PHOTO:EXPRESS/FILE
Traditionally referring to meat and poultry only, halal has grown to include non-meat products like processed food, dairy produce, beverages, pharmaceutical products and more recently non-food products like cosmetics, leather goods, etc.
Determining the precise size of the halal market has been challenging so far due to the absence of separate harmonised system (HS) codes, and non-segmentation of natural products eg grains, fruits and vegetables being intrinsically halal. The global halal market is estimated at $1.5 trillion, growing from $635 billion in 2010, and is forecast to reach $2 trillion by 2023.
In its sub-categories, the halal food market is estimated to increase from $1.3 trillion in 2017 to $1.8 trillion by 2023, halal pharmaceuticals from $87 billion to $131 billion and halal cosmetics from $61 billion to $90 billion.
The core consumer base of halal products comprises around 1.8 billion Muslim population of the world, growing at twice the rate of non-Muslim population. The 57 Organisation of Islamic Cooperation (OIC) countries, many of them being net food importers, have a collective GDP (PPP) of $29 trillion.
The halal market, however, is not limited to the OIC countries as it includes other countries with significant Muslim populations.
Halal meat products are gaining popularity even with non-Muslim consumers due to food safety and humane treatment of animals associated with halal. The halal products are increasingly made available in mainstream supermarkets, hypermarkets and convenience stores in Europe eg Tesco, Carrefour, Aldi, Lidl, etc.
Owing to the growth potential, halal is no more viewed by the economic operators as an exclusive niche market but a new commercial paradigm. Interestingly, amongst the top five halal meat exporting countries (Brazil, Australia, India, France and China), none is a Muslim country.
In view of the high growth potential in the halal market, the countries, regardless of the religious beliefs of their majority population, are leveraging their production strength to capture the market share.
Australia and New Zealand are capitalising on their perception as safe and high-quality food suppliers to penetrate the halal segment. Thailand is developing a robust halal regulatory system with state-of-the-art Halal Research Centre.
The Philippines has developed the Asia Halal Centre and promulgated the Halal Export Development and Promotion Act to develop and apply halal standards and practices. China, through the Belt and Road Initiative, is positioning to be a leading halal food exporter and has invested substantially in domestic halal food companies and around $350 billion in the Dubai Halal Food Park.
The compelling business opportunities have attracted multinational enterprises (MNEs) and global suppliers, regardless of the religious affiliations, to seize market share with aggressive production and marketing strategies. For instance, the Nestle Group has 150 halal facilities out of the total of 477 factories across the globe, exporting products to 51 countries.
Success factors
There are three critical success factors for tapping the potential in the halal marketplace. First, the halal certification is the basic market access requirement so that the consumer has confidence in the product’s halal status. Also, in order to forestall false claims, the reliability of the certificate itself is essential through the recognition of halal certification bodies in the export market.
Second, a reliable traceability mechanism is the sine qua non for establishing the halal integrity of the product by conforming to the halal standards and guidelines. Halal is a farm-to-fork process with compliance at all stages of the supply chain – halal purchasing, production, packaging, labelling, warehousing, transportation and consumption.
Third and the most important factor is the competitiveness of production, ensuring food safety and quality. The fact that leading halal exporting countries and corporations are non-Muslim, indicates that market dominance is driven primarily by the competitive cost of production and reputation for safe and high-quality food production - the halal certification becomes a mere add on.
Pakistan’s participation in the fast growing halal market has been insignificant. In the country, the effort at capitalising on the halal potential has remained limited to developing the halal certification system, that too with limited success. There has been little focus, even acknowledgment, of a competitive production environment and food safety as the most critical success factor.
Despite being an agricultural country, Pakistan remains a net food importer with $6.2 billion in imports and $4.8 billion worth of exports.
Strategy
In order to effectively penetrate the fast-growing global halal market, a multi-dimensional export development strategy is required. First, the halal certification and robust traceability mechanism needs to be put in place without any further delay.
Second, it is to be acknowledged that halal certification is a necessary but not sufficient condition for entry into the halal export market. The real driver is the competitive production environment, which largely depends on farm and industrial productivity.
Third, deeper penetration into the halal market in the short term would come from MNEs using Pakistan as a production base for exports to the global market. Through policy readjustment, the MNEs are to be coaxed into a major shift from viewing Pakistan as a consumer market for their products to a production base for exports to the global halal marketplace.
As a spinoff, the local SMEs will benefit through sub-contracting, indirect exports and learning through imitation.
Fourth, the capacity of SMEs should be built on halal import regulations of importing countries, packaging and labelling requirements of import markets and customising product offerings to suit local tastes.
On the market side, Pakistan’s geographical proximity can be leveraged to make the country a production base for supply to regional markets, especially the Middle East, which is a major halal food importing market, with high incomes and per capita rates of consumption.
To conclude, the potential in the fast growing global halal marketplace is huge, but making large strides in the halal export market depends critically on the competitively produced exportable surplus.
The writer is the Director General (Trade Policy), Ministry of Commerce
Published in The Express Tribune, June 10th, 2019.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ