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Call to bring down duty, taxes on poultry sector raw materials

Call to bring down duty, taxes on poultry sector raw materials

LAHORE: Pakistan’s poultry sector has huge unexplored potential which can earn important foreign exchange reserves if the duty and taxes on the raw material are brought down significantly, especially on feed related ingredients.

Presently exports are haphazard and negligible with biggest challenge is being not competitive in comparison to Brazil. ‘We are 20-25 per cent more expensive than Brazilian products,’ said Salman Tariq, Director of a leading poultry processing unit while talking to representatives of Agricultural Journalists Association (AJA).

‘Regulatory environment is not conducive at all and we have been in discussion with Ministry of Commerce and TDAP’s recently and in the past as well to devise a strategy with the poultry processors in terms of assigning a subsidy so that we become competitive in terms of Brazilian product in the Gulf countries. We are not asking the government to give us a flat subsidy, but instead asking that poultry feed millers pays a lot of duties and taxes when they import ingredients/medicines for manufacturing poultry feed,” added Salman.

‘If the government allows this, processors can easily target the Gulf Countries and our exports can easily increase since the product we are producing is equally good in comparison to the rest of the world,’ he added.

He said that processors have about 5 per cent share in Pakistan’s poultry industry and growing at a rate of 5-6 per cent per annum. There are five major players and then around 10-15 smaller units. Some smaller units close down, then new investment comes in and/or ownership changes and they become operational again. As for the major 5 players, all are operating at different capacities and having different market share. This is a tough business since 95% of the share is wet market. The consumer is not willing to switch to the processed chicken since there is a price differential of Rs 15-20 / kg.

Products that are being processed at the poultry processing plants are higher in terms of prices compared to the wet market. This is one of the reasons the customer is not inclined to buy this product. Price is a secondary issue. However, the main issue is the customer behavior where he/she goes to the wet market and gets the broiler slaughtered in person and then uses it. However, slowly and steadily people are converting from wet market to the processed market.

‘I believe we are not growing in terms of exports. Even though we could export to KSA, UAE and some other Gulf Countries but our competition is with Brazil and we are at least 20-25% more expensive than Brazilian Product. We have even lost Afghanistan as a potential market since they are also importing Brazilian products via Pakistan-Afghanistan transit trade. At present only some companies are able to export their Further Processed foods to Gulf Countries. It includes KSA, UAE, Qatar, Bahrain and Oman,’ he concluded.