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Pakistani Poultry Farmer Sold $2M in Property to Pay Employees, Then Came COVID-19
Haji Mohammad Arshad has had a few rough years with his once lucrative poultry farms.
He started Wali poultry farms in 1982 with meager resources and the business thrived over the decades, making him millions. But the last year and a half have been challenging as overproduction has driven prices down as production costs remained high. For example, a carton of eggs in wholesale, containing 30 dozen eggs, cost him about $17 to produce but he could sell it for only around $11.
Last year, he sold more than $2 million in property to keep his business afloat and pay his more than 800 employees, but he wondered how much longer he could continue.
"I am more worried about them than I am for my own children, but what do I do?" Arshad asked.
Also adding to costs has been Pakistan's roller-coaster relationship with its western neighbor, Afghanistan. Frequent shutdowns of its land routes into the country in the last few years have led to major losses to an industry that has relied heavily on exports to Afghanistan.
Also contributing, the depreciation of the Pakistani rupee and import duties and taxes added by the government that caused the price of feed and medicines for his birds, imported from abroad, to rise by almost 50%.
It was a tough environment for the poultry industry to survive, but as the industry started to stabilize after reducing its supply to match the demand, another crisis hit: the coronavirus pandemic.
Coronavirus pandemic
Pakistan has been in an almost countrywide lockdown for a week with no clear end in sight.
With marriage halls and restaurants shuttered and large gatherings banned, the demand for poultry dropped by 20-25%, according to Chaudhry Muhammad Fargham, the chairman of the northern region of Pakistan Poultry Association.
The uncertainty coupled with the lack of clear government policy, he said, was forcing farmers to sell their chickens at a reduced cost to try to limit their losses.
In addition, farmers were also uncertain about the continued supply of feed for their birds, causing many of them to suspend buying hatchlings.
"Forget the sales, now our biggest concern is that the police are stopping the trucks carrying feed and harassing drivers. We're afraid the birds might die of hunger," Arshad said.
Most of the feed used in commercial farms in Pakistan comes from abroad and lands at the port in Karachi. From there, it is loaded into vehicles that carry it across the country.
Transportation of food-related goods was exempt from the lockdown. Hamad Azhar, the federal minister for economic affairs, said the government was working to solve the issues in the transportation of imported goods. However, lack of coordination between the federal and provincial authorities, as well as a lack of clear understanding by the law enforcement officials as to what items were exempt, was causing some issues in transportation.
Two weeks ago, the Pakistan Poultry Association wrote a letter to Prime Minister Imran Khan, requesting help for what it called the "survival of the poultry sector in Pakistan."
It was not clear what aid the government gave the sector in a recently announced coronavirus relief package of more than $7 billion, out of which around $600,000 were set aside for small and medium enterprises and the agriculture sector.
Around 33% of Pakistan's demand for meat is met through domestically produced poultry. Continued losses could lead to the country losing self-sufficiency, warned Maqsood Jafri, a veterinary consultant and himself a poultry farmer.
"If we fall below a certain threshold, we will start importing. It'll become more expensive and our per capita consumption of nutrition, which is already low, will further decline," he said.
Pakistan is already suffering from a balance of payment crisis and the government is desperately trying to increase imports and curb exports. Importing poultry could be bad for both the country's physical and economic health.
April 01, 2020 at 05:16PM
