A Value Chain Analysis of The Meat Sector in Pakistan

A Value Chain Analysis of the Meat Sector in Pakistan
By Muhammad Sharif Zafar Altaf Hassnain Shah Nadeem Akmal Arifa-un-Nisa Naqvi
National Agricultural Research Centre Social Sciences Institute Islamabad November, 2009
i
Table of Contents
1. 2. 3. 4. 5. Introduction Objectives of the Study Methodology The Value Chain Analysis (VCA) Model Organization of the Report Overview of Red Meat Sub-Sector Inventory of Milk and Meat Animals Beef and Mutton Animals Characteristics of Meat Sub-Sector Meat Supply Chain Red Meat Value Chain Input Provision/Supplies --- 1st Segment of Value Chain Feed Pasture resources Veterinary services Seed stock (Genetics/breeds) Conclusions 7.2 Meat Animal Production --- 2nd Segment of Value Chain 7.2.1 Inventory of meat animals 7.2.2 Cost of production of meat animals at farm level 7.2.3 Cost of production of meat animals (general farmers) 7.2.3.1 Cost of production of beef animal 7.2.3.2 Cost of production of mutton animals 7.2.4 Cost of production of beef animals at feed lot framers 7.2.4.1 Cost of production of beef animals 7.2.4.2 Cost of production of mutton animals 7.3 Conclusions Marketing of Meat Animals ---3rd Segment of Meat Value Chain 8.1 Market Infrastructure 8.2 Live Animals Market Intermediaries 8.3 Conclusions Processing (Slaughtering) ---- 4th Segment of Meat Value Chain Animals for Slaughtering The Slaughtering System Red Meat Production Trends in Red Meat Production Cost of Production of Meat 9.5.1 Cost of production of mutton 9.5.2 Cost of production of beef at feed lot framers 9.5.2.1 Cost of production of beef 9.5.2.2 Cost of production of mutton Pages 1 2 2 2 3 4 4 4 5 7 9 10 10 12 12 13 13 15 15 16 16 16 17 18 18 18 19 21 21 22 23 23 23 26 26 27 28 29 29 29 30
6. 7.
8.
9.
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10.
11.
12. 13. 14.
Conclusions Meat Marketing ---- 5th Segment of Meat Value Chain Marketing of Red Meat Meat Marketing in Domestic Market Meat Marketing Infrastructure Transportation of Meat Market Information and Pricing Mechanism Structure of Meat Marketing Cost for Market Intermediaries Sale Price, Marketing Cost and Net Profit Margins of Market Intermediaries Meat Consumption (per capita consumption) Meat Marketing for Export Markets Revealed Comparative Advantages for Meat Export Conclusion The SWOT Approach for Meat Value Chain 11.1 Strengths 11.2 Weaknesses 11.3 Opportunities 11.4 Threats Proposed Action Plan for Meat Value Chain Summary and Conclusions References
31 33 33 33 34 34 34 35 36 37 37 39 39 41 41 41 42 42 43 44 47
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List of Tables
Table 1: Inventory of milk and meat animals during 1996, 2006 & 2009 Table 2: Classification of number of animals slaughtered in recognized and nonrecognized slaughter houses during 2006 and 2009 Table 3: Key characteristics of meat sub-sector, 2008-09 Table 4: Comparative status of livestock inventory and fodder as well as concentrate availability for livestock census years Table 5: Area of rangelands in Pakistan, 1988 Table 6: Status of rangeland in Pakistan during 1988 Table 7: Livestock veterinary services Table 8: Animal Genetic Resources of Pakistan Table 9: Livestock inventory and gross value 2008-09 Table 10: Cost of production of beef animal Table 11: Cost of production of mutton animals Table 12: Cost of production of beef animals at feed lot farms Table 13: Cost of production of mutton animals Table 14: Total number of animals slaughtered and value 2008-09 Table 15. Red meat (beef and mutton) production 2008-09 Table 16: Trends in production of meat and annual growth rate Table 17: Cost of production of beef Table 18: Cost of production of mutton Table 19: Cost of production of beef at feed lot farms Table 20: Cost of production of mutton Table 21: Structure of marketing cost for Contractor/Beopari Table 22: Structure of marketing cost for commission agent Table 23: Structure of marketing cost for Butcher/Retailer Table 24: Sale price at different market intermediaries Table 25: Marketing costs of producers and other market intermediaries Table 26: Net profit margin of market intermediaries Table 27: Meat per capita consumption Kg/Annum Table 28: Quantity and value of meat export from Pakistan from 2000-2007 Table 29: Synthetic RCA measures: Regional perspective Table 30: Proposed action plan for meat value chain Pages 4 5 6 11 12 12 12 13 15 17 17 18 19 23 27 27 28 29 30 31 35 35 36 36 36 37 37 38 39 43
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List of Figures
Figure 1: Capital Flow Figure 2: Supply Chain for Red Meat Figure 3: Red Meat Value Chain in Pakistan, 2008-09 Figure 4: Red Meat Value Chain: Inputs 1st Segment of Meat Value Chain Figure 5: Summary of Inputs 1st segment of meat value chain Figure 6: Meat Animals Production 2st Segment of Meat Value Chain Figure 7: Summary of Production 2nd Segment of Meat Value Chain Figure 8: Meat Animals Marketing 3rd Segment of Meat Value Chain Figure 9: Summary of Live Animals Marketing 3rd Segment of Meat Value Chain Figure 10: Processing (Slaughtering) 4th Segment of Meat Value Chain Figure 11: Trend of Red Meat Production Figure 12: Summary of Processing (Slaughtering) 4th Segment of Meat Value Chain Figure 13: Meat Marketing 5th Segment of Meat Value Chain Figure 14: Trend of Meat Export from Pakistan Figure 15: Trend of Meat Export Value Figure 16: Summary of Meat Marketing 5th Segment of Meat Value Chain Pages 3 8 10 11 14 16 20 22 24 25 28 32 33 38 38 40
A Value Chain Analysis of the Meat Sector in Pakistan

1. Introduction
Livestock production in Pakistan is still more of a way of life rather than an industry. It is an integral part of the rural economy contributing significantly to the agriculture (50%) and the national (12%) GDPs. Livestock raising in Pakistan is primarily a subsistence activity and is characterized by small herds/flocks with widespread ownership over 8 million farmers, more than one million of which are landless. It is also deeply integrated with crop production. Livestock complement crop and grain production and are still a major source of fertilizer and cooking fuel. The contribution of draft power and farmyard manure to crop production is yet to be fully quantified. As livestock are more evenly distributed than land and other assets, it forms the main asset base that meets the dietary needs and provides income to the rural poor. Women are deeply involved in almost all aspects of livestock farming (Hassnain and Khan, 2007). The geographical marketing of the buffalo, cattle, goat and sheep populations within Pakistan indicates the regional importance of the red meat industry. Nearly 57 percent of the national cattle and buffalo herd of 56.89 million head is located in Punjab, and the majority of Pakistans 48 percent sheep and 22 percent goat are located in Balochistan. The marketing of livestock is not even among different provinces as the Punjab province has about half (43%) of the livestock inventory including cattle (49%), buffaloes (65%), sheep (24%), goats (37%) and others (47%). Balochistan harbours majority of sheep as this province alone has 48 % of the sheep population of the country. Similar to cattle, sheep are also evenly distributed in rest of three provinces. The major products of livestock are milk and meat which are an important source of animal protein in human diet. Traditionally, beef and mutton are relatively more consumed as compared to poultry meat and fish. The marketing of beef and mutton starts from slaughtering of animals in the abattoirs and in the backyard of butchers meat shops. The meat shops usually deal only one type of meat, i.e. either beef or mutton. Present exercise is aimed to contribute the process of value chain analysis (VCA) of red meat (beef and mutton) industry in Pakistan because it facilitates the identification of binding constraints to growth and competitiveness and the effective targeting of institutional and policy-related issues, at the sub-sector (meat), at the sector (livestock) and economy-wide levels alike (FIAS, 2007). VCA are sometimes stand-alone studies that provide direct inputs to government strategies. For example, in Indonesia, the value chain analyses of selected sectors were key inputs for the governments export competitiveness strategy and are a good way to understand relationships and linkages among buyers, suppliers, and a range of market actors in between (FIAS, 2007). For example, a coffee value chain links coffee producers to processors and multinational buyers at one end of the chain, and to suppliers of inputs (such as fertilizer producers) at the other end. Many VCAs also incorporate the role of transportation, utility, and financial service providers, among others. However, the focus on inter- and intra-industry and firm relationships - although extremely useful in its own right - captures mainly market-related insights and often misses the
policy and regulatory environment (e.g., taxes, licensing, standards, etc.) in which private firms operate as well as policies and regulations often have a significant effect on firm-level competitiveness and the performance of the chain. By explicitly synthesizing government policy issues with market relationships, the type of value chain analysis used in this report will help to clarify which binding constraints to growth and competitiveness are affecting the firms that comprise the meat industry in Pakistan (FIAS, 2007). This study also aimed to contribute to the process of linking rural industries and enterprises into the mainstream markets to harness the benefit from the meat value chain. In addition to this study will also develop strategic linkages with its targets livestock producers, market players and consumers in the country. 2. Objectives of the Study
The objectives of this research are as under: (i) to review the size and nature of meat farming/industry; (ii) to discuss meat value chain emphasizing the role of key industry players and the extent of their direct or indirect control on meat animal raising practices; (iii) to identify key binding constraints to growth and competitiveness of the players in the meat industry for their specific leverages, either through their linkages to meat industry or through their overall market position; (iv) to identify and compare the top players of meat value chain; and (v) to suggest the institutional and policy measures at the sector and economy wide level. 3. Methodology
Maximum efforts were made to gather the relevant information and literature on meat value chain from various government departments, academic, research and development institutions, ministries, offices of international organizations, NGOs and journal articles. After the extensive review of the gathered literature, various stakeholders in the marketing chains, officials in agricultural research institutions, agricultural universities, L&DD department and private sector enterprises were consulted on plan for improvement of meat value chain in Pakistan. Moreover, the farmers/producers and marketing intermediaries were also consulted in order to get updated first hand information about meat value chain for validating and updating the information grasped from the literature reviewed. Overall, 16 secondary livestock markets (both large and small ruminants) were visited. In meat marketing chain, 10 abattoirs, 40 butchers (both urban and rural), and 20 consumers were consulted. The problems and issues related to meat production and marketing inefficiencies were therefore identified through this exercise and prepared proposed plan of action to improve this chain for the national level. 3.1 The Value Chain Analysis (VCA) Model
VCA model emphasizes on the diverse interrelationships among market opportunities constraints and directives at various levels of the supply chain and at different levels of influence, from which specific value addition takes place. This feature of the VCA lends to its completeness, as a strategic tool in exploring different alternative strategies for poverty reduction. The value chain
analysis model used for this study adopted from Asean Foundation and Asia DHRRA (2008) which is presented in Figure-1.
Capital Flow
Exporters
Input Suppliers
Producers Processors Wholesalers Retailers Consumers
Information Flow
Enabling environment
Policies Rules and Regulations Infrastructure & Enterprise Development Facilities Research & Technology & Institutional Services Socioeconomic & Cultural Consideration
Source: Adopted from Asean Foundation and Asia DHRRA (2008) VCA is a method for accounting and presenting the value that is created in a product or service as it is transformed from raw inputs to a final product consumed by end users and typically involves identifying and mapping the relationships of four types of features: (i) the activities performed during each stage of processing; (ii) the value of inputs, processing time, outputs and value added; (iii) the spatial relationships, such as distance and logistics, of the activities; and, (iv) the structure of economic agents, such as suppliers, the producer, and the wholesaler (FIAS, 2007). Meat industry value chain approach introduced in this technical report relies on the traditional market related context of value chain analysis in identifying failures in sourcing, manufacturing, and delivery and this approach is unique in recognizing the key public policy, institutional and infrastructure factors underlying constraints in the meat business environment in Pakistan. The policy and reform agenda that typically emerges from the value chain approach relates to three core areas (i) Product market issues (e.g., trade policy, competition policy, price distortions, subsidies, licensing, product standards, customs, logistics, property rights, enforcement of regulations); (ii) Factor market issues (e.g., wages, capital charges, utility market issues, labor market rigidities, land price, zoning); and (iii) Market related issues (e.g., market diversification, research and development, product diversification, supplier linkages). 4. Organization of the Report
Structure of red meat farming/industry in Pakistan is discussed in section 2. An overview of beef and mutton industries are presented in the section 3. The value chain of beef and mutton industries is examined in section 4. Economic actors and leverage are analyzed in section 5. Key findings and conclusion in section 6 completes the report.
5. 5.1
Overview of Red Meat Sub-Sector Inventory of Milk and Meat Animals
In 2008-09, there were 33 million cattle (including both beef and dairy). Out of this, 4.6 million heads were bullock, 7.2 million heads dry cows (beef cow) and 9.7 million heads in-milk cows. 11.5 million heads were cow young stock. Likewise, there were about 30 million buffaloes (including both beef and dairy). Out of this, 0.7 million heads were male buffaloes (beef animal), 5.9 million heads dry buffaloes (beef animal) and 11.1 million heads in-milk buffaloes. There was 12.2 million heads of buffaloes young stock. Total sheep was 27.4 million heads. Out of this, male sheep was 4.5 million heads (mutton animal) and female sheep was 14.2 million heads. There was 8.7 million heads sheep young stock. Just more than 58 million heads of goat was recorded for the year 2008-09. Out of this, 7.2 million heads was male goat (mutton animal) and 38.8 million heads of female goat. There was 17.3 million heads goat young stock during 2008-09 (Table 1). The data given in the table revealed the positive significant growth in livestock inventory from 1996 to 2006 and 2009 respectively. Table 1: Inventory of milk and meat animals during 1996, 2006 & 2009
Type of Animal Livestock Census 1996 2006 29.6 4.1 15.2 8.7 10.3 5.4 4.9 27.4 0.6 15.6 10.2 11.2 4.7 6.5 26.5 4.4 13.7 8.4 53.8 6.6 31.2 16.0 (Million heads) Extrapolated* 2008-09 33.0 4.6 16.9 9.7 11.5 6.0 5.5 29.9 0.7 17.0 11.1 12.2 5.1 7.1 27.4 4.5 14.2 8.7 58.3 7.2 33.8 17.3
A. Milk and Meat Animals (i) Total Cattle 20.4 Bullocks (3 years & above) 3.7 Cows (3 years & above) 10.0 In-milk cows 6.3 Youngstock (below 3 years) 6.7 Male 3.6 Female 3.2 (ii) Total Buffaloes 20.3 Male buffaloes (3 years & above) 0.4 Female buffaloes (3 years & above) 12.2 In-milk buffaloes 7.8 Youngstock (below 3 years) 7.7 Male 3.3 Female 4.4 (iii) Total Sheep 23.5 Male (1 year & above) 3.4 Female (1 year & above) 13.3 Youngstock (below 1 year) 6.8 (iv) Total Goats 41.2 Male (1 year & above) 5.2 Female (1 year & above) 22.4 Youngstock (below 1 year) 13.6 Source: Pakistan Livestock Census, 2006 * Economic Survey 2008-09 and extrapolated using the proportion of 2006 census data
5.2
Beef and Mutton Animals
The information on meat (both beef and mutton) animals are estimated on the basis of number of animals slaughtered during 2006 using Agricultural Census Data and extrapolated for 2009 using Economic Survey Data for the year 2008-09 and presented in Table 2. There were 24.493 million 4
meat animals for the year 2008-09 in Pakistan. Among them, 3.7 million heads were beef animals (cattle, buffaloes and camels) and 16.82 million heads were mutton animals (sheep and goat) during the year 2008-09 in the country (Table 2). Table 2: Classification of number of animals slaughtered in recognized and non-recognized slaughter houses during 2006 and 2009
(Million)
Type Animal of Number of Animals Slaughtered Outside Recognized Slaughter Houses Households Reporting Number of Animals Slaughtered Rural/Urban Butchers Reporting Number of Animals Slaughtered Number of Animals Slaughtered in Recognized Slaughter Houses Total Number of Animals Slaughtered 2006 2009
1 Bullocks Cow YS male YS Female Male Buffalo Female Buffalo YS Male YS Female
2 1.104 2.038 0.332 0.202 0.136
3 0.301 0.636 0.135 0.096 0.037
4 0.002 0.003 0.004 0.002 0.001
5 0.17 0.31 0.403 0.121 0.063
6 0.422 0.45 0.337 0.182 0.435
7 0.893 1.396 0.874 0.399 0.535
8 1.002 1.552 0.971 0.448 0.624 1.225 1.488 0.339 3.676 0.016 0.008 0.024 3.757 1.136 9.634 2.293 16.82 24.493
0.353 0.096 0.002 0.473 0.555 1.124 0.183 0.113 0.007 0.901 0.356 1.371 0.055 0.024 0.001 0.132 0.155 0.31 0.727 0.27 0.011 1.569 1.501 3.34 Camel 0.007 0.004 0 0.001 0.011 0.016 YS Camel 0.002 0.003 0 0.002 0.003 0.008 0.009 0.007 0 0.003 0.014 0.024 Sheep 0.951 1.348 0.002 0.39 1.898 3.636 YS Sheep 0.042 0.08 0 0.074 0.943 1.097 Goat 2.922 3.799 0.006 1.395 3.688 8.882 YS Goat 0.070 0.132 0.001 0.217 1.772 2.121 3.985 5.359 0.009 2.076 8.301 15.736 Total 8.399 6.804 0.03 4.651 11.207 22.662 Source: Livestock Census, 2006 and extrapolated for 2008-09 using data from Economic Survey 2008-09
5.3 Characteristics of Meat Sub-Sector Key characteristics of meat sub-sector are herd size cattle, buffaloes, sheep and goats type of farming (cattle, buffaloes, sheep and goats), number of household reported slaughtering animals, number of animal (cattle, buffaloes, camels, sheep and goats) slaughtered and meat sub-sector value of slaughtered meat animals (Table 3). Livestock can be classified as large ruminants (cow and buffaloes) and small ruminants (sheep and goat). More than 3/4th of the population of large ruminants falls under the category of herd size below 10 animal heads. More or less 70 percent of large ruminants farming households have less than 5 animal units which implies that majority of the large ruminants farming population have subsistence sized herds of large ruminants, although they represent about two-fifth of the total population. In case of small ruminants, nearly three-fourth of total sheep farming households keep about one-fifth of total sheep population by having herd size ranging 1-15 animal heads. On the other hand, about 90 percent of the goat farming households kept half of the total goat population with the herd size ranged 1-15 animal heads. This again implies that majority of the small ruminants farming households are subsistence farmers. It can be concluded that majority of the livestock farming households are keeping small sized herds of small and large ruminants.
Table 3: Key characteristics of meat sub-sector, 2008-09

Characteristics Herd size cattle 1-4 5-10 11-20 21-30 > 30 HH reported (million) 4.37 1.46 0.28 0.05 0.04 6.20 Herd size buffalo HH reported (million) 1-4 4.20 5-10 1.43 11-20 0.29 21-30 0.04 > 30 0.03 5.99 Herd size sheep HH reported (million) 1-15 1.203 16-50 0.268 51-150 0.073 151-350 0.015 > 350 0.006 1.565 Herd size goat HH reported (million) 1-15 6.172 16-50 0.531 51-150 0.083 151-350 0.013 > 350 0.004 6.803 Type of farming Cattle Rural irrigated Rural barani Progressive Per urban Types of farming Buffaloes Rural subsistence Rural market oriented Peri urban Commercial Type of farming Sheep and goat Nomadic Transhumant Sedentary Household Number of households reported slaughtering beef animals - mutton animals Number of animal slaughted: Cattle Bullocks Cows > 3 years Youngstock (male) Youngstock (female) Number of animal slaughted Buffaloes Male (adult) Female (adult) Youngstock (male) Youngstock (female) Number of animal slaughted: Small ruminants Sheep Youngstock Goat Youngstock Number of animal slaughted Camel Camel (adult) Youngstock Meat sub-sector value of slaughted - beef animals - mutton animals Key desirable traits Provinces where product is number one beef animals - mutton animals Meat sub-sector Cattle inventory (million heads) 11.55 10.74 4.28 1.26 5.17 33 Buffalo inventory (million heads) 10.01 10.35 4.45 1.18 2.92 29.91 Sheep inventory (million heads) 6.03 7.53 6.17 3.34 4.33 27.40 Goat inventory (million heads) 29.89 14.63 7.12 3.03 3.62 58.29 Cattle inventory (million heads) 17.342 15.420 0.0250 0.213 Buffalo inventory (million heads) 20.369 7.775 1.636 0.143 Sheep & goat inventory (million heads) 5.42 26.98 34.86 18.47 4.412 million 3.985 million 7.673 million 1.002 1.552 0.971 0.448 3.676 million 0.624 1.225 1.488 0.339 16.82 million heads 3.757 1.136 9.634 2.293 0.024 million 0.016 0.008 173.595 billion 92.960 billion Meat production, reproductive capacity Punjab and Sindh Balochistan, NWFP, Punjab and Sindh
Four types of cattle farming are prevalent in the country which are known as rural irrigated (17.34 million heads), rural barani (15.42 million heads), progressive farming (0.025 million heads) and peri urban (0.213 million heads). There are also four types of buffaloes farming in the country which are known as rural subsistence (20.369 million heads), rural market oriented (7.775 million heads), peri urban (1.636 million heads) and commercial (0.143 million heads). Number of cattle, buffaloes and camels slaughtered were 7.673 million heads, 3.676 million heads and 0.224 million heads respectively by 4.412 million households. The meat sub-sector value of slaughtered beef animal was Rs.175.01 billion in the country during 2008-09 (Table 3). Four types of small ruminant farming are prevalent in the country which are known as nomadic (5.42 million heads), transhumant (26.98 million heads), sedentary (34.86 million heads) and households (18.47 million heads). Numbers of sheep and goats slaughtered were 16.82 million heads by 3.985 million households. The industry value of slaughtered mutton animal was Rs.73.65 billion in the country during 2008-09 (Table 3). 6. Meat Supply Chain
The supply chain deals with the all the activities from inception (inputs, production, processing and distribution) of a product to its consumption. The meat supply chain (flow of meat animal to meat for domestic market and export market) is presented in Figure 2. The meat animals for the meat industry are mainly comes from the livestock farmers which contribute about 97 percent of the total meat animals (23.764 million). Feed lot fattening contribute 2.1 percent meat animals (0.514 million animals). Less than 1 percent meat animals are produced by the meat exporter at their own farm. Livestock farmers sell their animals (80%) to beopari, take animals (5%) to live animals markets and sell to rural butcher (15%). Beopari sell their animals (98%) at live animals markets and 2 percent of them to rural butcher. From live animals markets, 52 percent meat animals are purchased by contractors, 15 percent by traveler traders, 31 & 2 percent animals are purchased by urban and rural butchers respectively. The animals contractors sell their 27, 72 and 1 percent of meat animals to the traveling traders, urban butchers and exporters respectively. The traveler traders sell their animals to urban butchers (84%) and take to slaughter house (16%). From feed lot fattening, meat animals are sold to beopari (71%), livestock markets (18%), contractors (10%) and rural butchers (1%). Meat (beef and mutton) are marketed from recognized and non-recognized slaughter house to wholesalers (30%) and retailers (70%). Wholesalers sell their meat to retailers (90%), hotel and restaurants (5%), food services and suppliers (3%) and super markets (2%). Retailers sell their all meat to the consumers. Urban butchers sell their meat to consumers (93%), food suppliers (3%) and hotel and restaurants (4%). The rural butchers sell all the meat to the rural consumers. The offals are traded by offal contractors who sell to the offal retailers (50%) and to offal processors (50%). Offal retailers sell all the offals to the consumers. The offals processors sell all their offals to the offal exporters (Figure 2).
Figure 2: Supply Chain for Red Meat
Exporter own Farms (<1%)
Livestock Farmers (97%)
Feed lot Fattening (2.1%)
s o u r c e
52% 100 %
Contractor
5% Live animal Markets 98%
80%
Beoparies
10 % 18 %
71 % 1%
27% 1%
Trader
15% 2% 72% 16 % 84 %
Recognized Slaughterhouse (49%)
2%
15%
31%
m a k e
Exporters S. House (1%)
U. Butchers (30%)
R. Butchers (21%)
100 %
70% 100 %
Retailers
7% 30%
Wholesaler s Hotels/Food Chains
d e l i v e r
99 %
Offals Contractors
100 %
50%
Offals Retailer
90% 2% 100 % CONSUMERS (98.8%)
8% 93 %
Super Stores
100 50% %
100 %
Offals Processor
100 %
EXPORT (1.2%)
7.
Red Meat Value Chain
This section is devoted to the five segments of red meat value chain in Pakistan. The value chain deals with the diverse interrelationships among market opportunities constraints and directives at various levels of the supply chain and at different levels of influence, from which specific value addition takes place. These segments are input provision/supplies, meat animal production, meat animal marketing, processing and meat domestic and export markets. The basic structure of the Pakistan meat sub-sector is depicted in the meat value chain in Pakistan for the year 2008-09 in Figure 3. The first column in the red meat value chain inputs refers to the main products and services that cattle, buffaloes, sheep and goats farmers need in order to raise beef animals, including feed, veterinary services, and seedstock (breeding). The production column includes three separate stages of beef and mutton animals, representing three different types of farmers: those with cattle & buffaloes, sheep & goat operations (where beef and mutton animals are produced under different production system in the country) and feedlot operators (who confine beef and mutton animals and feed them a highenergy diet of grains/wanda to bring them to slaughter weight). One important box dairy beef (cow and buffalo) and dairy mutton (sheep and goat enters the Pakistan beef and mutton industry value chain laterally, from the dairy industry. A portion of the Pakistan beef industry is made up of dairy beef and dairy mutton that comes from cows, buffaloes, sheep and goat culled from dairy herds because, for age or other reasons, they are not productive for dairy purposes. Meat animal marketing column includes the purchase of these animals by traders in the country. These traders collect animals from the villages and sell them to wholesalers called Beopari or take them himself to the local live animals markets. In big cities (Lahore, Karachi, Peshawer, Quetta, Multan, Gujranwala) and towns commission agents called Arhties also operate in most parts of the country. In Lahore, there is another group of wholesalers called Rewaitees. They buy large number of sheep and goats from the Beoparies, through the Arhties, have them slaughtered and then sell them to the retailers through secret bidding. Several butchers collectively may also buy several animals from the Arhties, slaughter them and sell the dressed carcasses/meat to the consumers. There are no commission agents in Baluchistan. The Beoparies arrange large number of animals from large markets like Quetta and then transport them to main consumer outlets like Karachi and Lahore. Processing (Slaughtering) column of the value chain includes slaughtering of mutton and beef animals at recognized and non-recognized slaughter houses both in urban and rural areas. Distribution is achieved through wholesalers or director sale to retailers (butchers), although the wholesale role is increasing being perform by the large handlers and processors. At the end of the meat value chain, in the Distribution (Meat Marketing) column includes retailers, super markets, restaurants, and food service suppliers which provide dining and vending services for corporate clients such as offices, universities, wedding ceremonies and healthcare institutions.
Figure 3: Red Meat Value Chain in Pakistan, 2008-09
Inputs
Meat Animals Production
Meat Animals Marketing
Processing (Slaughtering)
Distribution (Meat Marketing)
Feed
Cattle Farming
Buffalo Farming
Transport
Recognized and NonRecognized Urban and Rural Slaughter Houses as well as Eid-ul-Azha
Wholesalers
UBs & RBs Retailers Handling, Packing and Loading (Butchers)
Veterinary Services
Sheep and Goats
Hotel and Restaurants
Food Service Suppliers Feedlots Fattening Meat Transport Super Markets Genetics (Breeds) Culled Beef Animals Live Export
Meat Export
Culled Mutton Animals
Consumers
7.1
Input Provision/Supplies --- 1st Segment of Value Chain
The first column in the chain inputs refers to the main products and services that cattle and buffaloes farmers need in order to raise beef animals, including feed, veterinary services, and breeding (Figure 4). The current situation of each input and binding constraints to input supply are briefly discussed here. 7.1.1 Feed Feed includes fodder, concentrates and pastures. Livestock producers reported that fodder and feed are very expensive due to their limited supplies. Area under fodder crop has declined from 2.75 million hectares in 1986 to 2.45 million hectares in 2006. The number of livestock heads has increased from 54.48 million heads in 1986 to 55.47 million heads in 2006. The livestock population and fodder production are inversely related fodder productivity. The fodder area per adult animal unit has significantly declined from 0.067 ha in 1986 to 0.035 ha in 2006. The fodder production per adult animal unit also has declined from 1.31 ton in 1986 to 0.80 ton in 2006. The concentrate and wheat straw availability per adult animal unit has also declined from 1986 to 2006 (Table 4).
10
Table 4: Comparative status of livestock inventory and fodder as well as concentrate availability for livestock census years
Items Fodder area (m.ha) Fodder production (m.ton) Fodder productivity (t/ha) Concentrate availability (m.ton) Wheat straw (m.ton) Adult animal units (m) Fodder area per adult animal unit (ha) Fodder availability per adult animal unit (ton) Adult animals units feeded from a hectare of fodder Adult animal units feeded from a tonne of fodder Concentrate availability per adult animal unit (ton) Wheat straw availability per adult animal unit (ton) 1986 2.75 54.48 19.60 1.4 13.9 41.52 0.067 1.31 14.96 0.76 0.034 0.335 1996 2.72 60.34 22.20 2.1 16.9 52.40 0.052 1.15 19.30 0.87 0.040 0.323 2006 2.45 55.47 22.66 2.5 21.27 69.26 0.035 0.80 28.29 1.25 0.036 0.307
Figure 4: Red Meat Value Chain: Inputs 1st Segment of Meat Value Chain
Inputs
(Seedstock, feed and veterinary services)
Feed
(Green & dry fodders, concentrates and pastures)
Cattle Farming
Buffalo Farming
Transport
Wholesalers
Further Meat Processing
UBs & RBs Retailers
Veterinary Services
(Medicine, vaccination and A. insemination)
(Handling, Packing and Loading)
Sheep and Goats
Food Service Suppliers Feedlots Fattening Meat Transport Super Markets Culled Beef Animals Culled Mutton Animals Live Export
Meat Export
Genetics/Breeds
Cattle (10), Buffaloes (3) Sheep (28) Goat (25)
Consumers
11
7.1.2 Pasture resources The total pasture area in different parts of Pakistan is 50.88 m.ha in 1987 (Table 5). The numbers of adult animal units of small ruminants are 10.7 million. The rangeland per adult animal of small ruminant is 4.76 ha/animal. FAO (1987) has reported a critical stocking rate of 16 ha/animal unit for low potential ranges. Due to misuse and centuries of overgrazing, the productivity of rangelands has been adversely affected. At present, rangelands are producing only 10 to 15% of their potential. This low productivity can be increased by adopting various management practices such as periodic closures, re-seeding, and improved grazing management etc. (Muhammad, 2002). Table 5: Area of rangelands in Pakistan, 1988
Province Balochistan Sind Punjab NWFP Northern Areas Azad Kashmir Total Source: NCA, 1988 Total area (M ha) 34.7 14.1 20.6 10.2 7.0 1.3 88.0 Rangeland area (M ha) 27.4 7.8 8.2 6.1 2.1 0.6 45.2 Percentage of provincial area 79 55 40 60 30 45 51
Using the data of pastures available in 1988 and number of small ruminants in 2006, 4.76 hectares of rangeland is available per adult small ruminant in Pakistan (Table 6). Table 6: Status of rangeland in Pakistan during 1988
Area of rangeland Area (m.ha) Adult animal unit (small ruminant) - million Rangeland/adult animal unit (small ruminant) - ha/AAU Source: Muhammad, 1987 1988 50.88 10.7 4.76
7.1.3 Veterinary services The number of livestock hospital, dispensaries, artificial insemination centres, livestock professional and sub-professional is limited in order to cover the livestock population in the country and therefore veterinary services to livestock are poor (Table 7). Although, there are several research institutes, research in livestock is rather weak mainly because of shortage of trained manpower, research facilities and operational funds (Hassnain and Khan, 2007). The availability of veterinary services per adult animal is very limited in Pakistan. Table 7: Livestock veterinary services
Livestock extension services Adult animal units Veterinary hospital Veterinary dispensaries/centres Artificiel insemination (AI) centres/sub-centres Livestock research institutes Livestock/poultry farms Professional Sub-professional Adult animal units/hospital Adult animal units/dispensary Adult animal units/AI Adult animal units/professional Adult animal units/sub-professional 2006 69.26 800 5000 1000 12 100 2000 5000 86575 13852 69260 34630 13852
12
7.1.4 Seed stock (Genetics/breeds) Reliable data on almost all aspects of livestock biodiversity in Pakistan is very limited. Even the breed inventory of species particularly of sheep and goats is not complete. Recently, Hassnain and Usmani (2006) have reviewed the state of animal genetic resources in Pakistan which is reproduced in Table 8. Pakistan has 9 species of livestock. Several breeds of these cattle, buffaloes, sheep, goats, camels, etc. are transboundry breeds because these also exist in some other countries of the region (Hassnain and Khan, 2007). Some examples of transboundry breeds are Sahiwal and Thari cattle, Nili-Ravi buffaloes, Beetal goats and Aseel chickens (Hassnain and Usmani, 2006). Moreover, it is claimed by many professionals that some breeds of these species particularly of sheep and goats are yet to be identified, characterized and reported (Hassnain and Khan, 2007). Table 8: Animal Genetic Resources of Pakistan
Species Cattle Buffaloes Sheep Goats Camels Horses Donkeys Yaks Chicken No. of breeds 10 3 28 25 20 2 1 1 3
7.1.5 Conclusions The summary of Inputs 1st segment of meat value chain is presented in Figure 5. 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 overall management that is compounded by the low genetic ceiling of the livestock. The availability of green and dry fodders, concentrates and pastures (grazing) have declined overtime which resulted the shortage of feed. The shortage of feed translated into poor and inadequate nutrition with resulted in low animal productivity. The availability of veterinary services (medicines, vaccination and artificial insemination) along with livestock professional and sub-professional for adult animal units have also declined overtime. The feed and veterinary services are also very expensive due to which livestock herders are using both feed and veterinary services at low level resulting poor livestock productivity. 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.
13
Figure 5: Summary of Inputs 1st segment of meat value chain
INPUTS
Seed Stock (Genetics/Breeds) Feed Veterinary Services
SEED STOCK (GENETICS/ BREEDS) Cattle (10) Buffaloes (3) Sheep (28) Goat (25)
FEED Green fodder Dry fodder Concentrates Pastures/grazing Fodder availability/ adult animal Wheat straw availability per adult Constraints availability per adult
unit declined 1.5 ton from 1996 to 0.80 ton in 2006 animal unit has declined from 0.323 ton in 1996 to 0.307 ton in 2006 animal unit declined from 0.04 ton in 1996 to 0.036 ton in 2006 small ruminants is only 4.76 ha/annum low productivity of rangeland due to over grazing and exploitation
VETERINARY SERVICES Medicines Vaccination A. insemination High disease incidence and Limited access to livestock Low level of farmers High cost of veterinary 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 services satisfaction services high mortality
Transboundry breeds Shaiwal and Thari cattle, Nili-Ravi buffaloes and Beetal goats
Rangeland per adult animal unit

Haphazard breeding Traditional unscientific management
During the current era these children

There are no beef breeds of cattle and beef is at best a by-product in Pakistan
High cost of feeds Number of nomadic from
prefer to go for daily wage work rather than grazing and grass cutting due to social status of herders
A veterinary professional and

a sub-professional is available for 34630 and 13852 adult animal unit during 2006 livestock census
Such decline of availability for

Need improved breeding for meat animal programme with modern and scientific management
Afghanistan has disappeared due to war and terror green and dry fodders and concentrates overtime led to poor and inadequate nutrition which resulted in low animal productivity performing much below their genetic potential due to poor and inadequate nutrition which lead to compounded by the low genetic ceiling of livestock
Medicines are very expensive Due to limited availability of

veterinary services and expensive medicines, livestock herders are using at low level resulting poor livestock productivity
Large and small ruminants are
Issues of Inputs
1. 2. 3. 4. Haphazard breeding and traditional unscientific management Availability of feed (green & dry fodders, concentrate and pastures) per adult animal declined overtime led to inadequate nutrition and feed is expansive Limited coverage of veterinary services (medicines, vaccination & AI) and medicines are expansive Low input system (expansive inputs and therefore farmers are using at low level)
14
7.2
Meat Animal Production --- 2nd Segment of Value Chain
The input (live animals) for the red meat sub-sector is mainly the livestock farmers which contribute about 97 percent of the total meat requirement. Among the livestock farmers small farmers with mix crop livestock farming system are dominant in the meat sector. Beef is the byproduct of the livestock sector and the male calves and heifers of cattle and buffaloes are offered for sale for slaughtering along with a small share of female calves and heifers. The adult cows and buffaloes are also offered for slaughtering after certain age and productivity levels. An estimated 16.5 and 20 percent of total beef and mutton production originates from dairy cows, dairy buffaloes, female sheep and female goats. Recently the private fattening farms are also developed with the government initiatives through feed lot fattening project through private sector-led, Livestock and Dairy Development Board. The structure of meat animal production is presented in Figure 6. 7.2.1 Inventory of meat animals The livestock inventory for milk and meat animals for the year 2008-09 in the country is presented in Table 9. Total livestock inventory for the year 2008-09 is 154.2 million heads. Out of which, cattle, buffaloes, sheep and goats are 33, 29.9, 27.4 and 58.3 million respectively. Out of 33 million of cattle, 9.7 and 11.1 million heads of in-milk cows and in-milk buffaloes respectively. The remaining animals can be considered as meat animals (Table 9). Table 9: Livestock inventory and gross value 2008-09
Type of Animal A. Milk and Meat Animals (i) Total Cattle Bullocks (3 years & above) Dry Cows (3 years & above) In-milk cows (3 years & above) Youngstock (below 3 years) (ii) Total Buffaloes Male buffaloes (3 years & above) Dry Female buffaloes (3 years & above) In-milk buffaloes Female buffaloes (3 years & above) Youngstock (below 3 years) (iii) Total Sheep Male (1 year & above) Female (1 year & above) Youngstock (below 1 year) (iv) Total Goats Male (1 year & above) Female (1 year & above) Youngstock (below 1 year) (v) Others Camel Horses Mules Donkeys Total 2008-09 33 4.6 7.2 9.7 11.5 29.9 0.7 5.9 11.1 12.2 27.4 4.5 14.2 8.7 58.3 7.2 33.8 17.3 0.921 0.344 0.156 4.268 5.689 Price (Rs./ Animal) Gross Value Rs. billions 793.100 193.200 122.400 339.500 138.000 939.400 35.000 147.500 610.500 146.400 156.150 40.500 85.200 30.450 205.670 37.440 128.440 39.790 36.835 13.770 7.785 42.685 2195.391
42000 17000 35000 12000 50000 25000 55000 12000 9000 6000 3500 5200 3800 2300 40000 40000 50000 10000
15
Figure 6: Meat Animals Production 2st Segment of Meat Value Chain

Inputs

Meat Animals = 24.493 million heads Beef Animals = 7.673 million heads Mutton Animals = 16.82 million heads
Feed
Cattle Farming
(3.973 million heads)
Buffalo Farming
Transport
Wholesalers
UBs & RBs Retailers
Veterinary Services
Sheep and Goats

Sheep = 4.899 million heads Goat = 11.927 million heads
Feedlots Fattening
Beef Animals = 0.0956 million heads Cattle = 0.0496 million heads Buffaloes = 0.0459 million heads
Food Service Suppliers Meat Transport Super Markets
Genetics/Breeds
Culled Beef Animals

Beef = 1.263 m.h Cattle = 0.655 m.h Buffaloes = 0.606 m.h

M. Animals = 3.365 m.h Sheep = 0.979 m.h Goat = 2.385 m.h
Live Export
Meat Export
Consumers
7.2.2 Cost of production of meat animals at farm level Cost of production of meat animals at farm level is comprised of fodder cost, labor, initial vale of animal, interest on investment and depreciation of shed etc. Cost of production of meat is estimated at two levels namely cost at general farm level and cost of production of feed lot fattening of commercial venture. 7.2.3 Cost of production of meat animals (general farmers) The cost of production for both beef and mutton animals at general farm level is presented separately in this section. 7.2.3.1 Cost of production of beef animal The cost of production for beef animal is calculated for young stalk including the initial value. At general farm level where the beef animal is considered as a by product of dairy animal, the cost of production of young stalk beef animals is estimated at Rs. 16113 where as the variable cost is Rs.12113 and the value of out put is Rs.12277 resulting a gross margin of Rs. 165 per animal and a net return in the form of loss amounting to Rs. 3835 per head for a 12 month old beef animal (Table 10).
16
Table 10: Cost of production of beef animal

Items Produce Sale (12 month old animal ) Manure Out Put Ave. Live Weight at Sale Sale Price Beef animal Costs Green fodder @ 10 Kg per Day Dry fodder @ 1 Kg per Day Vet medicine Calf Interest @12.5% on average value Labor @ 1 man day for 20 calf Equipment costs Interest on shed and space+depreciation on shed Variable cost Total cost Gross Margin/Head Net Income/Head Unit Quantity 1 25 Rate(Rs) 12077 8 Amount 12077 200 12277 171.6 70.38 3650 2190 60 4000 1238 4563 100 313 12113 16113 165 -3835
40 kg Kg Rs./Kg Live Weight 40 kg 40 kg
91.25 18.25 2 1 22.8125
40 120 30 4000 200 100 312.5
Days
Rs./Animals Rs./Animals
7.2.3.2 Cost of production of mutton animals The cost of production for mutton animal is calculated for young stalk including the initial value. At general farm level, the cost of production of 6 month old mutton animals is estimated at Rs. 2904 where as the variable cost is Rs. 1904 and the value of out put is 2710 resulting a gross margin of Rs. 806 per animal and a net return with loss to amounting to Rs. 194 per animal (Table 11). Table 11: Cost of production of mutton animals
Items Produce YS 6 month old Manure Out Put Ave. Live Weight at Sale Costs Green fodder @ 3 Kg per Day Dry fodder @ 0.15 Kg per Day Vet medicine Calf Interest @12.5% on average value Labour @ 1 mand day for 20 calfs Equipment costs Interest on shed and space+depreciation on shed Variable cost Total cost Gross Margin/Head Net Income/Head Unit Quantity 1 1.25 Rate(Rs) 2700 8 Amount 2700 10 2710 24.0 548 55 30 1000 204 730 25 313 1904 2904 806 -194
40 kg Kg 40 kg 40 kg
13.6875 0.45625 1 1 3.65
40 120 30 1000 200 25 312.5
Days
Rs./Animals Rs./Animals
17
7.2.4 Cost of production of beef animals at feed lot framers During the recent years feed lot fattening is also gaining popularity among the progressive farmers and there is also shift towards rearing meat animals against the previous practice of producing beef as a by product of dairy animals and draft animals. There was no practice of rearing mutton animals as feed lot specifically. The cost of production for feed lot farm for both beef and mutton is calculated and presented in this section as follows. 7.2.4.1 Cost of production of beef animals The cost of production of beef animals at feed lot farms is calculated and presented in Table 12. To get a representative estimates a herd size of 40 animals is assumed. The farm gate price of the beef animal with an average weight of 109 kg including the transportation charges is Rs. 9800/head. The cost of production for about three month is calculated at Rs.5034 with a weight increase of 54 kg. The value of output is Rs. 15270 per animal resulting a profit of Rs.436 without subsidy and Rs.1836 with subsidy per animal. Table 12: Cost of production of beef animals at feed lot farms
Items Purchase Price Transportation Purchase Price Initial Weight Initial Price VC: Labor (2 Persons @ 4000/month/person Electricity Rougages (hey,straw,fodder) Wanda Medicines Sub-Total Interest on variable cost Interest on value of animal @ 12 %pa Shed cost at 12% Fixed Cost Cost of Production Income Sale of Animal FYM Total Value of Animal at sale Subsidy Gross Income Without Subsidy Net Income Without Subsidy Gross Income With Subsidy Net Income With Subsidy Initial Weight Final Weight Difference Unit Rs./Animal Rs./Animal Rs./Animal Kg/Animal Rs./Kg Live weight Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Kg/Animal Kg/Animal Kg/Animal Cost per animal 9650 150 9800 109 90 600 45 1800 1620 100 4165 125.00 294.00 450.00 869.00 5034.00 15000.00 270.00 15270 1400.00 15270.00 436.05 16670.00 1836.05 109.00 163.00 54.00
7.2.4.2 Cost of production of mutton animals The cost of production mutton animals for a lot of 150 animals is calculated and presented in Table 13. The purchase price for a 25Kg animal was Rs.3150 per animal including the transportation cost. The cost of production to the feed lot farmers for mutton animal is estimated at Rs.1277 per animal and the value of out put is Rs.4529 per animal. Net income with a weight gain of about 10.8 kg per animal is estimated at Rs.102 per animal and a subsidy of Rs.400 per mutton (male) animal is provided to the farmers.
18
Table 13: Cost of production of mutton animals

Items Purchase Price Transportation Purchase Price Initial Weight Initial Price Variable Costs Labor (2 Persons @ 4000/month/person Electricity Roughages (hay, straw, fodder) Wanda Medicines Sub-Total Interest on variable cost Interest on value of animal @ 12 %pa Shed cost at 12% Fixed Cost Cost of Production Income Sale of Animal FYM Total Value of Animal at sale Subsidy Gross Income Without Subsidy Gross Income With Subsidy Net Income Without Subsidy Net Income With Subsidy Initial Weight Final Weight Difference Unit Rs./Animal Rs./Animal Rs./Animal Kg/Animal Rs./Kg Live weight Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Kg/Animal Kg/Animal Kg/Animal Cost per animal 3100 50 3150 25 126 160 12 80 729 58 1038 31.0 95.5 112.0 238.00 1277.00 4511.00 18.00 4529.00 400.00 4529.00 4929.00 102.00 502.00 25.00 35.80 10.8
7.3
Conclusions
The summary of Production 2nd segment of meat value chain is presented in Figure 7. Analysis of cost of production of small and large ruminants production revealed that farmers are getting negative net return where feed lot farming from commercial point of view provide significant results. This implies that farmers do not raise animals with the commercial perspective which require a sound livestock extension services to make them aware about the economic return of the raising commercial meat animal. The overall productivity of all the species in terms of meat is low. The overall increase in meat over the years is due to the increased inventory and not because of any increase in their productivity (Hassnain and Khan, 2007). They further argued that this is a serious issue and matter of great concern. Literature has shown that both the large and the small ruminants are performing much below their genetic potential (Hassnain and Khan, 2007). Moreover, their genetic ceiling can be increased with improved breeding program. The major factors contributing towards low productivity are poor and inadequate nutrition, inadequate health care, haphazard breeding and traditional unscientific overall management. All these factors translate into a existing very weak livestock extension services in the country.
19
Figure 7: Summary of Production 2nd Segment of Meat Value Chain
MEAT ANIMALS PRODUCTION

Meat (Beef and Mutton) Animals Beef Animals Cattle Buffaloes Mutton Animals Sheep Goat = 24.493 million heads with a value of Rs.266.557 billion = 7.673 million heads with a value of Rs.173.5965 billion = 3.973 million heads with a value of Rs.93.172 billion = 3.676 million heads with a value of Rs.79.6245 billion = 16.82 million heads with a value of Rs.92.960 billion = 4.8993 million heads with a value of Rs.36.0768 billion = 11.927 million heads with a value of Rs.56.8834 billion
TRADITIONAL MEAT RAISING ANIMALS

Raising of Beef Animals (million heads) Beef Animals Cattle Buffaloes Mutton Animals
Sheep Goats
FEED LOT FATTENING

Fattening of beef animals Beef Animals = Cattle = Buffaloes = 0.0956 m.h 0.0496 m.h 0.0459 m.h
CULLING FROM DAIRY ANIMALS

Culled beef animals from dairy animals Beef Animal Cattle Buffalo = 1.262 m.h = 0.655 m.h = 0.606 m.h
= 6.292 = 3.268 = 3.024 =

= =
13.436
3.912 9.524
Cost of production of 1 year old beef animal at general farm level (Rs./animal) Output = 12277 Variable cost = 12113 Fixed cost = 4000 Cost of production = 16113 Gross margin = 165 Net income = -3835 Cost of production of 6 month old mutton animal at general farm level (Rs./animal) Output = 2710 Variable cost = 1904 Fixed cost = 1000 Cost of production = 2904 Gross margin = 806 Net income = -194 Low inputs (no beef breeds of cattle, inadequate nutrition and limited availability of veterinary services) leads to low livestock productivity
Cost of production of 40 beef animals on commercial basis (Rs./animal) Output (value of animal at sale) = 15270 Variable cost = 5034 Fixed cost = 9800 Cost of production = 14834 Gross margin = 10236 Net income = 436 Fattening of mutton animals Mutton Animals Sheep Goats = = = 0.025252m.h 0.00734 m.h 0.0178 m.h
Culled mutton animals from female sheep and goats Mutton Animal Sheep Goat = 3.365 m.h = 0.979 m.h = 2.385 m.h
Cost of production of 150 mutton animals on commercial basis Output (value of animal at sale) = 4529 Variable cost = 1276 Fixed cost = 3150 Cost of production = 4426 Gross margin = 3253 Net income = 103 Confined to beef and mutton animals with high energy diet to bring them to slaughter weight which implies higher inputs and better management, feed lot fattening is profitable enterprise
A portion of meat sub-sector is made up of dairy meat and mutton that comes from inmilking cows and buffaloes, female sheep and female goats culled from dairy herds because for age for other reasons, they are not productive for dairy purposes and reproductive potential
ISSUES OF MEAT ANIMALS PRODUCTION

1. 2. 3. 4. 5. Weak and unhealthy stock and breeding lines because no beef breeds of cattle and beef is at best a by-product No concept of herd health management Low output system due to low input system Social system has broken due to inflation and ag-inflation is even higher Raising meat animal with traditional system is not profitable enterprise
20
8.
Marketing of Meat Animals ---3rd Segment of Meat Value Chain
Livestock are generally marketed either at village level by personal contact between buyer and seller or at special places called livestock markets organized for animal trade. These livestock markets are organized at sub-tehsil, tehsil, district and division levels on daily, weekly, fortnightly and monthly bases (Sharif et al., 2003). Both buyers and sellers are well informed about these market days as the days/dates are remained unchanged since ages. Smaller or primary markets are present in the rural anterior whereas larger or secondary markets are usually organized near the urban centers, on the main roads. In addition, some special livestock markets are also organized on provincial/regional festivals. Daily-based special markets are also organized at least 2-3 weeks before the eve of Eid-ul-Azha. In addition, some livestock markets are also introduced in the private sector. In general, both small and large ruminants are traded in the same markets, however at some places, buffalo, cattle, sheep and goats are also traded in separate markets. For instance, in bakker mandies, only small ruminants are marketed. Various types of beoparies, animal traders and farmers bring their livestock in these for selling (Sharif et al 2003). In villages, depending upon the nature of need arisen, the farmers choose time, place and agency for disposing their animals. There are several reasons for sale like urgent domestic need, as regular means of income, disposal of culled animals and scarcity of feeds/fodders as during droughts. Cattle and buffaloes are sold generally at the peak of their performance around 5-7 years of age or when they are about to calve. Heifers are disposed off at about 25-30 months of age. Working bullocks are sold after training as work animals. All culled animals are sold for meat when no longer fit for work or milk production. Sheep and goats are sold generally before one year of age (Hassnain and Khan 2007). The structure of live animals marketing as a 3 rd segment of meat value chain is presented in Figure 8. 8.1 Market Infrastructure
Majority of the livestock markets are under the direct control of the relevant local administration and the market holding days/dates are notified. The local administration/cantonment boards for animal trading provide special places for animal trading. The management responsibilities are contracted out on annual basis by open auction (Sharif et al., 2003). Depending upon the type, size of the market and the number of animals traded, and the practice of commission on sale price of animal or as entry fee only the contractual amount found varied between 0.5 million rupees to 120 million rupees. Some of the markets like Karachi, Peshawar and Quetta the individual arthies provide place and basic facilities for animals to the beoparies and charge on per animal or truck load basis and there is only entry fee of Rs. 10 per small ruminant and Rs. 25 per large animal. The contracted money is received-back by the contractor from the buyers and sellers in the form of commission or market fee. The local administration decides about the amount/percentage of market/entry fee to be charged. In Punjab 3-5% of the value of the animal sold is charged as market fee whereas in AJK, some fixed amount varied by the animal type is charged. In general, basic facilities like boundaries, electricity, loading-unloading facilities, animal watering, animal shelter, weighing, telephone and communication, easy availability of transport, the services of veterinary doctor etc. are lacking in majority of the markets. Private vendors usually provide the
21
Figure 8: Meat Animals Marketing 3rd Segment of Meat Value Chain

Inputs


Animal Marketed in Domestic Market = 24.495 m.h Animal Exported = 33477 heads
Feed
Cattle Farming
Buffalo Farming
Veterinary Services
Sheep and Goats

Channel-1 Farmer to Beopari = 80% Farmer to LAM = 5% Farmer to RBs = 15% Channel-2 Beopari to LAM = 98% Beopair to RBs = 2% Channel-3 LAM to Contractors = 52% LAM to T.Traders = 15% LAM to UBs = 31% LAM to RBs = 2% Channel-4 Contractor to T.Traders = 27% Contractor to Exporters = 1% Contractor to UBs = 72% Channel-5 Traveler Trader to S.House = 16% Traveler Trader to UBs = 84%
Wholesalers
UBs & RBs Retailers
Feedlots Fattening
Food Service Suppliers Meat Transport
Genetics/Breeds
Transport in Domestic Market Culled Beef Animals

Super Markets

Transportation cost Beef animals = Rs.6.075 b Mutton animals = Rs.3.253 b Meat Export
Consumers
Live Export
Average 2001-05 = 34477 heads with export value of Rs.309.01 m
food and fodder services. In primary markets, the quality of roads leading to these markets is also poor. In NWFP, Balochistan and AJK, at some areas only a piece of land is available as livestock markets whereas in other areas, farmers have to travel for very long distance to sell their animals in these markets. It seems that these livestock markets are a source of revenue for the local governments/cantonment boards. There is no investment of the contracted money for provision of various facilities in these livestock markets. 8.2 Live Animals Market Intermediaries
Beoparies and commission agents are main intermediaries of livestock markets. The market intermediaries are comparatively well informed about market situations than the farmers. Although the services of broker or dallal are available, but most of the times they extend more favor to buyers than farmers. Some farmers complained about forming cartels by market intermediaries by not offering prices beyond some limits. In this way, both beoparies and commission agents exploit them. The transport means used are not suitable, therefore, causing physical distress, bruising and other internal/external injuries to the animals (Sharif et al., 2003). The estimated cost of transport for beef (cattle and buffaloes) animals and mutton (sheep and goat) animals from farmers to slaughter places via livestock markets is Rs.6.125 billion and Rs.2.324 billion respectively during 2008-09. The marketing channel of live animals from villages to slaughter houses and export of live animals is given in Figure 9.
22
8.3 Conclusions The summary of the third segment of meat value chain namely live animals marketing is presented in Figure 9. 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. 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. Moreover, there is no livestock market authority for regulating livestock marketing in the country. 9. Processing (Slaughtering) ---- 4th Segment of Meat Value Chain 9.1 Animals for Slaughtering Red meat has two components namely beef and mutton. The beef is mainly produced by cattle and buffaloes in Pakistan. A negligible quantity of beef is also obtained from camel and yaks. The second part, mutton mainly comes from sheep and goats. Generally speaking, camel meat is eaten mainly be camel herders but now it is reported that camels are also regularly slaughtered in Karachi and the coastal areas of Balochistan like Lasbela and Uthal (Hassnain and Khan, 2007). It is also used for sacrifice during Eid Al Adha. Yak meat is only eaten in the Northern Area of Pakistan because that is where these animals are maintained (Hassnain and Khan, 2007). There were 24.493 million heads of beef (7.673 m. heads) and mutton (16.82 million heads) animals which were slaughtered during 2008-09. The gross value of meat industry was Rs. 266.557 billion where the gross value of beef and mutton animals was Rs. 173.59 billion and Rs. 92.960 billions respectively (Table 14). Table 14: Total number of animals slaughtered and value 2008-09
Type of Animal Bullocks Cow YS male YS Female Male Buffalo Female Buffalo YS Male YS Female Camel YS Camel Total Beef Animals Sheep YS Sheep Goat YS Goat Total Mutton Animals Total Meat Animals Animals (million heads) 1.002 1.552 0.971 0.448 3.973 0.624 1.225 1.488 0.339 3.676 0.016 0.008 0.024 7.673 3.757 1.136 9.634 2.293 11.927 16.82 24.493 Price Rs./Animal 40500 22000 13000 13000 38000 27000 12500 12500 40000 20000 Value Rs. Billion 40.581 34.144 12.623 5.824 93.172 23.712 33.075 18.6 4.2375 79.6245 0.64 0.16 0.8 173.5965 30.056 6.0208 48.17 8.7134 56.8834 92.960 266.557
8000 5300 5000 3800
23
Figure 9: Summary of Live Animals Marketing 3rd Segment of Meat Value Chain
LIVE ANIMALS MARKETING

Meat Animals Marketed = 24.493 million heads Meat Animals Marketed in Domestic Market for Slaughtering = 24.495 million heads Meat Animals Exported (Average 2001-05) = 33477 with a export value of Rs.309.01 million Beef Animals Exported = Average 2001-05 = 23107 with a export value of Rs.284.58 million Mutton Animals Exported = Average 2001-05 = 10370 with a export value of Rs.24.43 million
LIVESTOCK FARMERS
(97%) 23.764 million animals were marketed from traditional farmers C-1 Farmer to Beopari = 80% Farmer to Live Animal Market = 5% Farmer to Rural Butcher = 15% C-2 Beopari to Live Animal Market = 98% Beopair to Rural Butcher = 2% C-3 Animal Market to Contractors Animal Market to T.Traders Animal Market to U.Butcher Animal Market to R.Butcher C-4 Contractor to T.Traders Contractor to Exporters Contractor to U.Butcher = 52% = 15% = 31% = 2% = 27% = 1% = 72%
FEED LOT FATTENING

(2.1%) 0.514 million animals were marketed from feed lotting Feed lot to R.Butcher = 1%
EXPORTER OWN FARM

(< 1%) 0.220 million animals were marketed from feed lotting
Exporter Own Farm to Exporting Destination = 100%
Feed lot to Beopari
= 71%
Feed lot to L. Market = 18%
Feed lot to Contractor = 10%
C-5 Traveler Trader to S.House = 16% Traveler Trader to U. Butcher = 84%
LIVE ANIMALS TRANSPORTING COSTS

Beef Animals Transport Cost for Domestic Market = Rs.6.075 billion Mutton Animals Transport Cost for Domestic Market = 3.253 billion
ISSUES OF MARKETING LIVE ANIMALS

1. 2. 3. 4. 5. 6. Inadequate basic facilities at live animals market (watering, shelter, feed and fodder, absence of weighing machine and market committee) Non-availability of specific transport and overloading without refrigeration Delay in live animal delivery Inadequate livestock marketing information system and marketing regulatory agency as well as policy Faulty pricing mechanism of meat animals (per head basis rather than weight basis) Livestock animals smuggling to Afghanistan
24
There are no beef breeds of cattle and it is at best a byproduct. Working cattle, cows and buffaloes that are no longer able to work or produce milk are slaughtered and consumed as beef and therefore beef form such animals is of poor quality (Hassnain and Khan, 2007). They further stated that young male calves particularly of buffaloes are generally not reared and thus slaughtered at an early age and low live weight. They also further argued that the other reason for the early slaughter of sucklers is the high cost of milk replacers and non-availability of economical early weaning diets and therefore beef is the cheapest meat whether it is from cattle or buffaloes. However during recent years efforts have been made to develop feed lot fattening farms through providing subsidy to the farmers. The share of the animals slaughtered at Eid-ulAzha ranged from 25-40% for beef and mutton animals and these animals are particularly reared to fetch good prices and also the meat produced from these animals is one of the best quality. The structure of meat processing (slaughtering) is presented in Figure 10.
Figure 10: Processing (Slaughtering) 4th Segment of Meat Value Chain

Inputs


Animal Slaughtered Total Meat Production =24.459 m.h =2.192 m.t
Feed
Cattle Farming
Buffalo Farming
Veterinary Services
Sheep and Goats

Recognized & non-recognized S.Houses at Urban and Rural Areas Total Meat Production From Traditional Farms From Feed Lot Fattening Eid-ul-Azha =2.192 = 1.528 = 0.028 = 0.636 m.t m.t m.t m.t
Wholesalers
Further Processing (Handling,

Slaughtering, Cutting into Piece, Packing and Loading) Further processing cost=Rs.9.88 m Beef = Rs.652 million Mutton = Rs336 millin
UBs & RBs Retailers
Feedlots Fattening
Food Service Suppliers Meat Transporting Cost in Domestic Markets

Meat = Rs.7.076 billion Beef = Rs.4.752 billion Mutton = Rs.324 billion
Genetics/Breeds

Super Markets

Transportation cost Beef animals = Rs.6.075 b Mutton animals = Rs.3.253 b
Consumers Live Export

25
9.2
The Slaughtering System
According to the West Pakistan Slaughter Control Act 1963, slaughtering of small and large ruminants should strictly be undertaken in recognized slaughterhouses with ante- and postmortem veterinary inspection (Sharif et al., 2003). Similarly, according to the Pakistan slaughterhouse act of 1983, the killing of animals outside the boundary of slaughterhouses is prohibited. Recognized slaughterhouses usually provide separate buildings for slaughtering large and small animals. There are 295 recognized slaughterhouses, 27 in NWFP, 174 in Punjab, 60 in Sindh and 34 in Balochistan (Sharif et al., 2003). Presently, slaughtering of small and large ruminants is done in municipal, cantonment and private slaughterhouses, and in the backyards of meat retailers in villages. Local municipal corporations operate majority of the urban slaughterhouses. 16 slaughterhouses are also established in the private sector. Majority of slaughterhouses are now located in the thick-populated areas. In general, the existing slaughterhouse facilities are highly insufficient than the requirements. The slaughtering, carcass dressing and by-product handling are done in the same space. They area also in shortage of various equipments such as pulley hoists, hooks etc. for hanging carcasses. Ante and post-mortem arrangements, water supply, drainage systems, waste disposal, handling of by-products are inadequate and sometimes non-existent. A large portion of the byproducts such as blood, glands, intestines, and bones are either wasted or poorly processed. One of the underlying reasons is that these facilities were not periodically updated because of various administratively complex procedures involved. It can, therefore, be generally concluded that the slaughter facilities are mostly obsolete, unclean, and poorly managed (SMEDA, 2002). This problem is most severe in big cities like Karachi, Lahore and Faisalabad. Due to the shortage of slaughtering facilities, much slaughtering takes place outside the recognized facilities, so there is no inspection and even in recognized slaughterhouses there are no meaningful inspection facilities. Therefore, official statistics greatly understate the number of animals slaughtered (FAO, 1987; Alvi, 1988). There are eleven slaughterhouses in Karachi, Lahore and Islamabad that have modern facilities. These are good indications of developments in the slaughtering systems of Pakistan, but the process needs to be enhanced keeping in view the national and international challenges. 9.3 Red Meat Production
The red meat production is estimated on the basis of animals slaughtered at slaughter places (recognized and non-recognized Slaughter houses), meat from feed lot and animals sacrificed at the eve of Eid-ul-Azha (Table 15). Total number of animals slaughtered at slaughter places during 2008-09 was 24.493 million heads. 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 (Table 15). The production of cattle, buffalo and camel beef is 0.638, 0.543 and 0.006 m. tones respectively. Production of mutton from sheep and goat is 0.588 m. tons.
26
Table 15. Red meat (beef and mutton) production 2008-09

Type of Animal Number of animal slaughtered (million heads) 1.002 1.552 0.971 0.448 0.624 1.225 1.488 0.339 0.016 0.008 Meat (Kg/Animal) Meat production (Million tons)
Bullocks Cow YS male YS Female Male Buffalo Female Buffalo YS Male YS Female Camel YS Camel Beef from Slaughtered Animals (1) Beef from Feed Lot (2% of total) (2) Beef from Eid-ul-Azha (for beef 25%) (3) Total Beef (1+2+3) Sheep YS Sheep Goat YS Goat Mutton from Slaughtered Animals (1) Mutton from Feed Lot (2% of total) (2) Mutton from Eid-ul-Azha (40%) (3) Total Mutton (1+2+3) Total Meat
275.40 160.00 80.00 80.00 243.20 200.00 80.00 80.00 320.00 160.00
3.757 1.136 9.634 2.293
25.00 16.56 20.83 11.88
0.276 0.248 0.078 0.036 0.638 0.152 0.245 0.119 0.027 0.543 0.005 0.001 1.187 0.016 0.400 1.603 0.094 0.019 0.201 0.027 0.341 0.012 0.236 0.588 2.192
9.4
Trends in Red Meat Production
The information on the trends of meat production is presented in Table 16. The meat production has increased from 1.10 m. tones in 1986 to 1.49 m. tones in 1996 with an annual growth rate of 3.07% and further increased to 1.956 m. tones in 2006 with a growth rate of 2.76%. The current meat production in 2008-09 is 2.19 m. tones. The beef production is growing faster than mutton production in the country (Table 16 and Figure 11). Table 16: Trends in production of meat and annual growth rate
Products Red Meat Total Beef Mutton 1986 1101 567 534 Year 1996 1490 889 601 2006 1956 1174 782 2008-09 2191 1601 590 Annual Growth Rate (%) 1986-96 1996-06 3.072 2.759 4.600 2.820 1.189 2.668
27
Figure 11: Trend of Red Meat Production

100% 80% 60% 40% 20% 0% 000 Tonnes 601 889 782 1174 590 1601
Mutton Beef
534 567
1986
1996
Year
2006
2009
9.5
Cost of Production of Meat
The information of cost of production of beef is presented in Table 17. To get a representative estimates a 12 month old beef animal is taken. The farm gate price of the beef animal with an average live weight of 171.6 kg including the transportation charges is Rs.12277/head. Cost of production of beef was Rs.171.77 per kg. Income including manure was Rs.130.12 per kg. Loss of production of 1 kg meat at general farm level was Rs.40.65 (Table 17). Table 17: Cost of production of beef
Items Produce 12 month old animal Manure Out Put Ave. Live Weight at Sale Ave. beef @ 55% of Live weight Sale Price Beef Costs:Green fodder @ 10 Kg per Day Dry fodder @ 1 Kg per Day Vet medicine Calf Interest @12.5% on average value Labor @ 1 man day for 20 calf Equipment costs Interest on shed and space+depreciation on shed Variable cost Total cost Gross Margin/Head Net Income/Head Cost of Production of Beef Income (Including manure Value) Return Unit Quantity 1 25 Rate(Rs) 12077 8 Amount 12077 200 12277 171.6 94.4 128 3650 2190 60 4000 1238 4563 100 313 12113 16113 165 -3835 170.77 130.12 -40.65
40 kg Kg Kg Rs./Kg 40 kg 40 kg
91.25 18.25 2 1 22.8125
40 120 30 4000 200 100 312.5
Days
Rs./Anaimls Rs./Kg Rs./Kg Rs./Kg
9.5.1 Cost of production of mutton
28
The cost of production mutton at generally farm level is estimated at Rs.269 per Kg. the estimated gross margin is Rs.806 per head with net income of Rs. (-) 194 per head for a 6 month old mutton animal. The sale price of mutton at farm level is Rs. 250 which generally keeps farmers at a loss of Rs. 18 for producing a Kg of mutton (Table 18) Table 18: Cost of production of mutton
Mutton Produce YS 6 month old Manur Out Put Ave. Live Weight at Sale Ave. beef @ 45% of Live weight Sale Price murrton Costs Green fodder @ 3 Kg per Day Dry fodder @ 0.15 Kg per Day Vet medicine Calf Interest @12.5% on average value Labour @ 1 mand day for 20 calfs Equipment costs Interest on shed and space+depreciation on shed Variable cost Total cost Gross Margin/Head Net Income/Head Cost of Production of mutton Income (Including manure Value) Return Unit Quantity 1 1.25 Rate(Rs) 2700 8 Amount 2700 10 2710 24.0 10.8 250.0 548 55 30 1000 204 730 25 313 1904 2904 806 -194 269 251 -18
40 kg Kg Kg Rs./Kg 40 kg 40 kg
13.6875 0.45625 1 1 3.65
40 120 30 1000 200 25 312.5
Days
Rs./Kg Rs./Kg Rs./Kg
9.5.2 Cost of production of beef at feed lot framers During the recent years feed lot fattening is also gaining popularity among the progressive farmers and there is also shift towards rearing meat animals against the previous practice of producing beef as a by product of dairy animals and draft animals. There was no practice of rearing mutton animals as feed lot specifically. The cost of production for feed lot farm for both beef and mutton is calculated and presented in the following sub-sections: 9.5.2.1 Cost of production of beef The cost of production of beef at feed lot farms is calculated and presented in Table 19. To get a representative estimates a herd size of 40 animals is taken. The farm gate price of the beef animal with an average weight of 109 kg including the transportation charges is Rs. 9800/head. Profit with Subsidy was 34.00 Rs./Kg (12.38 %) and Profit without Subsidy was 8.07 (2.94%) Rs./Kg.
Table 19: Cost of production of beef at feed lot farms 29
Items Purchase Price Transportation Purchase Price Initial Weight Initial Price Variable Costs Labor (2 Persons @ 4000/month/person Electricity Rougages (hey,straw,fodder) Wanda Medicines Sub-Total Interest on variable cost Interest on value of animal @ 12 %pa Shed cost at 12% Fixed Cost Cost of Production Income Sale of Animal FYM Total Value of Animal at sale Subsidy Gross Income Without Subsidy Net Income Without Subsidy Gross Income With Subsidy Net Income With Subsidy Initial Weight Final Weight Difference Total Cost Cost per Kg Live Weight Cost per Kg Meat @ 55% of Live Weight Profit With Subsidy Rs./Kg meat Profit Without Subsidy Rs./Kg meat Profit With Subsidy % Profit Without Subsidy %
Unit Rs./Animal Rs./Animal Rs./Animal Kg/Animal Rs./Kg Live weight Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Kg/Animal Kg/Animal Kg/Animal Rs./Animal
Cost per animal 9650 150 9800 109 90 600 45 1800 1620 100 1039.00 125.00 294.00 450.00 869.00 5034.00 15000.00 270.00 15270 1400.00 15270.00 436.05 16670.00 1836.05 109.00 163.00 54.00 5034.00 93.22 169.49 34.00 8.07 12.38 2.94
9.5.2.2 Cost of production of mutton The cost of production mutton for a lot of 150 animals is calculated and presented in Table 20. The purchase price for a 25Kg animals was Rs. 126 per kg live weight. The cost of production to the feed lot farmers is Rs. 118 of live weight. The weight gain was 10.8 kg. Profit with Subsidy was 46.50 Rs./Kg (11.34%) and profit without Subsidy 9.46Rs./Kg (2.31%).
30
Table 20: Cost of production of mutton

Items Purchase Price Transportation Purchase Price Initial Weight Initial Price Variable Costs Labor (2 Persons @ 4000/month/person Electricity Roughages (hay, straw, fodder) Wanda Medicines Sub-Total Interest on variable cost Interest on value of animal @ 12 %pa Shed cost at 12% Fixed Cost Cost of Production Income Sale of Animal FYM Total Value of Animal at sale Subsidy Gross Income Without Subsidy Gross Income With Subsidy Net Income Without Subsidy Net Income With Subsidy Initial Weight Final Weight Difference Total Cost Cost per Kg Live Weight Cost per Kg Meat @ 45 % of Live Weight Profit With Subsidy Rs./Kg Profit Without Subsidy Rs./Kg Profit With Subsidy % Profit Without Subsidy % Unit Rs./Animal Rs./Animal Rs./Animal Kg/Animal Rs./Kg Live weight Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Rs./Animal Kg/Animal Kg/Animal Kg/Animal Rs./Animal Cost per animal 3100 50 3150 25 126 160 12 80 729 58 1038 31.0 95.5 112.0 238.00 1277.00 4511.00 18.00 4529.00 400.00 4529.00 4929.00 102.00 502.00 25.00 35.80 10.8 1277.00 118.00 263.00 46.50 9.46 11.34 2.31
9.6
Conclusions
The summary of processing 4th segment of meat value chain is presented in Figure 12. The numbers of abattoirs are not sufficient and they are deprived of many basic facilities like adequate space, light, shade, water, meat chilling, processing/disposal of byproducts which implies that outdated and unhygienic conditions of abattoirs with few exceptions in private sector. Abattoirs have rudimentary disposal system of byproducts. This results in not only in un-hygienic meat production but also deteriorating the quality of other livestock products like hides and skins, blood, cases and eatable offal etc. Meat is transport and displayed as uncovered thus exposed to dust, houseflies and other contaminations. Thus all meat production chain is unhygienic. Because of fixing the price of meat by the tehsil municipal administration, the slaughtering of weak, diseased and old animals is very common. Moreover, the prices received by the farmers are also very low. Primitive public abattoirs, controlled retail price of meat (causing slaughtering of unhealthy and old animals), absence of meat grading and pricing (affecting meat quality), illegal slaughtering, lack of specialized skills in flaying and meat handling and un-hygienic meat transportation are serious concerns in the meat production chain.
31
Figure 12: Summary of Processing (Slaughtering) 4th Segment of Meat Value Chain
PROCESSING (SLAUGHTERING)
Animal Slaughtered during 2008-09 Total Meat Production during 2008-09 Meat Production from Traditional Farms Meat Production from Feed Lot Fattening Meat Production at Eid-ul-Azha = 24.459 m.h = 2.192 m.t = 1.528 m.t = 0.028 m.t = 0.636 m.t
MEAT PROCESSING
(Million tonnes)
Total Meat Beef Mutton Traditional Farms Meat Beef Mutton Feed Lot Fattening Meat Beef Mutton Eid-ul-Azha Meat Beef Mutton = 2.192 = 1.603 = 0.588 = 1.528 = 1.187 = 0.341 = 0.028 = 0.016 = 0.012 = 0.636 = 0.400 = 0.236
FURTHER MEAT PROCESSING

(Handling/cutting/packing/ loading)
MEAT TRANSPORTNG
Meat Transporting Costs
Costs of slaughtering, cutting into pieces, handling, packing and loading of meat
Meat Beef Mutton
= Rs.7.076 billion = Rs.4.752 billion = Rs.2.324 billion
Meat Beef Mutton
= Rs.988 million = Rs.652 million = Rs.336 million
ISSUES OF MEAT PROCESSING

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13.
Numbers of regulated abattoirs are not sufficient that results to unhygienic meat supply Outdated and unhygienic conditions of abattoirs (primitive public abattoirs) with few exceptions in private sector Lack of basic slaughtering facilities (chilling, incerators and blood processing etc.) Rudimentary disposal system of byproducts No hide and skin treatment at abattoirs No generator facility for backing-up in case of load shedding in order avoid injuries working at night Limited private sector participation Code of practice for slaughter houses stipulating grades for carcasses and animal cases has not observed or enforce Weak ante mortem and post mortem inspection No chilling facilities except in few private abattoirs Limited cold chain and cold storage facilities apart from few export orientated abattoirs which has major risk of meat spoilage and cross contamination. The microbiological quality of the meat deteriorates rapidly which renders meat unsafe particularly during summer season No veterinary and plant health authority Food safety is the weakest link in Pakistan's regulatory framework with Government unable to provide the framework for the maintenance of food safety, quality and animal heath, across the supply chain "from farm to fork'. Food safety laws and SPS regulations, directives, standards, policies and procedures, which form the foundation for a food control system, are weak and their enforcement is poor.
Need to promote regular/legal slaughtering for provision of hygienic meat supply to consumers. For enhancing legal slaughtering, there is a need for de-skinning machines may increase efficiency for slaughtering large ruminants in the country with the consideration of employment concerned of manually slaughtering workers.
32
10. 10.1
Meat Marketing ---- 5th Segment of Meat Value Chain Marketing of Red Meat
Marketing of meat is closely linked to marketing of live animals. Like the marketing of live animals, meat marketing is also entirely in the private sector. However, all the slaughterhouses are established and run by the local governments. A few modern slaughterhouses are now being established by the private sector for export of meat. There are hundreds of slaughterhouses in the country big and small but almost all of them are just basic in the sense that these just provide some covered shed and floor with poor running water and drainage. Only a few have cold storage and chilling facilities. The slaughterhouses in Karachi, Lahore and Islamabad may just qualify as modern. The result is that full carcasses are transported generally in open vehicles to the butchers in the urban areas who now have deep freezers for storage of unsold meat, at least in the large cities and towns. 10.2 Meat Marketing in Domestic Market
Out of total meat production 2.192 million tones, 2.177 million tones meat distributed in the domestic market. There were 1.603 million tones beef produced out of which 1.596 million tones were consumed in the domestic market for the year 2008-09. Likewise, out of total mutton production of 0.588 million tones, 0.581 million tones was distributed in the domestic market. The structure of meat marketing is presented in Figure 13.
Figure 13: Meat Marketing 5th Segment of Meat Value Chain

Inputs


Animal Slaughtered Total Meat Production =24.459 m.h =2.192 m.t
Meat for DM=2.177m.t Beef for DM=1.596m.t Mutton for DM=0.581m.t Meat for Export=0.01436m.t
Feed
Cattle Farming
Buffalo Farming
Veterinary Services
Sheep and Goats

Recognized & non-recognized S.Houses at Urban and Rural Areas Total Meat Production From Traditional Farms From Feed Lot Fattening Eid-ul-Azha =2.192 = 1.528 = 0.028 = 0.636 m.t m.t m.t m.t
Export
Meat = 0.01436 m.t Beef = 0.00697 m.t Mutton = 0.00739 m.t
Wholesalers
From RSHs=30%
Further Processing (Handling,

Slaughtering, Cutting into Piece, Packing and Loading) Further processing cost=Rs.9.88 m Beef = Rs.652 million Mutton = Rs336 millin
UBs & RBs Retailers

From W.Saller=90%
Restaurants
Wholesaler=5% Retailer = 4%
Feedlots Fattening
Genetics/Breeds

Meat Transporting Cost in Domestic Markets

Meat = Rs.7.076 billion Beef = Rs.4.752 billion Mutton = Rs.324 billion
Food Service Suppliers
Wholesaler=3% Retailer = 3%

Transportation cost Beef animals = Rs.6.075 b Mutton animals = Rs.3.253 b
Super Markets
Wholesaler=2%
Live Export
Consumers
33
10.2.1 Meat Marketing Infrastructure The red meat markets operate five days a week. Tuesday and Wednesday are observed as meatless days throughout country (Rodriguez, et al. 1995). During these days, butchers visit local livestock markets to buy animals. The marketing of meat starts after buying meat from slaughter houses. This meat is transferred to meat markets, individual retail meat shops in the city and mohallas using various transports means (Sharif et al., 2003). These retail meat shops specialize in the type of meat dealt with, i.e. either beef or mutton shop. These meat shops are located in the village bazaars. In urban areas, Mohallah meat shops are organized on the same lines. Mohallah meat shops are either located as the corner-shop or in some main street/business activity center of the colony. In urban areas, meat shops are also located in the main grocery markets. Central meat markets are located in big cities of Pakistan where separate meat markets for mutton and beef exist. These markets are the constructed keeping in view the norms of sanitation and are fly proof. The quantity of meat traded on these shops depend upon the daily sales which in turn depends upon the locality, location of the shop and butchers personal dealing with the customers. Very little quantity of meat is carried over to the next day. Some shops possess deep freezers to preserve the unsold meat for the following day. A typical meat shop is consisted of one big bench/floor, some carcass hanging arrangement, one piece of tree trunk cut on the cross-section, some knives and axes. The carcasses are displayed by hanging barely for attracting the customers (Sharif et al., 2003). 10.2.2 Transportation of Meat The physical transportation of meat begins after slaughtering the animal in slaughterhouses. From slaughterhouse, the dressed carcasses are transported to the meat retail shops (or butchers shops) using various means like bicycles, horse/donkey carts, auto rickshaws and vans. The meat the transportation cost is nominal and usually paid on per trip basis and rages from Rs.300-1000 depending upon the mean of transport and distance involved. In remote rural areas, the animals are slaughtered in the backyard of butcher shop, no transportation of carcasses took place. 10.2.3 Market Information and Pricing Mechanism In urban and peri-urban areas, meat prices are fixed by local administration. Generally beef price vary between 45-60 percent of the mutton price. In rural areas, the prices of both beef and mutton are 15-25 percent lower as compared with urban centers. This is because the village requirements of slaughtering animals are locally met. The costs like transportation, slaughterhouse costs, taxes and duties are also not involved. However, an increase in the price of meat in urban centers also increases meat prices in rural areas. The market committees disseminate the price information by displaying price at some prominent or hanging price information at prominent place on the meat shops. Generally, butchers slaughter their animals in the slaughterhouse and take the meat to their respective shops. Hides and Skins are sold to the hide/skin collectors or representatives of the commission agents. Some body parts like head, feet and offals are sold to another group of retailers dealing in these products. However, some intermediaries are also operating in the slaughterhouses. In big cities like Lahore a group of wholesalers, called rewaitees are also
34
operating. They deal in dressed carcasses. These rewaitees buy many goats and sheep from the beoparies, through the commission agents, get them slaughtered, and sell the dressed carcasses to the retailers (Alvi, 1988). 10.3 Structure of Meat Marketing Cost for Market Intermediaries
The information on structure of marketing cost for contractors/beopari, commission agents and butchers/retailers is presented in Table 21-23 respectively. The marketing cost of meat for contractors/beopari includes transportation, commission, meal expenditures, entry fees and other expenditure. The total marketing cost of beef and mutton for contractors and beopari is Rs.7.50 and 14.71 per kg respectively (Table 21). Table 21: Structure of marketing cost for Contractor/Beopari
S.No. 1 2 3 4 5 6 7 8 Item Transportation Commission Meal Expenditures Entry fees Other Expenditures Total Expenditures Gross Income Net Income Mutton Rs/Kg 4.00 3.71 4.00 2.50 0.50 14.71 22.00 7.29 Item Transportation Commission Meal Expenditures Entry fees Other Expenditures Total Expenditures Gross income Net Income Beef Rs/Kg 3.33 1.08 1.25 0.83 1.00 7.50 16.01 8.51
The information on structure of marketing cost for commission agents is presented in Table 22 respectively. The marketing cost of meat for commission agent includes labour, food, telephone and other miscellaneous expenditure. The total marketing cost of beef and mutton for commission agent is Rs.0.06 and 4.83 per kg respectively (Table 22).
Table 22: Structure of marketing cost for commission agent

S.No. 1 2 3 4 5 6 8 9 10 Mutton Item labor food Phone Miscellaneous(some Total Expenditures Gross income Net Income Rs/Kg 2.33 1.00 0.50 1.00 4.83 7.43 2.60 Beef Item labor food Shed Residence of selling agent Phone Miscellaneous Total Expenditures Gross income Net Income Rs/Kg 0.23 0.20 0.04 0.04 0.06 0.08 0.64 1.25 0.61
The information on structure of marketing cost for butcher/retailer is presented in Table 23 respectively. The marketing cost of meat for butcher/retailers includes transportation, commission, market fees, meat shop rent, shopping bag, business and slaughter fees. The total marketing cost of beef and mutton for butcher and retailers is Rs.11.07 and 21.73 per kg respectively (Table 23).
35
Table 23: Structure of marketing cost for Butcher/Retailer

S.No. 1 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 Mutton Item Transportation Commission+Market fee etc Rent shop Shopping Bag Fees(business+Slaughter etc) Miscellaneous(Food etc) Total expenditure on meat Gross Income A.Net income on meat basis B. Income from Edible/Non edible offal Skin Head/Paya Liver Intestine Ojhary Total income from Edible/Non edible offal Total income(A+B) Rs/Kg 4.00 5.40 3.83 2.00 3.50 3.00 21.73 25.00 3.27 10.00 5.50 8.00 1.00 2.00 26.50 29.77 Beef Item Transportation Commission Rent shop Shopping Bag Market Fees Other(If slaughter+ transportation within locality+Food) Total Expenditures Gross Income A.Net income on meat basis B. Income from Edible/Non edible offal Skin Head/Paya Liver Intestine Ojhary Charbi Others Income from Edible/Non edible offal Total income(A+B) Rs/Kg 4.17 2.40 1.92 0.75 0.83 1.00 11.07 20.63 9.57 6.67 3.33 1.17 0.83 0.42 0.17 0.50 13.08 22.64
10.4
Sale Price, Marketing Cost and Net Profit Margins of Market Intermediaries
The information on sale price, marketing cost and net profit margins for both beef and mutton is presented in Table 24-26 respectively. The sale price of beef and mutton at producer level is Rs.128.36 and Rs.250/kg. The sale price of beef and mutton at contractor/beopari level is Rs.144.37 and Rs.272/kg. The sale price of beef and mutton at butcher/retailer level is Rs.165 and Rs.297/kg respectively (Table 24). Table 24: Sale price at different market intermediaries
Market Intermediaries Producer Contractor/Beopari Commission Agent Butcher/Retailer Mutton (Rs./kg) 250.00 272.00 0.00 297.00 128.36 144.37 0.00 165.00 Beef
The marketing costs of beef and mutton at producer level is Rs.170.77 and Rs.268.87/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 (Table 25). Table 25: Marketing costs of producers and other market intermediaries
Market Intermediaries Producer Contractor/Beopari Commission Agent Butcher/Retailer Mutton (Rs./kg) 268.87 14.71 4.83 21.73 170.77 7.50 0.64 11.06 Beef
36
The net profit margin of beef and mutton at producer level is Rs.-42.41 and Rs.-18.87/kg which implies that farmers are getting loss in producing both beef and mutton. The net profit margin of beef and mutton at contractor/beopari level is Rs.7.50 and Rs.14.71/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 (Table 26). Table 26: Net profit margin of market intermediaries
Market Intermediaries Producer Contractor/Beopari Commission Agent Butcher/Retailer Mutton (Rs./kg) -18.87 7.29 2.60 3.27 -42.41 8.51 0.61 9.57 Beef
10.5
Meat Consumption (per capita consumption)
Meat consumption is calculated using FAO (2002) data and projected upto 2009 and presented in Table 27. Per capita consumption of beef and mutton is 11 and 6 kgs per person per annum in the country. Table 27: Meat per capita consumption Kg/Annum
Years 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Calculated using FAO (2002) data Beef 6.00 6.38 6.77 7.20 7.65 8.12 8.63 9.17 9.75 10.35 11.00 Mutton 3.20 3.40 3.63 3.86 4.12 4.38 4.67 4.98 5.30 5.65 6.02
10.6
Meat Marketing for Export Markets
The quantity of cattle meat exported was 6986 tonnes during 2007 which was assumed as same for the year 2009. Likewise, mutton quantity exported was 7388 tonnes. The export value of total meat was Rs.3.348 billion. The export values of beef and mutton were Rs.1.304 and 2.044 billion. The quantity of cattle, goat and sheep meat and their export values during 2000-2007 is presented in Table 28 and Figure 14 & 15 respectively.
37
Table 28: Quantity and value of meat export from Pakistan from 2000-2007
Qty (tons) Years 2000 2001 2002 2003 2004 2005 2006 2007 597 347 813 1518 1265 2054 2794 6986 Value (000 US$) Cattle meat 961 463 991 2256 1952 2934 4229 15708 Qty (tones ) 2713 968 517 2235 4097 3650 2833 3505 Value (000 US$) Goat meat 4874 1586 841 4565 10528 10604 8761 12944 Qty (tons) 590 420 272 1088 653 1502 2313 3883 Value (000 US$) Sheep meat 921 627 418 1777 1284 3064 5278 11678
Figure 14: Trend of Meat Export from Pakistan

8000 7000 6000 5000 4000 3000 2000 1000 0 2000 2001 2002
Cattle meat
Tonnes
2003 2004 Years
2005
Goat meat
2006
2007
Figure 15: Trend of Meat Export Value

18000 16000 14000 12000 10000 8000 6000 4000 2000 0 2000 2001 2002 2003 2004 Years 2005 2006 2007
000$
Cattle meat
Goat meat
10.7
Revealed Comparative Advantages for Meat Export
38
The revealed comparative advantage is an index used in international economics for calculating the relative advantage or disadvantage of a certain country in a certain class of goods or services as evidenced by trade flows. It is based on the Ricardian comparative advantage concept. It most commonly refers to an index introduced by Balassa (1965) and defined as under: RCAji = (XjiXjw) / (XiXw) Where Xji = exports of product j from country i, Xjw = world exports of the product j Xi = exports of country i, and Xw = world exports
Numerator: our share in a product market (e.g. international meat market) our share in world market
Denominator:
RCA index greater than equal to 1 indicates comparative advantage and values less than 1 indicate comparative disadvantage. Riaz (2009) computed RCA for meat and meat preparations and reproduced in Table 29. 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 (Table 29). To enhance comparative advantage in meat products, need to ensure SPS requirements are met, improve abattoirs, establish cold chains, control disease (e.g. FMD), improve breeds and fodder varieties Table 29: Synthetic RCA measures: Regional perspective
Product Product Name 011 Beef, fresh/child/frozn 012 Meat nes./fresh/chld/froz 016 Meat/offal preserved 017 Meat/offal presvd n.e.s 017 Meat/offal presvd n.e.s 017 Meat/offal presvd n.e.s 017 Meat/offal presvd n.e.s Source: Riaz (2009); IDS, Islamabad Meats and Preparations Group Gulf Coop Council Gulf Coop Council Gulf Coop Council China Gulf coop Council Ro_Eastasia SAARC RCA 5.52 5.48 5.2 2.07 1.8 2.29 3.06
10.8 Conclusion The summary of meat marketing (distribution) 5th segment of meat value chain is presented in Figure 16. 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.
39
Figure 16: Summary of Meat Marketing 5th Segment of Meat Value Chain
MEAT MARKETING)
Total Meat Production during 2008-09
Beef Production Mutton Production
= 2.192 m.t
= 1.603 m.t = 0.588 m.t
DOMESTIC MARKETING
Domestic Market (DM) (Wholesalers) Meat = 2.177 m.t Beef = 1.596 m.t Mutton = 0.581 m.t
Recognized slaughter houses (RSH) to DM (49%)
MEAT TRANSPORTING IN DOMESTIC MARKETS
EXPORT MARKETS
Meat Export
Meat = 1.067 m.t Beef = 0.782 m.t Mutton = 0.285 m.t Urban butchers (UBs) to DM (30%) Meat = 0.653 m.t Beeft = 0.479 m.t Mutton = 0.174 m.t Rural butchers (RBs) to DM (21%) Meat = 0.457 m.t Beef = 0.335 m.t Mutton = 0.122 m.t
Export Markets (Wholesalers)

(Assuming same volume and value as 2007)
Meat transported for domestic markets Meat Transporting Costs
Meat Beef Mutton
= 0.01436 m.t = 0.00697 m.t = 0.00739 m.t
Value of Meat Export

Meat export value = Rs.3.348 m Beef export value = Rs.1.304 m Mutton export value= Rs.2.044 m
Meat
= Rs.7.076 billion
RSHs
RSHs to Wholesalers (30%) and Retailers (70%) Wholesalers to Retailers (90%), Hotel and Restaurants (5%), Food Services and Suppliers (3%) and Super Markets (2%) Retailers to Consumers (100%) Offals retailers receives (50%) from offals contractors and sell all of it to consumers Hotel and Restaurants, Food Services and Suppliers and Super Markets to Consumers (100%)
Beef
= Rs.4.752 billion
Offals Export
Offals contractors (100%) receiving offals from RSHs and non-RSHs
Mutton
= Rs.2.324 billion
Offals processors receives (50%) offals from contractors and sell all to offals exporters
UBs RBs
UBs to Consumers (93%), Food Suppliers (3%), Hotel and Restaurants (4%) RBs to Consumers (100%)
ISSUES OF MEAT MARKETING

(1) Controlled retail price of meat causing slaughtering of unhealthy and old animals (2) Absence of meat grading and pricing by quality (3) Illegal slaughtering leads to poor quality meat (4) Lack of specialized skills in flaying and meat handling (5) Un-hygienic meat sale (retail outlets) (6) No chilling facilities at butchers shops (7) Few operations for export and poor regulation for export
Opportunities for export: Export increases 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. Threats for export: The export of meat exploits local consumers in the farm 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
40
41
11.
The SWOT Approach for Meat Value Chain
The SWOT (Strengths, Weaknesses, Opportunities and Threats) approach has often been used to identify the major factors affecting the performance of an agrifood chain and in this case the performance of meat value chain. The meat value chain can be assessed with regard to its strengths (what it can do) and weaknesses (what it cannot do) in addition to opportunities (potentially favorable conditions) and threats (potential unfavorable conditions) (da Silva and de Souza Filho, 2007). They further stated that the role of SWOT analysis is to take information from the analysis and separate it into current influences (strengths and weaknesses) and potential future developments (opportunities and threats). The SWOT analysis determines whether the information indicates something that will assist meat value chain in being successful in a certain environment, or if it indicates obstacles that must be overcome or minimized (da Silva and de Souza Filho, 2007). In traditional applications of the SWOT approach, opportunities and threats are considered to arise from factors external to the subject of analysis. For chain analysis, these would be issues primarily associated with our definition of the enabling environment (policies, trade agreements, etc.). Strengths and weaknesses, on the other hand, would be associated with elements internal to the object of analysis. For meat chain analysis, this would often include items related to performance drivers such as technologies, inputs or firm management. Although the external vs. internal classification is not entirely rigid, it does provide a helpful way to begin identifying the relevant variables to consider in a SWOT exercise (da Silva and de Souza Filho, 2007). Following this approach, the SWOT exercise for meat value chain is carried out and presented as under: 11.1 Strengths
A low input production with low output system prevails, with less veterinary products used. The large size of national herd The population is growing fast and meat supply cannot keep pace" Weaknesses
11.2
The nondescript breeds in the country are inefficient meat producers and there are no beef breeds of cattle and beef is at best a by-product in Pakistan Decline of availability for green and dry fodders, concentrate and pasture led to poor and inadequate nutrition Nutritional and feed shortages are prevalent Inadequate nutrition, limited availability of veterinary services and expensive medicines, livestock herders are using at low level resulting poor livestock productivity The production base involves small farmers with practically no contract animal rearing and farming to enhance quality control and sanitary measures Inadequate basic facilities (watering, shelter, feed and fodder, absence of weighing machine and market committee), non-availability of specific transport & overloading, inadequate livestock marketing information system and marketing regulatory agency as well as policy,
42
faulty pricing mechanism of meat animals (per head basis rather than weight basis), and livestock animals smuggling to Afghanistan Numbers of abattoirs are not sufficient that results to unhygienic meat supply, outdated and unhygienic conditions of abattoirs (primitive public abattoirs) with few exceptions in private sector, lack of basic slaughtering facilities (chilling, incerators and blood processing etc.), rudimentary disposal system of byproducts, no hide and skin treatment abattoirs, and no generator facility for backing-up in case of load shedding in order avoid injuries working at night Controlled retail price of meat causing slaughtering of unhealthy and old animals, absence of meat grading and pricing by quality, illegal slaughtering leads to poor quality meat, lack of specialized skills in flaying and meat handling, and un-hygienic meat sale Health hygiene awareness poor Weak SPS regulatory framework Poor enforcement of SPS laws Inefficient disease control and quarantine Opportunities
11.3
New markets for Halal meat Malaysia and Indonesia Domestic and foreign private sector investment interest The establishment of feed lots and fattening yards attached to slaughterhouses. Donor support to manage SPS issues Export increases 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 exports 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. Threats
11.4
Loss of existing markets through competition and their introduction of better quality and safer meat products. Imports, particularly from India The introduction of exotic diseases The export of meat exploits local consumers in the farm 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 Proposed Action Plan for Meat Value Chain
12.
The rationale for action plan for meat value chain is derived from the inefficiencies of five segments (inputs, production, live animals marketing, processing/slaughtering of animals, and meat marketing/distribution) of meat value chain along with institutions, policy and legislations for meat sector. The segments of meat value chain are taken as activities of the chain with associated issues or inefficiencies or obstacles of meat value chains along with strategy/ requirements are summarized in the Table 30.
43
Table 30: Proposed action plan for meat value chain

Activity Inputs (seed stock genetics/ breeds, feed and veterinary services) Issues Haphazard breeding and traditional unscientific management The decline of availability for green and dry fodders, concentrates and pasture overtime led to poor and inadequate nutrition Limited availability of veterinary services and expensive medicines, livestock herders are using at low level of veterinary services Low input system (expensive inputs are used at low level by livestock farmers) Weak and unhealthy stock and breeding lines because no beef breeds of cattle No concept of herd health management Low output due to low input system Raising meat animal with traditional system is not profitable enterprise Social system has broken due to inflation and ag-inflation is even higher Inadequate basic facilities at live animals market (watering, shelter, feed and fodder, absence of weighing machine and market committee) Non-availability of specific transport and overloading without refrigeration Delay in live animal delivery Faulty pricing mechanism of meat animals (per head basis rather than weight basis) Abattoirs in disrepair with limited current expenditure Small number of regulated slaughterhouses Limited private sector participation Code of practice not operational Weak ante mortem and post mortem inspection No chilling facilities except in few private abattoirs No veterinary and plant health authority Through middlemen in big cities, without chilling/storage facilities Controlled retail price of meat causing slaughtering of unhealthy and old animals Absence of meat grading and pricing by quality Illegal slaughtering leads to poor quality meat Lack of specialized skills in flaying and meat handling Un-hygienic meat transportation and sale (retail outlets) No chilling facilities at butchers shops Few operations for export and poor regulation for export Strategy/Requirements Need improved breeding for meat animal programme with modern and scientific management Farmers awareness about low cost quality feed for ensuring adequate nutrition Policies for cheaper inputs (feed and veterinary services) for higher use of inputs
Meat Animals Production (traditional meat raising animals, feed lot fattening and culling from dairy animasl) Live Animal Marketing (domestic and export markets)
Meat Processing (Slaughtering)
Meat Marketing (wholesaling, retail and export)
Farmers awareness about raising meat animals on commercial basis Shift to feed lot fattening or farmer production groups in rearing yards Effective disease monitoring and control for enhancing animal productivity Need a special focus on social system Policies for reducing ag-inflation Channeling of Contractual money for provision of basic facilities Encouraging Pvt Sector for developing markets with basic facilities Redesigning vehicles suitable for animal transport Awareness to traders Enforcement of pricing by weight and awareness campaign Proposed legal authority with regulatory coverage Privatization of state owned slaughter houses Foreign/local investment SPS management through Veterinary plan Health authority Meat standards and an industry Code of practice HACCP for meat processing Meat inspection laws For enhancing legal slaughtering, there is a need for de-skinning machines may increase efficiency for slaughtering large ruminants in the country with the consideration of employment concerned of manually slaughtering workers A robust value chain, improved linkages with producers Regulated outlets open price policy like chicken & fish Cut-based pricing under free market forces Strict compliance of the legal slaughtering Awareness, Provision of institutional training & Registration Awareness & implementation of SPS sanitary measures Consumer awareness of the benefits of a hygienic product Investment-driven incentives and effective regulation and standards Exposure visits for exporters
44
13.
Summary and Conclusions
Meat value chain is comprised of five segments namely Inputs, Production of Meat Animal, Marketing of Meat Animals, Processing (Slaughtering) and further Meat Processing and Distribution (Domestic and Export Markets). The Inputs 1st segment of meat value chain, includes seedstock (genetics/breeds), feed (green and dry fodder, concentrate and pasture/grazing) and veterinary services (medicine, vaccination and Artificial insemination). 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 and (v) low input system (expensive inputs are used at low level by livestock farmers). The Production 2nd segment of meat value chain deals with raising of meat animals. Meat animals are raised by traditional farmers (97%) including culled animals from dairy animals, feed lot fattening (2%) and exporter raise less than (1%) meat animals at their own farm. Analysis of cost of production of small and large ruminants production revealed that traditional farmers are getting negative net return where feed lot farming are generating positive returns. This implies that traditional farmers do not raise animals with the commercial perspective which require a sound livestock extension services to make them aware about the economic return of the raising commercial meat animal. The overall productivity of all the species in terms of meat is low. The overall increase in meat over the years is due to the increased inventory and not because of any increase in their productivity which is a serious issue and matter of great concern. Literature has shown that both the large and the small ruminants are performing much below their genetic 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 aginflation is even higher. All these factors translate into a existing very weak livestock extension services in the country. The Live Animals Marketing 3rd segment of meat value chain describes the players and marketing channels of meat animals. 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 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 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
45
refrigeration (iii) delay in live animal delivery and (iv) faulty pricing mechanism of meat animals (per head basis rather than weight basis). The Processing (Slaughtering) and further Meat Processing 4th segment of meat value chain narrates the meat production at recognized and non-recognized slaughter houses at urban and rural places in the country. 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. The Distribution (Meat Marketing) 5th segment of meat value chain covers both domestic and export meat markets. 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 management (ii) farmers awareness about low cost quality feed for ensuring adequate nutrition and (iii) policies for cheaper inputs (feed and veterinary services) for higher use of inputs . The proposed strategy/requirements for 2nd segment of meat value chain namely Production of Meat Animals are (i) farmers awareness about raising meat animals on commercial basis (ii) shift to feed lot fattening or farmer production groups in rearing yards (iii) effective disease monitoring and control for enhancing animal productivity (iv) need a special focus on social system and (v) policies for reducing ag-inflation. The proposed strategy/requirements for 3rd segment of meat value chain namely Marketing of Meat Animals: are (i) channeling of Contractual money for provision of basic facilities (ii) encouraging Pvt Sector for developing markets with basic facilities (iii) redesigning vehicles suitable for animal transport (iv) awareness to traders (v) enforcement of pricing by weight and awareness campaign and (vi) proposed legal authority with regulatory coverage.
46
The proposed strategy/requirements for 4th segment of meat value chain namely Processing (Slaughtering) and further Meat Processing are (i) privatization of state owned slaughter houses (ii) foreign/local investment (iii) SPS management through Veterinary plan (iv) health authority (v) Meat standards and an industry Code of practice (vi) HACCP for meat processing (vii) meat inspection laws and (viii) for enhancing legal slaughtering, there is a need for de-skinning machines may increase efficiency for slaughtering large ruminants in the country with the consideration of employment concerned of manually slaughtering workers The proposed strategy/requirements for 5th segment of meat value chain namely Meat Marketing are (i) a robust value chain, improved linkages with producers (ii) regulated outlets open price policy like chicken & fish (iii) cut-based pricing under free market forces (iv) strict compliance of the legal slaughtering (v) awareness, provision of institutional training & Registration (vi) awareness & implementation of SPS sanitary measures (vii) consumer awareness of the benefits of a hygienic product (viii) investment-driven incentives and effective regulation and standards and (ix) exposure visits for exporters. Greater product diversification by the processors is needed. Processing of meat can be as simple as preparation of retail cuts of meat, or it may involve grinding, flaking, sectioning, seasoning, salting, curing, forming, smoking, heating, fermenting, drying or combination of these treatments. The improvement of packaging utilizing food grade materials and the greater use of vacuum packing are also required. Greater research or collaborative research with other countries into food safety and veterinary and plant health, for example (i) improved detection and screening techniques for residues of antimicrobials and their metabolism in animal products (ii) the presence of drug metabolites in animal products destined for human consumption (iii) the role that antimicrobials or their residues play in food sensitization and subsequent hypersensitive reactions in humans (iv) the associations and frequency of antibiotic resistance and (v) detailed studies to assess the microbiological contamination at different stages of processing.
47
14.
References
Alvi, A. S., 1988, Meat Hygiene and its Importance in Public Health, Progressive Farming, Vol.8, # 2, PARC Asean Foundation and Asia DHRRA, 2008, Value Chain Analysis Report, Cambodia, Philippines and Vietnam, Linking Small Farmers to Market Project. Balassa, B. 1965, Trade Liberalisation and Revealed Comparative Advantage, The Manchester School, 33, 99-123. Carlos, A. da Silva and H.M. de Souza Filho, 2007, Guidelines for Rapid Appraisals of Agrifood Chain Performance in Developing Countries, Agricultural Management, Marketing and Finance, Occasional Paper 20. Food and Agriculture Organization of the United Nations, Rome, 2007. FAO, 1987, Livestock Sector Study, Vol 1 & 2, FAO/Asian Development Bank Cooperative Programme. Food and Agriculture Organization of the United Nations- Rome. FAO, 1987, Pakistans Experience in Rangeland Rehabilitation and Improvement. Food and Agriculture Organization of the United Nations. 70pp. FIAS, 2007, Pakistan Value Chain Analysis, Leaders in Investment Climate Solutions, A multi-donor service managed by the International Finance Corporation and The World Bank Hassnain, H. and M.F. Khan, 2007, Livestock Sector Review for Pakistan, Value Chain Analysis of Prospects and Problem of Livestock. Islamabad, October, 2007. Hassnain, H.U. and R.H. Usmani, 2006, Livestock of Pakistan, Livestock Foundation, Islamabad. Muhammad, Dost, 2002, Grassland and Pasture Crops, Country Pasture/Forage Resource Profiles. Riaz, K. 2009, An Analysis of Pakistans Revealed Comparative Advantage in Agricultural Products, Innovative Development Strategies with the Assistance from the World Bank and FAO. Rodriguez, A., Ali, I., Affzal, M., Shah, N.A. and Mustafa, U. 1995, Price Expectations of Sheep and Goat by Producers and Intermediaries in Quetta Market, Pakistan, Agricultural Economics. Vol. 12(1): 79-90
Shairf, M., W. Malik, N.I. Hashmi and U. Farooq, 2003, Action Plan for Marketing of Livestock System in Pakistan, SSI-FAO, Islamabad Report.
SMEDA, 2002, Pre-Feasibility Study on Abattoir, Small and Medium Enterprise Development Authority, Government of Pakistan, March 2002.
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A Value Chain Analysis of The Meat Sector in Pakistan

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A Value Chain Analysis of the Meat Sector in Pakistan

12. 13. 14.

A Value Chain Analysis of the Meat Sector in Pakistan

Producers Processors Wholesalers Retailers Consumers

Overview of Red Meat Sub-Sector Inventory of Milk and Meat Animals

Beef and Mutton Animals

2 1.104 2.038 0.332 0.202 0.136

3 0.301 0.636 0.135 0.096 0.037

4 0.002 0.003 0.004 0.002 0.001

5 0.17 0.31 0.403 0.121 0.063

6 0.422 0.45 0.337 0.182 0.435

7 0.893 1.396 0.874 0.399 0.535

Table 3: Key characteristics of meat sub-sector, 2008-09

Figure 2: Supply Chain for Red Meat

Exporter own Farms (<1%)

Livestock Farmers (97%)

Feed lot Fattening (2.1%)

5% Live animal Markets 98%

Exporters S. House (1%)

90% 2% 100 % CONSUMERS (98.8%)

Red Meat Value Chain

Figure 3: Red Meat Value Chain in Pakistan, 2008-09

Meat Animals Production

Meat Animals Marketing

Distribution (Meat Marketing)

UBs & RBs Retailers Handling, Packing and Loading (Butchers)

Sheep and Goats

Hotel and Restaurants

Culled Mutton Animals

Input Provision/Supplies --- 1st Segment of Value Chain

Meat Animals Production

Meat Animals Marketing

Distribution (Meat Marketing)

Further Meat Processing

UBs & RBs Retailers

(Handling, Packing and Loading)

Sheep and Goats

Hotel and Restaurants

Figure 5: Summary of Inputs 1st segment of meat value chain

Rangeland per adult animal unit

During the current era these children

High cost of feeds Number of nomadic from

A veterinary professional and

Such decline of availability for

Medicines are very expensive Due to limited availability of

Large and small ruminants are

Meat Animal Production --- 2nd Segment of Value Chain

Figure 6: Meat Animals Production 2st Segment of Meat Value Chain

Meat Animals Production

Meat Animals Marketing

Distribution (Meat Marketing)

Further Meat Processing

UBs & RBs Retailers

Sheep and Goats

(Handling, Packing and Loading)

Hotel and Restaurants

Food Service Suppliers Meat Transport Super Markets

Culled Beef Animals

Culled Mutton Animals

Table 10: Cost of production of beef animal

40 kg Kg Rs./Kg Live Weight 40 kg 40 kg

91.25 18.25 2 1 22.8125

40 120 30 4000 200 100 312.5