Halal Meat

Enormous Potential of Halal Meat Production in Punjab

8.26 million pop. USD14,455 million 51.19 million pop. USD 63,988 million

North America

Europe
1085.27 million pop USD 385, 685 million

Asia

1.64 million pop. USD820 million

461.77 million pop. USD 155,443 million

South America

Africa

Muslim Population (Million) Prospected Halal Food Market Value (USD Million)

Roadmap to Making Punjab a Regional Base for Halal Meat Export

Action Plan & Progress Report

Pakistan should stay in chilled segment and compete in the premium end and build scale here. In the short term it should focus on limited market geography (Middle East and Malaysia) and enter the frozen segment only when and if - costs of farm production have been brought down. Over the longer term it should prepare for European market entry by fast tracking the animal tagging project to fulfill the EU markets traceability requirement for meat products.

BUILDING PARTNERSHIPS

Punjab Board of Investment & Trade

ACKNOWLEDGEMENTS

PBIT would like to acknowledge the invaluable contributions of the following, without whose help this study would not have been possible. Livestock and Dairy Development Board, Ministry of Livestock, Government of Pakistan Livestock and Dairy Development Department, Government of Punjab Mr. Khalil Sattar, Chairman, Chief Ministers Task force on Meat Development Cholistan Development Authority Private stakeholders involved in meat exports Mr. Syed Hassan Raza, Syed Traders Mr. M. Nawaz Dogar, Abedin International Mr. Mian Abdul Hannan, Tazij Meat & Foods Mr. Asif Ghias, Zenith Associates

INTRODUCTION
As per Chief Minister Punjabs vision of making Punjab a regional base for halal meat export, PBIT was given the mandate to come up with an action plan to realize this goal. This paper has been prepared on the basis of rigorous discussions and field visits covering all the major players and stakeholders that constitute Punjabs meat industry. Here we present the major findings from this process and then propose an action plan. Lastly the paper outlines and describes PBITs top 14 initiatives that have already been taken, as first steps towards facilitating investment to pointedly uplift this sector.

MACRO AND PUBLIC POLICY PERSPECTIVE

Until a few years ago, Pakistan, with only 3 modern slaughterhouses, and a negligible cold chain lacked the infrastructure to compete as an effective player in the world meat market. Even today, the present 14 export approved modern slaughterhouses only indicate a nascent though emerging status for the country. The Livestock and Dairy Development Board (LDDB) of the Federal Ministry of Livestock have plans to encourage 8 additional slaughterhouses in the private sector for which it offers a Rs. 3 million grant for establishment of a new slaughterhouse against total estimated investment outlay of Rs 70-80 million. The LDDB also offers Rs 300,000 grant for opening a new meat shop. Other incentives to accelerate the establishment of modern slaughterhouses would give impetus to the meat export sector. A major roadblock to exporting meat to developed countries, primarily US and EU is the lack of a traceability mechanism in the local meat value chain. To redress this, a livestock tagging and information management project needs to be initiated. To achieve this goal a pilot project with EU funding has been initiated by Belgium Blue Cattle Farms (BBCF) through PBIT facilitation. BBCF has begun implementing this project in 52 villages surrounding University of Veterinary and Animal Sciences campus at Patoki. Additionally organized meat farming activity in Pakistan is almost negligible. Most animals originate from small herd farmers with average 1 5 animals. For the meat sector to grow there is need to meaningfully integrate these small herd farmers into the meat economy as economic agents. In this the meat development project of the LDDB is a commendable initiative. Under this, farmers are provided subsidy of Rs 1400 for large animals and Rs 500 for small animals for a period 90 days for fattening expenses. The programme has

covered 100,000 animals to date and this programme needs to be continued and expanded. At the same time, the viability of large meat farming business models needs to be urgently tested and validated. Pakistan enjoys certain natural advantages to become a major player in the global meat market. Firstly the country has large tracts that are relatively disease-free (e.g. Cholistan) but this status has not been properly capitalized or marketed. Secondly, the taste preference of Middle East consumers is mainly for young cattle calves - tender meat; Pakistani meat has a distinct advantage in this sector. Anecdotal feedback from western consumers has also validated this taste advantage factor of Pakistani meat. Still this may be fully validated in a full blown consumer taste research study. On the contrary the Indian meat model focuses mainly on frozen and buffalo meat of mature animals which does not necessarily taste better. Additionally cow slaughtering is totally banned in India. Nevertheless, Pakistan and India have competitive advantages in different market segments. Pakistans advantage is in cattle and the chilled meat sector. Thirdly, given the proximity, the country can provide chilled meat at a more competitive pricing than anybody else to the Middle East region. The LDDB, as a federal agency and the provincial livestock department, both have a limited role in quality and pricing of meat as these subjects lie under the regulatory control of the city and district governments. In many cases this limits the role of federal and provincial agencies to improve and standardize quality while on the other hand the local governments are not equipped with the skills and tools - and often times, the motivation - to upgrade.

PRIVATE SECTOR PERSPECTIVE

PBIT had extensive discussions with private sector players on the current state of the meat industry and possible actions to improve the situation. Although the issue of only a handful of approved slaughter houses was often raised as a constraint in the meat export sector, the irony is that the 14 slaughterhouses that are approved for exports are generally running under capacity. So the question arises that is more slaughterhouses /abattoirs really the answer? Private sector players identified marketing as a key requirement and an area where local players should focus. The smuggling of live animals to Iran and Afghanistan was also felt to be a major issue. On the other hand breed was also considered to be an important factor. The main competition faced by Pakistan in the meat sector is from Brazil, Australia, US and Argentina. These countries are leading Pakistan in the areas of beef breeds, technology and feed economics. The major constraints cited by the private sector were: a. Lack of modern slaughterhouses b. Poor backward linkages This often results in supply shortages for meat exporters c. Marketing Pakistani products have very limited presence in international markets and the main reason identified for this is insignificant marketing in foreign countries. d. Air Cargo space Availability of cargo space becomes a major issue during the mango season

e. Enforcement of ban on export of live animals. If even one diseased animal is found, the entire country may be affected by a ban. f. Slaughterhouses be put under L & DDD instead of city/ district governments g. Forward integration Most Pakistani export meat is in the form of whole carcasses. Slaughterhouses need technical assistance to build processing capacity and marketing of processed/ valueadded meat products h. Animal Health The current livestock health extension systems are inefficient resulting in poor animalhealth, which in turn adversely affects both productivity and export potential i. Feed Mix Developing/researching high quality feed mix will increase productivity of animals j. Market Structure Formal market channels should be established to ensure continuous supply of high quality meat k. Herd Size Most animals originate from small herd farmers with average 1 5 animals. For the meat sector to grow these small herd farmers need to be integrated into the meat economy

PBIT OBSERVATIONS

After extensive discussions with relevant parties from both the public and private sector, PBIT made the following observations regarding to meat production and export. The popular Pakistani large animal breeds are multipurpose (Milk, Meat, Draught power). Generally this implies a longer time to maturity and slower daily weight gain as compared to Latin American, Australian, European and US beef breeds. This puts Pakistan at an economic disadvantage in rearing meat animals. In Pakistan, the mindset to tie animals to a peg and also the limited availability of free grazing pastures has led to stall feeding becoming prevalent practice. This implies a less efficient feed to weight conversion ratio. In addition animals do not enjoy free access to water which is another limiting factor for optimal weight gain.

Given these conservative mindsets and a propensity towards and on farm requirement for - these native breeds, undertaking a switching program for small herd farmers may prove to be a very steep hill to climb. On the flip side, we are proposing the hypothesis that the slow weight gain and natural feeds of farm grown animals is perhaps what gives Pakistani meat its distinct, seasoned flavor. There may be merits to retaining this and positioning this as a marketing advantage. Breeding and rearing of beef breeds are therefore only likely to be adopted by large scale farmers who together with the risk appetite can also provide the necessary veterinary infrastructure and management support for this longer term business model which will unfold only after 3 or 4 generations of animals have been bred.

SUGGESTED ACTIONS
Based on input received from meat sector stakeholders, we spell out the following high level action plan with a view to developing Punjab as a regional halal meat export base: 1. Meat Export Processing zones should be established; preferably two in the province, one near Lahore and a second one in Southern Punjab. These zones are expected to include animal breeding farms, fattening farms, slaughter houses and meat processing facilities all located in one area. In addition cold storage facilities need to be established at airports around the province; the one at Lahore is already operational, similar cold storage facilities should be established at Multan, Bahawalpur and RahimyarKhan. Another facility currently lacking at airports are electricity plugs for reefer containers. These need to be provided to ensure meat waiting at airports for transport remains chilled inside parked container trucks. Disease free zones in Cholistan and other areas need to be declared and maintained followed by maximum capitalization of this important marketing attribute. Cattle farming should be actively promoted in these areas through extension of credit, microcredit and extension services even if sourced from the private sector and funded by a grant assistance programme. Pakistani chilled meat export volumes are stillshort of attaining critical mass. A programme which offers a one year freight subsidy tied to demonstrable performance in gaining shelf space in export markets ought to be designed and offered. Freighter services (as opposed to passenger carriers) to Middle East need to be started. Presently exporters in Pakistan are paying over $ 1 per kg for freight whereas Indian exporters are paying INR 56 per kg on which 25% is offered as freight subsidy. 5. Quarantine charges need to be abolished. Presently quarantine charges of Rs 240 are being charged per large animal and Rs 40 per small animal. Also other handling charges on airlines, logistic services need to be reduced / rationalized to ensure our meat products retain a cost/price advantage in international markets. To incentivize more investors to enter the meat processing industry, land may be offered for the establishment of processing units. This land may be provided by GoPb and should preferably be near farming areas. Also financial incentives may be provided to investors in the form of export financing/ refinance on preferred rate of interest or soft loans for establishment of value added meat products processing units. Punjab government livestock farms be put under public private partnership to increase cattle production, possibly beef breeds with joint venture collaboration from Australian expertise. TDAP offers a subsidy on rental outlets in export markets. This facility to be actively encouraged for meat exporters and also extended to include meat counter rental in upscale retail supermarkets. Implement a National Livestock Information and Management programme as an extension to the animal tagging project. This would open up export markets to the US and EU.

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10. R&D/survey should be conducted to identify most appropriate breeds for fattening. 11. The most effective feed mix that is developed should be actively promoted to farmers through extension work, media and private sector marketing efforts. 12. The private sector should be encouraged to participate in delivery of services (e.g. medical/R&D) to the livestock sector.

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ARTICULATION OF STRATEGY

Pakistan should stay in chilled segment and compete in the premium end and build scale here. In the short term it should focus on limited market geography (Middle East and Malaysia) and enter the frozen segment only when and if - costs of farm production have been brought down. Over the longer term it should prepare for European market entry by fast tracking the animal tagging project to fulfill the EU markets traceability requirement for meat products

SUMMARY OF ACTION PLAN

Immediate Stay in chilled meat segment Confine to limited geography Improve logisitcs Consider 1 year freight subsidy tied to demonstrable performance in gaining shelf space in the Middle East premium market Improve / build all logistics Cold Storages at airports in South Punjab Sure plugging faclity at airports for reefer containers Short Term Bring down farm production costs Provide incentives to develop value added processing opportunities Develop and enhance branding Improve services and extension support for 1-5 animal herd size farmers to increase production Ban on export of live animals Enforce anti smuggling mechanism to prevent smuggling into Afghanistan and Iran Privatise government farms Medium Term Brace for EU market entry Fast track animal tagging project Develop beef breeds

FACILITATIONS ALREADY PROVIDED BY PBIT

1. Animal Tagging Project PBIT is giving facilitation to Belgium Blue Cattle Farms (BBCF) for introducing food safety agency in Punjab (Livestock Tagging) for traceability of meat. BBCF has begun implementing this project in 52 villages surrounding New Campus of UVAS at Patoki. Cholistan Livestock Development Project PBIT has finalized road shows and presentations for this project. Investment Memorandum has also been developed by project wing of PBIT. This project is ready and awaiting green signal for launch. 7. Profarm Ltd Cattle Breeding Profarm is a new initiative to provide quality semen provision in the Livestock sector. Profarmhas established 8 centers where 25 technical managers are working at this point in time. Auriga Group of Companies Concentrated Cattle Feed Auriga Group of companies is involved in chemical pesticides, hybrid seeds and micro nutrients. PBIT is facilitating them in expansion into the concentrated cattle feed sector.

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Jassar Farms Cattle Breeding Project This is a private sector Semen Production Unit which will provide quality semen for cattle breeding to both the public as well as private sectors. The project has been started with facilitation from PBIT and the unit has purchased animals for breeding purposes. Maxim Animal Feed Manufacturing Maxim provides quality concentrated feed for dairy as well as feed lot fattening farms. PBIT has arranged Maxim to meet with Auriga Group of companies to discuss mutual collaboration in maximizing feed outreach.

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10. Anujuman e Kashtkaran Punjab Backward linkages for slaughterhouses.

Ghulam Faroque Group Slaughterhouse Ghulam Faroque Group is a leading industrial group, which intends to set up a state of the art slaughter house in Punjab province. PBIT is assisting them in land selection, acquisition and also in locating foreign JV partners.

11. PBIT has facilitated three MOUs with Turkish companies for technology upgradation of the sector.

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RCDS Cooperative Cattle & Dairy Project RCDS is an NGO working for socio economic uplift of resource-less rural masses in district Nankana Sahib. They are working on cooperative basis by supplying animals to their members and collecting milk on better prices. PBIT has arranged two chillers for RCDS from a private milk processing company and also sent a request to PUM Netherlands for providing a senior expert from Netherlands to provide better milk marketing solutions for RCDS. Malaysian Agrifood Corporation- Slaughterhouse As per follow up of Ministerial Delegation from Malaysia, PBIT is facilitating the corporation to provide them linkages to Punjab's exporters and entrepreneurs.

12. PBIT took a group of leading Punjab Food companies (primarily dairy and meat) to Gulfood - Dubai, the regions largest business matchmaking event in February 2010. 13. PBIT is taking a delegation of leading private sector meat and dairy players to Australia / New Zealand with a view to sourcing state appropriate technologies and best practices for this sector.

14. PBIT is facilitating a LUMS study on the Beef Value chain in Pakistan with a view to improving the transaction models that exist and removal of the bottlenecks identified.