2010

Roadmap to Making
Punjab a Regional
Base for Halal Meat
Export
Action Plan & Progress Report
Pakistan should stay in chilled segment and compete in the premium end and
build scale here. In the short term it should focus on limited market geography
(Middle East and Malaysia) and enter the frozen segment only when – and if -
costs of farm production have been brought down. Over the longer term it should
prepare for European market entry by fast tracking the animal tagging project to
fulfill the EU market’s traceability requirement for meat products.

Projects Directorate,
Punjab Board of Investment & Trade
4/9/2010
Copyright ©2010 - Punjab Board of Investment & Trade
Roadmap to Making Punjab a Regional Base for Halal Meat Export

ACKNOWLEDGEMENTS

PBIT would like to acknowledge the invaluable contributions of the following, without whose help this
study would not have been possible.

 Livestock and Dairy Development Board, Ministry of Livestock, Government of Pakistan

 Livestock and Dairy Development Department, Government of Punjab
 Mr. Khalil Sattar, Chairman, Chief Minister’s Task force on Meat Development
 Cholistan Development Authority
 Private stakeholders involved in meat exports
o Mr. Syed Hassan Raza, Syed Traders
o Mr. M. Nawaz Dogar, Abedin International
o Mr. Mian Abdul Hannan, Tazij Meat & Foods
o Mr. Asif Ghias, Zenith Associates

Moazzam Husain
Director General – Projects Development
Punjab Board of Investment & Trade
23 – Aikman Road, GOR I- Lahore
moazzam.husain@pbit.gop.pk

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

INTRODUCTION

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

MACRO AND PUBLIC POLICY PERSPECTIVE

U
ntil a few years ago, Pakistan, with only 3 modern slaughterhouses, and a negligible cool chain
lacked the infrastructure to compete as an effective player in the world meat market. Even
today, the present 14 export approved modern slaughterhouses only indicate a nascent though
emerging status for the country. The Livestock and Dairy Development Board (LDDB) of the Federal
Ministry of Livestock have plans to encourage 8 additional slaughterhouses in the private sector for
which it offers a Rs. 3 million grant for establishment of a new slaughterhouse against total estimated
investment outlay of Rs 70-80 million. The LDDB also offers Rs 300,000 grant for opening a new meat
shop. Other incentives to accelerate the establishment of modern slaughterhouses would give impetus
to the meat export sector.

A major roadblock to exporting meat to developed countries, primarily US and EU is the lack of a
traceability mechanism in the local meat value chain. To redress this, a livestock tagging and information
management project needs to be initiated. To achieve this goal a pilot project with EU funding has been
initiated by Belgium Blue Cattle Farms (BBCF) through PBIT facilitation. BBCF has begun implementing
this project in 52 villages surrounding University of Veterinary and Animal Sciences campus at Patoki.
Additionally organized meat farming activity in Pakistan is almost negligible. Most animals originate
from small herd farmers with average 1 – 5 animals. For the meat sector to grow there is need to
meaningfully integrate these small herd farmers into the meat economy as economic agents. In this the
meat development project of the LDDB is a commendable initiative. Under this, farmers are provided
subsidy of Rs 1400 for large animals and Rs 500 for small animals for a period 90 days for fattening
expenses. The programme has covered 100,000 animals to date and this programme needs to be
continued and expanded. At the same time, the viability of large meat farming business models needs to
be urgently tested and validated.

Pakistan enjoys certain natural advantages to become a major player in the global meat market. Firstly
the country has large tracts that are relatively disease-free (e.g. Cholistan) but this status has not been
properly capitalized or marketed. Secondly, the taste preference of Middle East consumers is mainly for
young cattle calves - tender meat; Pakistani meat has a distinct advantage in this sector. Anecdotal
feedback from western consumers has also validated this “taste advantage” factor of Pakistani meat.
Still this may be fully validated in a full blown consumer taste research study. On the contrary the Indian
meat model focuses mainly on frozen and buffalo meat of mature animals which does not necessarily

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

taste better. Additionally cow slaughtering is totally banned in India. Nevertheless, Pakistan and India
have competitive advantages in different market segments. Pakistan’s advantage is in cattle and the
chilled meat sector. Thirdly, given the proximity, the country can provide chilled meat at a more
competitive pricing than anybody else to the Middle East region.

The LDDB, as a federal agency and the provincial livestock department, both have a limited role in
quality and pricing of meat as these subjects lie under the regulatory control of the city and district
governments. In many cases this limits the role of federal and provincial agencies to improve and
standardize quality while on the other hand the local governments are not equipped with the skills and
tools - and often times, the motivation - to upgrade.

PRIVATE SECTOR PERSPECTIVE

P BIT had extensive discussions with private sector players on the current state of the meat
industry and possible actions to improve the situation. Although the issue of only a handful of
approved slaughter houses was often raised as a constraint in the meat export sector, the irony is
that the 14 slaughterhouses that are approved for exports are generally running under capacity. So the
question arises that is more slaughterhouses/abattoirs really the answer?

Private sector players identified marketing as a key requirement and an area where local players should
focus. The smuggling of live animals to Iran and Afghanistan was also felt to be a major issue. On the
other hand breed was also considered to be an important factor.

The main competition faced by Pakistan in the meat sector is from Brazil, Australia, US and Argentina.
These countries are leading Pakistan in the areas of beef breeds, technology and feed economics.

The major constraints cited by the private sector were:

a. Lack of modern slaughterhouses

b. Poor backward linkages
This often results in supply shortages for meat exporters
c. Marketing
Pakistani products have very limited presence in international markets and the main
reason identified for this is insignificant marketing in foreign countries.
d. Air Cargo space
Availability of cargo space becomes a major issue during the mango season.
e. Enforcement of ban on export of live animals.
If even one diseased animal is found, the entire country may be affected by a ban.
f. Slaughterhouses be put under L & DDD instead of city/ district governments
g. Forward integration
Most Pakistani export meat is in the form of whole carcasses. Slaughterhouses need
technical assistance to build processing capacity and marketing of processed/ value
added meat products.

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

h. Animal Health
The current livestock health extension systems are inefficient resulting in poor animal
health, which in turn adversely affects both productivity and export potential
i. Feed Mix
Developing/researching high quality feed mix will increase productivity of animals
j. Market Structure
Formal market channels should be established to ensure continuous supply of high
quality meat
k. Herd Size
Most animals originate from small herd farmers with average 1 – 5 animals. For the
meat sector to grow these small herd farmers need to be integrated into the meat
economy

PBIT OBSERVATIONS

A
fter extensive discussions with relevant parties from both the public and private sector, PBIT
made the following observations in regards to meat production and export.

The popular Pakistani large animal breeds are multipurpose (Milk, Meat, Draught power).
Generally this implies a longer time to maturity and slower daily weight gain as compared to Latin
American, Australian, European and US beef breeds. This puts Pakistan at an economic disadvantage in
rearing meat animals.

In Pakistan, the mindset to tie animals to a peg and also the limited availability of free grazing pastures
has led to stall feeding becoming prevalent practice. This implies a less efficient feed to weight
conversion ratio. In addition animals do not enjoy free access to water which is another limiting factor
for optimal weight gain.

Given these conservative mindsets and a propensity towards - and on farm requirement for - these
native breeds, undertaking a switching program for small herd farmers may prove to be a very steep hill
to climb.

On the flip side, we are proposing the hypothesis that the slow weight gain and natural feeds of farm
grown animals is perhaps what gives Pakistani meat its distinct, seasoned flavor. There may be merits to
retaining this and positioning this as a marketing advantage.

Breeding and rearing of beef breeds are therefore only likely to be adopted by large scale farmers who
together with the risk appetite can also provide the necessary veterinary infrastructure and
management support for this longer term business model which will unfold only after 3 or 4 generations
of animals have been bred.

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

SUGGESTED ACTIONS

B
ased on input received from meat sector stakeholders, we spell out the following high level
action plan with a view to developing Punjab as a regional halal meat export base:

1. Meat Export Processing zones should be established; preferably two in the province, one near
Lahore and a second one in Southern Punjab. These zones are expected to include animal
breeding farms, fattening farms, slaughter houses and meat processing facilities all located in
one area. In addition cold storage facilities need to be established at airports around the
province; the one at Lahore is already
operational, similar cold storage facilities should
be established at Multan, Bahawalpur and ARTICULATION OF STRATEGY
RahimyarKhan. Another facility currently lacking
at airports are electricity plugs for reefer Pakistan should stay in chilled segment
and compete in the premium end and
containers. These need to be provided to ensure
meat waiting at airports for transport remains build scale here. In the short term it
chilled inside parked container trucks. should focus on limited market
geography (Middle East and Malaysia)
2. Disease free zones in Cholistan and other areas and enter the frozen segment only
need to be declared and maintained followed by when – and if - costs of farm
production have been brought down.
maximum capitalization of this important
marketing attribute. Cattle farming should be Over the longer term it should prepare
actively promoted in these areas through for European market entry by fast
tracking the animal tagging project to
extension of credit, microcredit and extension
services even if sourced from the private sector fulfill the EU market’s traceability
and funded by a grant assistance programme. requirement for meat products

3. Pakistani chilled meat export volumes are still

short of attaining “critical mass”. A programme which offers a one year freight subsidy tied to
demonstrable performance in gaining shelf space in export markets ought to be designed and
offered.

4. Freighter services (as opposed to passenger carriers) to Middle East need to be started.
Presently exporters in Pakistan are paying over $ 1 per kg for freight whereas Indian exporters
are paying INR 56 per kg on which 25% is offered as freight subsidy.

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

5. Quarantine charges need to be abolished. Presently quarantine charges of Rs 240 are being
charged per large animal and Rs 40 per small animal. Also other handling charges on airlines,
logistic services need to be reduced / rationalized to ensure our meat products retain a
cost/price advantage in international markets.

6. To incentivize more investors to enter the meat processing industry, land may be offered for the
establishment of processing units. This land may be provided by GoPb and should preferably be
near farming areas. Also financial incentives may be provided to investors in the form of export
financing/ refinance on preferred rate of interest or soft loans for establishment of value added
meat products processing units.

7. Punjab government livestock farms be put under public private partnership to increase cattle
production, possibly beef breeds with joint venture collaboration from Australian expertise.

8. TDAP offers a subsidy on rental outlets in export markets. This facility to be actively encouraged
for meat exporters and also extended to include meat counter rental in upscale retail
supermarkets.

9. Implement a National Livestock Information and Management programme as an extension to

the animal tagging project. This would open up export markets to the US and EU.

10. R&D/survey should be conducted to identify most appropriate breeds for fattening.

11. The most effective feed mix that is developed should be actively promoted to farmers through
extension work, media and private sector marketing efforts.

12. The private sector should be encouraged to participate in delivery of services (e.g. medical/R&D)
to the livestock sector.

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

SUMMARY OF ACTION PLAN

Immediate Short Term Medium Term

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

FACILITATIONS ALREADY PROVIDED BY PBIT

1. Animal Tagging Project

PBIT is giving facilitation to Belgium Blue Cattle Farms (BBCF) for introducing food safety agency
in Punjab (Livestock Tagging) for traceability of meat. BBCF has begun implementing this project
in 52 villages surrounding New Campus of UVAS at Patoki

2. Cholistan Livestock Development Project

PBIT has finalized road shows and presentations for this project. Investment Memorandum has
also been developed by project wing of PBIT. This project is ready and awaiting green signal for
launch

3. Jassar Farms – Cattle Breeding Project

This is a private sector Semen Production Unit which will provide quality semen for cattle
breeding to both the public as well as private sectors. The project has been started with
facilitation from PBIT and the unit has purchased animals for breeding purposes.

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Roadmap to Making Punjab a Regional Base for Halal Meat Export

4. Maxim – Animal Feed Manufacturing

Maxim provides quality concentrated feed for dairy as well as feed lot fattening farms. PBIT has
arranged Maxim to meet with Auriga Group of companies to discuss mutual collaboration in
maximizing feed outreach.

5. RCDS – Cooperative Cattle & Dairy Project

RCDS is an NGO working for socio economic uplift of resource-less rural masses in district
Nankana Sahib. They are working on cooperative basis by supplying animals to their members
and collecting milk on better prices. PBIT has arranged two chillers for RCDS from a private milk
processing company and also sent a request to PUM Netherlands for providing a senior expert
from Netherlands to provide better milk marketing solutions for RCDS.

6. Malaysian Agrifood Corporation- Slaughterhouse

As per follow up of Ministerial Delegation from Malaysia, PBIT is facilitating the corporation to
provide them linkages to Punjab's exporters and entrepreneurs.

7. Profarm Ltd – Cattle Breeding

Profarm is a new initiative to provide quality semen provision in the Livestock sector. Profarm
has established 8 centers where 25 technical managers are working at this point in time.

8. Auriga Group of Companies – Concentrated Cattle Feed

Auriga Group of companies is involved in chemical pesticides, hybrid seeds and micro nutrients.
PBIT is facilitating them in expansion into the concentrated cattle feed sector.

9. Ghulam Faroque Group – Slaughterhouse

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

10. Anujuman e Kashtkaran Punjab – Backward linkages for slaughterhouses

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

12. PBIT took a group of leading Punjab Food companies (primarily dairy and meat) to Gulfood -
Dubai, the region’s largest business matchmaking event in February 2010

13. PBIT is taking a delegation of leading private sector meat and dairy players to Australia / New
Zealand with a view to sourcing state appropriate technologies and best practices for this sector.

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