Billion dollar industry: Meaty money

The animal markets all around you are no small business. It’s a billion dollar industry.

KARACHI:

Religious zeal, a booming population and a slowly growing economy is the recipe for the big money in the buy and sale of animals on Eidul Azha. This year this business has managed to hit the impressive mark of $1 billion in Pakistan, according to conservative estimates of economic analysts.

Economic experts say that despite a steep rise in the prices of animals and an overall increase in inflation, the trend of slaughtering animals on Eid-ul-Azha has grown over the last few years.

“Eid-ul-Azha is a natural type of stimulus for Pakistan’s economy,” said Faisal Shahji, Head of Research, Standard Capital Securities, a brokerage house.

According to Shahji’s rough estimates, this year’s overall economic activity on Eid ul Azha would be in Rs100-110 billion (or over $1 billion). He says the conservative estimate of Pakistanis who sacrifice animals every year is over 8 million. This year’s average spending per sacrifice is expected to remain in the range of Rs10,000-12,000. This means the overall spending on animals will be between Rs80-96 billion.



Shahji rightly pointed out to the economic impact of job opportunities that our unskilled workers get every year on the occasion. People who raise animals, transporters, loaders, butchers – all gain from the meat game.

“The spillover effect of the spending of billions of rupees on Eid-ul-Azha is huge,” said Atif Zafar, analyst at JS Global Capital, a leading brokerage house in Karachi.

Sending money home for sacrifice

The national economy gets a boost every year when there is a rise in remittances that overseas Pakistanis send to their relatives to perform this ritual on their behalf.

There are many reasons why Pakistanis send money to Pakistan for this religious ritual, instead of performing it wherever they are living. The foremost reason is that the animals in Pakistan can be bought at one of the cheapest rates in the world. Secondly, sacrificing animals in other countries has many restrictions compared to Pakistan.

Last year, Pakistanis remitted around $13.9 billion foreign exchange or over $1.1 billion a month. And average monthly remittances in the month of Eid-ul-Azha jump every year by an additional $100-200 million (or Rs10.5-20.5 billion).

This helps stabilise the value of Pakistani rupee.

“The foreign exchange coming to Pakistan on Eid-ul-Azha may not bring any big change in the economic situation of Pakistan. But it surely has a positive impact on the economy,” Zafar added.

Zafar and other analysts are convinced that one cannot find out the exact size of economic activity generated every year on Eid-ul-Azha but are convinced that the size of business activities are in billions of rupees.

Collateral benefits

There are many industries in Pakistan that receive a direct stimulus on Eid-ul-Azha. The leading sectors are leather industry, cement industry, livestock and agriculture. Indirect benefit reaches yet other industries.

For instance, when farmers and investors in livestock sector get returns on their annual investments on Eid, they buy new automobiles, tractors, renovate houses and purchase various other items that are part of the rural economy.

“Eid-ul-Azha is one of the festivals for which we wait throughout the year,” said Gulzar Feroz, Former Chairman Pakistan Tanners Association. The leather industry of the country gets over 30% of its raw material (that is, animals skins) from sacrificial animals of Eid-ul-Azha. According to him, the leather industry of Pakistan is going to get animal skins worth over Rs12 billion this year.

As per the estimates of tanners association, Pakistanis are going to sacrifice over 5 million goats and sheep and over 1.5 million cows this Eid-ul-Azha.

Published in The Express Tribune, October 16^th, 2013.