Cattle farming in Pakistan-I
REHANA SHEHZAD
ARTICLE (April 10 2007): Cattle farming and production which comes under
"LIVESTOCK and Agriculture" sector is an integral part of Pakistan's
agriculture sector and plays a vital role in national economy. At present,
LIVESTOCK is contributing about 49.1% to the Agricultural sector and 11.4 per
cent to the GDP. Its net foreign exchange earnings in 2003-04 were 53 billion,
which are about 11 percent of the overall export earnings of the country.
The role of LIVESTOCK in rural economy may be assessed by the fact that 30 to
35 million of the total rural population is engaged in LIVESTOCK farming,
having 2 to 3 cattle/buffalo and 5 to 6 sheep/goats per family deriving 30 to
40 per cent of income from it. During year 2003-04, the total red meat
production was 1.09 and 0.72 million tons for beef and mutton, respectively.
The per capita consumption indicates a growing demand of meat in the years to
come. Calves for fattening may come from the DAIRY herd.1
CATTLE FARMING Cattle farming is all-inclusive activity, related to meet
animal's care, housing, medication ,feeding and management. It is defined as
all those aspects and activities relating to raising of calves for meat
purpose. LIVESTOCK production is growing rapidly as a result of the increasing
demand for animal products. In a Food & Agriculture Organisation (FAO) study:
LIVESTOCK TO 2020: The Next Food Revolution, it is suggested that global meat
production and consumption will rise from 233 million tones (2000) to 300
million tones (2020), and milk from 568 to 700 million tones over the same
period. Egg production will also increase by 30%3. These predictions show a
massive increase in animal protein demand, needed to satisfy the growth in the
human population.
Calf fattening enterprise is an agro-based project. The calves, preferably
males, 8-9 months of age are fed on concentrated feed and fodder produced from
the agricultural land. Balanced feed is given to calves for a period of 120
days to get higher weight gain. Live weight of these calves is between 80-90
kg. If these calves are fed properly on the formulated fattening feed, their
weight can be raised up to 180-200 kg during the fattening period. The daily
weight gain of fattened calves varies between 800-1000 grams.
POPULATION OF LIVESTOCK There is a shortage of beef in the country. This
shortage is being met through meatless days. If the calf fattening projects
are carried out in the country then the domestic demand of beef could be
fulfilled, as the fattened animals have higher meat contents (55%) as compared
to grazing animals (48%).
POPULATION OF LIVESTOCK (MILLION)
============ ========= ========= ========= ========= ========= =========
========= =
Species 1999-00 2000-01 2001-02 2002-03 2003-04(E2)
------------ --------- --------- --------- --------- --------- --------- --------- -
Cattle 22.0 22.4 22.8 23.3 23.8
Buffalo 22.7 23.3 24.0 24.8 25.5
Sheep 24.1 24.2 24.4 24.6 24.7
Goats 47.4 49.2 50.9 52.8 54.7
------------ --------- --------- --------- --------- --------- --------- --------- -
Production of <b class="searched">LIVESTOCK</b> Products
------------ --------- --------- --------- --------- --------- --------- --------- -
Product 1998-99 1999-00 2000-01 2001-02 2002-03
------------ --------- --------- --------- --------- --------- --------- --------- -
Milk 24.88 25.57 26.28 27.03 27.81
(million tones)
------------ --------- --------- --------- --------- --------- --------- --------- -
Beef 963 986 1,010 1,034 1,060
(000,tones)
------------ --------- --------- --------- --------- --------- --------- --------- -
Mutton 633 649 666 683 702
(000,tones)
============ ========= ========= ========= ========= ========= ========= ========= =
Species 1999-00 2000-01 2001-02 2002-03 2003-04(E2)
------------ --------- --------- --------- --------- --------- --------- --------- -
Cattle 22.0 22.4 22.8 23.3 23.8
Buffalo 22.7 23.3 24.0 24.8 25.5
Sheep 24.1 24.2 24.4 24.6 24.7
Goats 47.4 49.2 50.9 52.8 54.7
------------ --------- --------- --------- --------- --------- --------- --------- -
Production of <b class="searched">LIVESTOCK</b> Products
------------ --------- --------- --------- --------- --------- --------- --------- -
Product 1998-99 1999-00 2000-01 2001-02 2002-03
------------ --------- --------- --------- --------- --------- --------- --------- -
Milk 24.88 25.57 26.28 27.03 27.81
(million tones)
------------ --------- --------- --------- --------- --------- --------- --------- -
Beef 963 986 1,010 1,034 1,060
(000,tones)
------------ --------- --------- --------- --------- --------- --------- --------- -
Mutton 633 649 666 683 702
(000,tones)
============ ========= ========= ========= ========= ========= ========= ========= =
Source: Economic Survey of
Pakistan, 2003-04
2 E - Estimated
3 The LIVESTOCK to 2020 study used base figures for 1993 and these have been
recalculated for the year 2000 based on FAO STAT data.
MEAT SUPPLY Currently, meat sector in
Pakistan is working on an informal basis from animal raising to meat
selling. Animal traders purchase animals from the rural areas and sell them to
the animal markets in the urban areas.
Butchers purchase these animals from animal markets and slaughter them in the
slaughterhouses. Butchers act as meat traders and dominate the meat market
both in rural and urban areas. The animals sold in these markets are generally
diseased and culled animals. Butchers/traders prefer to buy these cheap
animals.
Pakistan has ten semi-automated slaughterhouses and a meat processing
plant. The only meat processing plant was installed in 1995. It has a capacity
of 50,000 Kg. per month, but is operating below its capacity.
It processes both chicken and beef into a variety of processed products such
as sausages and smoked meats. The current red meat production system is both
traditional and inefficient. Beef mostly comes from the end of career, or
emergency slaughtered animals.
A lot of baby buffaloes and calves are slaughtered when these are only 1-2
weeks old. Few calves are raised to 60-80kg weight but on extremely poor and
unbalanced diets. Lack of commercial, on-farm LIVESTOCK feeding could be
blamed for existing price ceiling, which is fixed too low to recover the
production cost.
Traditional and unhygienic slaughtering techniques are major constraints,
which are not acceptable to those who believe in health and hygiene. The
LIVESTOCK resources hold potential for increasing the production of meat. It
is estimated that about 6-7 million buffalo/cattle male calves if raised on
balanced diet could double the production. Sheep and goats can also be raised
for quality meat production.
MEAT INDUSTRY The meat industry as a whole, from LIVESTOCK farming to
marketing of meat is in a poor state at the moment. General crop farming has
progressed from the 'subsistence level farming' to 'commercial farming', at
least in major crops in the country because of research, extension focus and
'market pull factors'. Whereas the LIVESTOCK farming has remained least
commercialised and survives under subsistence farming conditions.
BEEF YIELD HAS REMAINED LOW DUE TO THE FOLLOWING CONSTRAINTS:
1. Despite immense potential, breeding has not been done for increasing
productivity.
2. Feeding methods are primitive with hardly any feed management. Despite
abundant fodder production, there is always a shortage between seasons. This
shortage is met by "bhoosa" (wheat straw) which has very low nutritional
value. Quality feed concentrates from existing by-products is not being used
efficiently.
3. Large-scale LIVESTOCK farming has not been practised due to the total
manual.
4. procedures adopted in feeding and herd management. Reliability of manual
labour is severe especially in view of illiteracy and poor farmer education on
the subject.
MARKET POTENTIAL In
Pakistan, the beef industry is an important segment of LIVESTOCK
production. The increasing population and the rising consumer buying power
have together contributed to an increase in demand resulting in relatively
favourable prices for beef.
World-wide consumption of meat during 1983 for developed world was 74 kg
compared to 14 kg for developing countries and 11 kg for
Pakistan. The data for 1993 indicates 76kg, 21 kg and 16kg for the
three, respectively.
The challenge for
Pakistan now is to achieve 47 kg per capita consumption by 2020.
According to statistics there is a gap in demand and supply of beef in the
market. This gap is met through meatless days and through POULTRY meat.
INVESTMENT IN CATTLE FARMING In order to curtail the serious problems in
future, Government of Pakistan has introduced a scheme to invite the potential
investors to invest in cattle farming in which government will support and
will provide the complete feasibility.
Before making the decision, whether to invest in the LIVESTOCK farming or not,
one should carefully analyse the associated risk factors. A SWOT analysis can
help in analysing these factors, which can play important role in making the
decision.
STRENGTHS
1. Backbone and main stay of economy. (provides raw material for food &
Leather industry).
2. Major source of food, ie Meat.
3. Source of Farmyard Manure (FYM).
4. Sizeable foreign exchanges earning through exports.
5. Ample human resource employment sector.
6. Stationed, Permanently located secured loaning sector.
7. Contended nature. Low cost living standard.
8. Full family involvement, Devoted & Hardworking Sector.
WEAKNESSES
1. Animals are kept for social rather than commercial reasons.
2. There is no registered beef breed in
Pakistan.
3. Low or lack of interaction with farmers. Poor information about each other.
Lack of extension services.
4. Lack of education and initiative in farmer, traditional approach due to
lack of skills and management.
5. Unorganised sector, unaware of basic farm management practices.
6. Remote area, lack of farm to market approach & transportation.
7. Non-availability of communication services.
8. Lack of farm/ market infra structures & marketing information.
9. Lack of record keeping on farm.
10. No or low application of research work and record keeping.
11. Management of LIVESTOCK farm is a challenging job.
12. Nutrition is still a problem hampering the LIVESTOCK productivity in
general and meat production in particular
13. Enormous production losses due to endemic diseases every year.
OPPORTUNITIES
1. Government of Pakistan and Sate Bank of Pakistan's priority sector.
2. Meat and meat products needs are much higher than supply.
3. Ample opportunities are available in the Banking Sector.
4. Commercially viable sector with great credit potential and absorption
capacity.
5. Vast range of area of operation, more needs and scope of development.
6. Value added meat products are in demand. If the government lifts the price
fixing taboo, then there are bright chances for the flourishing of meat
market. Customers are ready to pay prices for the good quality meat.
7. Massive migration of labour to cities can be checked / stopped.
8. Corporate financing will become a niche in lending market.
9. Co-operatives can play a big role for development in LIVESTOCK sector.
10. Progressive meat retailing firms can promote the sale of processed and
quality meat cuts to consumers, which is packed and labelled at a price,
including the cost of processing, packaging and quality.
11. Development of slaughtering and processing operations can help in
obtaining maximum value.
12. Improving the control of external parasites may enhance the value of hide
or skin.
13. More opportunities to invest in this sector due to duty free import of
LIVESTOCK from India.
THREATS
1. Implementation of WTO will result in open and competitive commodity
pricing.
2. Due to fear of default, baker community has reluctance for lending loans.
3. High risks of diseases in LIVESTOCK. Animals are subject to serious
diseases that may lead to mortality.
4. The formal meat market not growing due to the government regulation of
price fixing as Municipal Corporation fixes the meat prices in the urban
markets.
5. The fixed prices are not likely to be viable for selling the quality meat.
6. Butcher market not ready to pay the premium prices for the fattened animal.
7. Defective and unorganised markets.
8. Imbalance between prices of inputs & outputs.
9. Rising trend of cost of production with higher rate of interest as compared
to profit ratio.
10. Lack of media projection, non-recognition of problems and monopoly of
multinationals.
11. Lack of community organisations and out dated farm practices.
12. Lack of coordination towards common causes & goals.
13. Lack of awareness about economics, demand & supply in market.
14. Low saving, low holding capacity. Increasing level of poverty.
15. Non-availability of subsidy & tax holidays.
TARGET CUSTOMERS The buyers could be the corporate buyers eg hotels and
exporters. The animal mandies of big metropolitan cities can also be
considered for selling the animals in bulk. The animals will be sold on live
weight basis.
The price of fattened calves varies between Rs 50-60 kg depending upon the
supply and demand of meat in the market. The feasibility has taken Rs 55 per
kg live body weight as the selling price. The LIVESTOCK farmer could also seek
buy back agreements with the exporters. The following are some of the target
clients for a cattle fattening farmer.
1. Local people
2. Butchers
3. Contractors
4. Slaughter house owners
The cost of production per kg of meat should be lower than its sale price so
that farmer could feel it economical.
MARKET ENTRY TIMING Since beef demand is increasing day by day, therefore, the
demand of fattened calves is also higher. The demand increases especially
before occasions like Eid-ul-Fitr and Eidul-Azha. That's why the animals on
such occasions are sold at a bit higher prices as compared to other days.
The proposed business can be started before these occasions or any time
throughout the year. At the commencement of the proposed business, it is
important that the entrepreneur must have good knowledge of the production and
have contacts with the LIVESTOCK breeders and farmers. The ability to work
with people/animals and efficient use of resources are important aspects in
modern and commercial calf fattening farm.
PROPOSED BUSINESS LEGAL STATUS The proposed legal structure of the business
entity is either sole proprietorship or partnership. Although selection
totally depends upon the choice of the entrepreneur but this financial
feasibility is based on Sole Proprietorship.
PROPOSED CAPACITY The pre-feasibility suggests producing 390 calves a year in
3 production cycles, each of 4 months. This size of a farm justifies the
recurring costs of this project.
PROJECT INVESTMENT The total cost of the project is Rs 1, 307, 615 out of
which capital cost of the project is Rs 1,121,000 for purchasing the animals
and constructing the building and the rest is used to meet the working capital
requirement.
PROJECT COSTS
============ ========= ========= ========= ====
i) Capital Investment 1,121,000
ii) Working Capital Requirement 186,615
Total Investment (i + ii) 1,307,615
============ ========= ========= ========= ====
i) Capital Investment 1,121,000
ii) Working Capital Requirement 186,615
Total Investment (i + ii) 1,307,615
============ ========= ========= ========= ====
DETAILS OF PROJECT COSTS
============ ========= ========= ========= ========
Description Amount (in Rs)
------------ --------- --------- --------- --------
1. Fixed Cost
------------ --------- --------- --------- --------
i) Land & Building 1,062,000
ii) Machinery & Equipment 59,000
------------ --------- --------- --------- --------
Total Fixed Cost (i + ii) 1,121,000
------------ --------- --------- --------- --------
2. Working Capital 186,615
Total Project Cost (1 + 2) 1,307,615
------------ --------- --------- --------- --------
Project Financing
------------ --------- --------- --------- --------
i) Debt 50% 653,808
ii) Equity 50% 653,808
Total Project Investment 100% 1,307,615
------------ --------- --------- --------- --------
Project Economics
------------ --------- --------- --------- --------
i) IRR (%) 47.20
ii) NPV @20% (Rs) 2,758,560
iii) Pay Back Period (year) 2.87
============ ========= ========= ========= ========
PROPOSED LOCATION The development of urban or peri-urban commercial calf fattening farms is something new in LIVESTOCK production. Metropolitan cities like Lahore, Karachi, Multan, Faisalabad, Rawalpindi, etc are the major markets of meat.
Description Amount (in Rs)
------------ --------- --------- --------- --------
1. Fixed Cost
------------ --------- --------- --------- --------
i) Land & Building 1,062,000
ii) Machinery & Equipment 59,000
------------ --------- --------- --------- --------
Total Fixed Cost (i + ii) 1,121,000
------------ --------- --------- --------- --------
2. Working Capital 186,615
Total Project Cost (1 + 2) 1,307,615
------------ --------- --------- --------- --------
Project Financing
------------ --------- --------- --------- --------
i) Debt 50% 653,808
ii) Equity 50% 653,808
Total Project Investment 100% 1,307,615
------------ --------- --------- --------- --------
Project Economics
------------ --------- --------- --------- --------
i) IRR (%) 47.20
ii) NPV @20% (Rs) 2,758,560
iii) Pay Back Period (year) 2.87
============ ========= ========= ========= ========
PROPOSED LOCATION The development of urban or peri-urban commercial calf fattening farms is something new in LIVESTOCK production. Metropolitan cities like Lahore, Karachi, Multan, Faisalabad, Rawalpindi, etc are the major markets of meat.
KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS
I) ECONOMICAL MEAT PRODUCTION The LIVESTOCK production research institutes and
universities have conducted many studies to ascertain the beef production
potential of indigenous LIVESTOCK under the feedlot fattening regimes. Weight,
growth and efficiency are major factors influencing the economical meat
production.
II) USE OF CAPITAL AND MANAGEMENT The thrust in calf fattening farm is on the
increased use of capital and management. Successful farming harnesses all
available resources into productive and profitable unit.
III) MAXIMIZING PRODUCTIVELY AND PROFITS Calf fattening is highly complex as
it includes farm management, feeding, housing, disease control and hygienic
production of milk on farm. The judicial use of means and resources to achieve
clearly defined goals is the key success factor ie the art of maximisation and
optimal utilisation of resources and means for maximising productivity and
profits.
IV) ANIMAL FEEDS Feeding meat animals on nutritious compound feed along with
green fodder can be adopted. Other farm management practices include
comfortable and ventilated barns, drinking water and feed according to the
requirements. Timely vaccination against Rinderpest, Black Quarter and Foot &
Mouth Disease.
The prevention of internal and external parasites will also improve the over
all performance of herd. The absence of calf weaning program is a shortcoming
to the development of beef industry. Too many young male calves are
slaughtered quite young due to high cost of milk required to feed them.
Those left are generally underfed and stunted thus unable to achieve the
normal growth. A suitable plan could provide animals of 100-150 kgs of weight,
which could be raised to the desired market demand.
Attention must be given to the selection of animals. Once the calves are
purchased and placed in pens, farmers would face many technical problems
affecting the success of their operation. It will be worthwhile to get
technical assistance from the LIVESTOCK professionals and experts. It is
advisable to purchase fattening rations initially from the public or private
sector feed mills.
