Research Studies completed

i). A Value Chain Analysis of the Meat Sector in Pakistan

• Meat value chain is comprised of five segments namely “Inputs”, “Production of Meat

Animal”, “Marketing of Meat Animals”, “Processing (Slaughtering)” and “Meat Distribution

(Domestic and Export Markets)”.

• “Inputs” 1st segment includes genetic (breeds of meat animals), feed (green, dry fodders,

concentrates and pastures) and veterinary services (medicine, vaccination and artificial

insemination). There are transboundry breeds namely Sahiwal and Thari cattles, Nili Ravi

buffaloes and Beetal goats. There are no beef breeds of cattle in Pakistan and therefore

beef is at best a by-product. Haphazard breeding is prevailing along with traditional

unscientific management that is compounded by the low genetic ceiling of the livestock.

Fodder availability/adult animal unit has declined 1.5 ton from 1996 to 0.80 ton in 2006.

Likewise wheat straw availability per adult animal unit has declined from 0.323 ton in 1996

to 0.307 ton in 2006.

• Concentrates availability per adult animal unit has declined from 0.04 ton in 1996 to 0.036

ton in 2006. Rangeland per adult animal unit – small ruminants is only 4.76 ha/annum – low

productivity of rangeland due to over grazing and exploitation. During the current era these

children prefer to go for daily wage work rather than grazing and grass cutting due to social

status of herders. The decline in feed resulted to high cost of feeds. Number of nomadic

from Afghanistan has also disappeared due to war and terror. Such decline of availability for

green and dry fodders and concentrates overtime led to poor and inadequate nutrition

which resulted in low animal productivity. Large and small ruminants are performing much

below their genetic potential due to poor and inadequate nutrition which lead to

compounded by the low genetic ceiling of livestock.

• The availability of veterinary services (a veterinary hospital, a veterinary dispensary and a

artificial insemination centre is available for 86575, 13852 and 69260 adult animals unit

respectively during 2006 Livestock Census. A veterinary professional and a sub-professional

is available for 34630 and 13852 adult animal unit during 2006 livestock census) is limited

due to which high disease and high mortality are occurring. The veterinary medicines are

also very expensive in the view of livestock and level of farmer’s satisfaction is poor.

• The binding constraints/obstacles facing first segment of meat value chain are (i) haphazard

breeding and traditional unscientific management (ii) the decline of availability for green

and dry fodders, concentrates and pasture overtime led to poor and inadequate nutrition (iii)

limited availability of veterinary services and expensive medicines, livestock herders are

using at low level of veterinary services (iv) earlier, the children of small farmers were

involved in grazing animal and cutting of grasses for animal. During the current era these

children prefer to go for daily wage work rather than grazing and grass cutting due to social

status. Due to limited availability of genetics, feed and veterinary services along with

expensive medicines, livestock herders and flock owners are using these at low level

resulting poor management and productivity of meat animals in the country.

• Under the “Production of Meat Animals” segment of value chain, meat animals produced

were 24.493 million heads with a value of Rs.266.557 billion during 2008–09 in the country.

Out of which beef animals were 7.673 million heads with a value of Rs.173.5965 billion

including cattle (3.973 million heads with a value of Rs.93.172 billion) and buffaloes (3.676

million heads with a value of Rs.79.6245 billion). The mutton animals (sheep and goats)

were 16.82 million heads with a value of Rs.92.960 billion including sheep (4.8993 million

heads with a value of Rs.36.0768 billion) and goat (11.927 million heads with a value of

Rs.56.8834 billion). Analysis of cost of production of large ruminants at feed lot farming

revealed that farmers are earning net income of Rs.436/- per animal. Similarly, cost of

production of small ruminants with feed lot farming revealed that farmers are earning net

income of Rs.103/- per animal. This implies that feed lot farming (raising beef and mutton

animals) with concentrate to bring them to slaughter weight and feed lot farming is

profitable enterprise. A portion of meat sub-sector is made up of dairy meat and mutton

that comes from in-milking cows and buffaloes, female sheep and female goats culled from

dairy herds because for age and other reasons, they are not productive for dairy purposes

and reproductive potential.

• The major factors contributing towards low productivity are (i) weak and unhealthy stock

and breeding lines because no beef breeds of cattle (ii) no concept of herd health

management (iii) low output due to low input system (iv) raising meat animal with

traditional system is not profitable enterprise and (v) social system has broken due to

inflation and ag-inflation is even higher. All these factors translate into a existing very weak

livestock extension services in the country.

• Under “Marketing of Meat Animals” segment of value chain, meat animals marketed was

24.493 million heads during 2008-09 which includes domestic marketing (24.495 m.h) and

animal exported (33477 with a export value of Rs.309.01 million). Traditional farmers, feed

lot fattening farmers and exporter own farm marketed 23.764, 0.514, and 0.220 million

heads were marketed respectively during 2009. Meat animals were marketed through five

channels. Channel-1 includes farmer to beopari (80%), farmer to live animal market (5%),

and farmer to rural butcher (15%). Channel-2 deals with beopari to live animal market

(98%), and beopair to rural butcher (2%). Channel-3 includes animal market to contractors

(52%), animal market to traveler traders (15%), animal market to urban butcher (31%), and

animal market to rural butcher (2%). Channel-4 includes contractor to traveler traders

(27%), contractor to exporters (1%), and contractor to urban butcher (72%). Channel–5

includes traveler trader to slaughter house (16%), and traveler trader to urban butcher

(84%).

• On the marketing side, the livestock markets are suffered from shortage of basic facilities

like watering, shelter, feed and fodder. A number of other arrangements like

loading/unloading, communication, services of veterinary doctor, weighing, market

boundaries etc. are absent despite 3-5 percent commission is charged as market fee in

Punjab whereas in other provinces various practices are followed. The contract money of

these markets is not invested back for provision of such facilities. But the most crucial

aspect of the marketing system constraining meat development is the sale of animal on per

head basis and not on their live weight basis. This militates against the success of any meat

development program. The meat production is entirely in the private sector. Delay in live

animal delivery is due to non-availability of specific transport and overloading without

refrigeration. However, the government intervention in fixing the price at the retail end is

neither rational nor fair. It makes the situation worse because this retail price fixation is not

applied to the corporate sector.

• The binding constraints of this segment of meat value chain are (i) inadequate basic facilities

at live animals market (watering, shelter, feed and fodder, absence of weighing machine

and market committee) (ii) non-availability of specific transport and overloading without

refrigeration (iii) delay in live animal delivery and (iv) faulty pricing mechanism of meat

animals (per head basis rather than weight basis).

• Under “Meat Production” segment of value chain, total meat produced during 2008-09 was

2.192 million ton by slaughtering 24.493 million heads of meat animals. Total beef

production originates from beef animals produced by general farmers slaughtered (1.187

million tons), feed lots (0.016 million tons) and Eid–ul-Azha (0.40 million tones). Similarly,

total mutton production comes from mutton animals produced by general farmers

slaughtered (0.341 million tons), feed lots (0.012 million tons) and Eid–ul–Azha (0.236 million

tones). The estimated meat production for the year 2008-09 in Pakistan is 2.192 million

tones. Out of this 1.603 and 0.588 m. tones are beef and mutton respectively. The

production of cattle, buffalo and camel beef was 0.638, 0.543 and 0.006 m. tones

respectively. Production of mutton from sheep and goat was 0.588 million tons. The overall

productivity of all the species in terms of meat is low. The overall increase in meat over the

years was due to the increased inventory and not because of any increase in their

productivity.

• The binding constraints of this part of meat value chain are (i) abattoirs in disrepair with

limited current expenditure (ii) small number of regulated slaughterhouses (iii) Abattoirs

have rudimentary disposal system of byproducts (iv) limited private sector participation (v)

code of practice not operational (vi) weak ante mortem and post mortem inspection (vii) no

chilling facilities except in few private abattoirs and (viii) no veterinary and plant health

authority (ix) because of fixing the price of meat by the tehsil municipal administration, the

slaughtering of weak, diseased and old animals is very common (x) absence of meat grading

and pricing (affecting meat quality) (xi) illegal slaughtering (xii) lack of specialized skills in

flaying and meat handling and un-hygienic meat transportation are serious concerns in the

meat production chain

• Under “Meat Marketing” segment of value chain, the total meat marketed during 2008-09

was 2.192 million ton out of which beef and mutton were 1.603 and 0.588 million ton

respectively. The meat marketed from recognized slaughter house to domestic market was

1.097 million ton (49%) which includes beef (0.782 m.t) and mutton (0.285 m.t). The meat

marketed from urban butcher to domestic markets was 0.653 million ton (30%) which

includes beef (0.479 m.t) and mutton (0.174 m.t). The meat marketed from rural butchers

was 0.457 m.t. which includes beef (0.335 m.t) and mutton (0.122 m.t).

• The meat marketing channels observed are as under: (i) from recognized slaughter houses

to wholesaler (30%) and retailers/butchers (70%) (ii) wholesalers to retailers (90%), hotel

and restaurants (5%), food services and suppliers (3%) and super markets (2%) (iii) retailers

to consumers (100%) (iv) urban butchers to consumers (93%), food suppliers (3%), hotel and

restaurants (4%) (v) rural butchers to consumer (100%) (vi) offals retailers receives (50%)

from offals contractors and sell all of it to consumers (vi) hotel and restaurants, food

services and suppliers and super markets to consumers (100%) and (viii) offals processors

receives (50%) offals from contractors and sell all to offals exporters. The meat transported

cost for domestic markets Rs.7.076 billion during 2008-09 which includes the transportation

cost of beef (Rs.4.752 billion) and mutton (Rs.2.324 billion).

• The estimated cost of production of beef and mutton was Rs.169.49/kg and Rs.263/kg

respectively at feed lot fattening producer respectively. The marketing costs of beef and

mutton at producer level is Rs.169.49 and Rs.262.75/kg. The marketing costs of beef and

mutton at contractor/beopari level is Rs.7.50 and Rs.14.71/kg. The marketing costs of beef

and mutton at commission agent level is Rs.0.64 and Rs.4.83/kg. The marketing costs of

beef and mutton at butcher/retailer level is Rs.11.06 and Rs.21.73/kg respectively.

• The sale price of beef and mutton at producer (feed lot fattening) level is Rs.184.17 and

Rs.280/kg. The sale price of beef and mutton at contractor/beopari level is Rs.200.18 and

Rs.302/kg. The sale price of beef and mutton at butcher/retailer level is Rs.220.81 and

Rs.327/kg respectively.

• The net profit margin of beef and mutton at producer at feed lot fattening level is Rs.14.68

and Rs.17.25/kg. The net profit margin of beef and mutton at contractor/beopari level is

Rs.8.51 and Rs.7.29/kg. The net profit margin of beef and mutton at commission agent level

is Rs.0.61 and Rs.2.60/kg. The net profit margin of beef and mutton at butcher/retailer level

is Rs.9.57 and Rs.3.27/kg respectively.

• The exported meat was 0.01436 million ton during 2008-09 (assuming the same as exported

in 2007-08) which includes beef (0.00697 m.t.) and mutton (0.0739 m.t) respectively. The

value of synthetic RCA for beef fresh/child/frozen, meat nes./fresh/chld/froz, meat/offals

preserved, meat/offals preserved n.e.s etc. is greater than 1 which implies Pakistan has

comparative advantage in meat and meat preparation.

• The main inefficiencies of meat marketing are (i) controlled retail price of meat causing

slaughtering of unhealthy and old animals (ii) absence of meat grading and pricing by quality

(iii) illegal slaughtering leads to poor quality meat (iv) lack of specialized skills in flaying and

meat handling (v) un-hygienic meat sale (retail outlets) (vi) no chilling facilities at butchers

shops and (vii) few operations for export and poor regulation for export.

• The opportunities for meat export increase the source of foreign exchange and it may also

increase the income of farmers if facilitation from government/research institutions and

farmers interest to raise meat animals as a business on commercial basis. Moreover, the

export of meat offals has a potential like intestines of small ruminants for European

countries and “Patjori” export to China. There is a need to create awareness at local level

for export of offals. The threat for export meat is related with the exploitations local

consumers in the form of price and quality. Likewise illegal smuggling reduces foreign

resources and also exploits the local consumers. There is need of compulsion for exporters

to produce a reasonable export quantity at their own farms to avoid market distortion and

protect domestic consumers.

• The proposed strategy/requirements for 1st segment of meat value chain namely “Inputs”

are (i) need improved breeding for meat animal programme with modern and scientific