Cheap imports make poultry industry’s survival difficult

Some producers shutting plants, starting imports from Malaysia

Khawaja Amer May 24, 2015

KARACHI: Protein is an essential component of human diet and is regarded a vital element by leading physicians. In a country where malnutrition is a common ailment, there is an increasing focus on making the chicken industry modern and efficient.

At a time when the government should be encouraging and supporting the domestic poultry sector, it has withdrawn the zero-rated status for value-added, processed, frozen and packed poultry products. As a result, the cost of production has gone up by Rs20 to Rs40 depending on the product, depriving many children and youth of a relatively cheap source of protein.

Pakistan Poultry Association (PPA) Chairman Khalil Sattar says the government has compounded the problem by imposing import duty in the range of 5% to 30% plus sales tax on ingredients used by local producers of value-added chicken; while similar chicken products are allowed to be imported under the Free Trade Agreement (FTA) from Malaysia at 0% and at 10-16% import duty and free from sales tax from China.

On the other hand, he says, none of the two countries considers Pakistan compliant with their regulations for poultry processing and poultry health monitoring and as such Pakistani producers cannot export to Malaysia or China. This aspect, whether inadvertently or consciously, has also not been taken into consideration while opening the doors for importers of various ranges of finished poultry at the cost of local producers.

Khalil observes that one of the greatest ironies is the fact that under the South Asia Free Trade Agreement (Safta), processed chicken meat and value-added products can be imported from India at 5% duty and 0% sales tax, whereas India has placed imports from Pakistan in the sensitive list.

Moreover, he says these anomalies and contradictions result in some of the local producers of value-added chicken products shutting their plants, starting import of finished products from Malaysia and repacking them under their brand name.

In the past, a number of firms namely Pakistan Poultry Produce, Jiffey Chicken, Modern Poultry Processor, KK Chicks, Bibi Jan and J-Haziat International succumbed to the highly uneven competition from the unorganised and undocumented sector.

Chicken processing units have now become one of the most essential and vibrant contributors of frozen food worldwide. Brisk consumption of chicken, in fact, has become a way of life, which has led to the rapid expansion of the chicken market in the world.

Chicken farms are all part of this phenomenal expansion. The poultry industry in Pakistan has made a significant contribution to the enhancement of food production. There is no denying the fact that poultry farming is of extreme importance to the country, especially in terms of offering better food and animal proteins in a more accessible and cheaper way.

Explaining the impact of government’s policy on the poultry industry, the PPA chairman said, “The outcome of this phenomenon is exceedingly demoralising. A 40-feet container of 25 tons of chicken breast meat will adversely affect local production of 183,480 broilers, 2,042 parent breeders and 830,000 kg of poultry feed, which means a blow of Rs58.71 million to the GDP and above all slaughter of 36,000 man-hours of bread earners.”

Highlighting the problems of poultry processors, Khalil said, “We have to pay heavy labour cost, heavy overheads, huge electricity and gas bills, taxes like social security, EOBI, Workers Profit Participation Fund, Workers Welfare Fund, contribution to provident fund, the sum is Rs20 to Rs40 per kg depending on the product.”

“On the other hand, the cost to the unrecognised live bird and street side slaughter wet market is not more than Rs4 per kg. The unorganised sector pays no taxes at all whereas the organised sector pays all kind of taxes and produces safe and healthy products. Such gross discrimination has made the survival of the poultry industry a bit too difficult.”

Khalil is of the view that currently there are only two organised poultry processors in the country, processing less than 2% of total chicken produced in the country and is in emerging stages. These plants are making endeavours against all odds, thus they need full government support. Only a successful poultry processing sector could stabilise the current roller coaster prices of poultry and build an exportable surplus.

The writer is a freelance contributor on economic issues

Published in The Express Tribune, May 25th,  2015.

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ABC | 6 years ago | Reply Hilarious! Every industry in Pakistan requires protection.
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