consumption stands at around 10 million tons.
As recent sluggish performance of the sector is forcing some small and medium-sized players to switch their business, Khan said in future only those groups will survive which will invest in the entire poultry value chain including breeder, layer, commercial farming, feed mills and processing.
“In recent years, several producers have started investing in the entire value chain and some foreign companies are also successfully making profits. The processed chicken industry currently stands at around 4% of the total industry and this is the sector which will flourish in future,” Khan said.
He added that they are also planning to expand to other segments of the poultry industry.
Published in The Express Tribune, September 5th, 2017.