Pakistan Feed Milling Industry

Poultry feed production

Seventy percent of broiler feed in Pakistan is produced in modern feedmills equipped with pelleting technology. Small feedmillers volume of business has been squeezed and in future may become non-profitable due to small volumes and higher cost of raw materials. Poultry feed production over the past 10 years is shown in tables 1 and 3.

Table 1. Poultry feed production (000 tonnes)

Source: Writers own estimates.

Source: PPA souvenirs and writers estimates

Poultry feed composition consists of 50-65% grains and their by-products, 30-40 % vegetable proteins, 10-15% animal protein sources, plus vitamins, minerals and amino acids.

The feed milling industry does not import feed grains, thus utilizing locally available/produced feeds grain. These include maize, broken rice, wheat, rice polishings and sorghum. This paper examines raw material availability in the future, which may become constraints for feed production.

Maize production in the past five years is given in table 4.

Maize utilization by the feed industry is mostly dependent on price. Utilization of maize is in two major sectors, food and feed. About more half the maize is used in food products and on an average about 40% goes into poultry feed. Trends in maize utilization by the feed industry during the last 10 years are shown in table 5.

Source: Economic Survey of Pakistan 2004-05 and market reports.
* 16% of rice as Rice Broken production.

Broken rice is utilized about 20-25% in poultry feed, while about 50,000 tonnes is utilized by M/s Habib Arkady Karachi plant for manufacturing liquid sugar. The remainder is exported along with rice as 5-10% broken rice. Utilization rates over the past 5 years are given in table 7.

Rice polishings, a by-product of rice processing industry, are used in poultry feed and for oil extraction (for the laundry soap manufacturing, as it contains 12-14% oil). Feedmills utilize 80% of rice polishings produced for energy and protein. The remaining 20% is utilized by the solvent extraction industry to extract oil, with the resultant bran again utilized by the poultry or cattle feed sector. As feedmillers are paying a better price for this product, utilization of rice polishings for solvent extraction has been decreased in the last five years.

Wheat

Wheat production in Pakistan has a central position in agricultural policies because wheat is a staple food for people. Wheat production shows 1.8% increase over the last year. The yield per hectare has increased by 1.2 percent. This year wheat production is less than the target of 20 million tonnes.

Table 8. Wheat production

Sorghum

Increases in sorghum and barley production were significant as shown in the economic survey of Pakistan (2003-04). In 2002-03 production of sorghum was 202,000 tonnes, and increased to 238,000 tonnes (17% increase) whereas for barley the increase was just 1%. Barley in 2002-03 100,000 tonnes whereas in 2003-04 102000 tones, and in 2004-2005 it is expected that production has reduced by 2%.

Utilization of sorghum/barley in poultry feed is about 3 to 5%. A major barrier for more use of sorghum in poultry feed is tannins and last year was the lower market prices. Low tannins varieties are in development at agriculture research stations and ICI has been trying to promote the hi-bred seed in rain fed areas. In future, sorghum may receive better market prices, which will be helpful for its production in Pakistan.

Vegetable protein sources are the major proteins in feed. Almost all vegetable protein sources are by-products of the solvent extraction industry. They vary in composition according to processing. Major vegetable protein sources used in poultry feeds are:

• Canola meal (imported)
  
• Rape seed meal (local)
  
• Sunflower meal (local + imported)
  
• Soybean meal (imported)
  
• Guar meal (local)

The oilseeds market is driving meal utilization in the livestock sector, not the demand for oil. Local oilseeds production fulfills about 29 % of vegetable oil demand of the country. Total availability of the edible oil in 2002-03 was 2.19 million tonnes, local production stood at 0.641 million tonnes (Economic Survey of Pakistan 2003-04). During 2003-04 (July-March), production of edible oil from local oilseed was estimated at 0.702 million tonnes.

Canola meal imported and local rapeseed meal

Since 1997 canola seed has been imported for better utilization of the solvent extraction industry, as they were operational seasonally and in total only 180 days of the year.

E: Estimated added another 150,000 tonnes in imports (* Sept-DEC)
1) Economic Survey of Pakistan 2003-04 (rape/mustard seed meal locally produced)

Table 10. Sunflower oil seed imports and local production

Source: Economic Survey of Pakistan 2003-04 and import data of goods arrival at Karachi port.

Sunflower utilization in feed is restricted by high fibre content and low protein. The cattle feed sector, which is still unexplored for the compound feed manufacturers, utilize about 30% sunflower meal.

Soybean meal

Pakistan at present imports both soybean meal from India and soybean seed from Brazil and Argentina. In 2002 soybean seed was imported from USA under F-16 aid compensation program. On average, 7-8000 tonnes of soybean meal is imported per month. Annual imports of soybean meal from India are between 85-100 thousand tonnes.

Table 11. Soybean imports and meal production.

Source: Port Qasim Import Data. 59.85 Rupees= 1 USD

Soybean meal is totally utilized by the poultry feed sector. Pakistan’s feed milling sector utilize only 1% of the total Indian soybean meal production, which will increase in future, if canola seed production and availability become non-competitive in international prices.

In 2004-05 Pakistan fishmeal production was about 65,000 to 70,000 tonnes, compared with 30,000 tonnes in 1985. Adulteration of fishmeal is a major barrier to its utilization in the poultry feed.

Feedmills use most of the fishmeal produced in the country. The utilization rate is 5-7%. By the year 2008 it is forecast that the shortage of fishmeal will be substituted with soybean meal or canola meal.

Guar Meal is locally produced in the country. There are two main processing plants of Guar in the country 1) Habib Group and 2) Pakistan Gum. Both has the capacity to process 80-85,000 M.tons of Guar per annum.

Future demand of raw materials

Keeping in view the past ten years growth of the feed sector at 7-10% annually, the demand of raw materials for the future need has been calculated in Table-12.

It is evident that in future the availability of raw materials, especially grains, will be difficult for feedmillers and there will be a shift of 10% towards either wheat or broken rice or Corn what so ever is available in better price to the feed milling industry.

The fate of the small feed miller/Home mixer role in the feed production will be reduced due to cost and marketing/ logistics arrangement of small shipments verses bulk shipment.

Fish meal production in Pakistan will increase by 4-5%. In the case of some years of poor fish harvest, production could be lower than the required quantity. Its demand can be easily shifted to other vegetable protein sources however.

Table 12. Future demand of raw materials (in million tones)

Source: Writers Estimates, & Poultry Feed Miller Association

Explanation: After the next five years, grain availability may become crucial for the feed industry. If broken rice, sorghum and corn production do not increase to meet the feed demand, then further increases in feed prices will be inevitable.

Micro raw materials used in poultry feeds are 100% imported. Demand for vitamins and amino acids will increase at the rate of 3% per annum. Use of enzymes and other growth promoters in the feed will increase due to need of more efficient performance of the poultry sector and to get maximum nutritive benefits from the raw materials (grains and vegetable protein sources). For vegetable protein meal sources the role of solvent extraction industry is very vital for the feed production on one hand and vegetable oil production on the other. Local oilseed production is not enough to coop with the demand of meals. Import of Canola, Sunflower and Soybean is allowed by the government to support the livestock and poultry production. Pakistan has abundant resources of cotton seed, which is still screw pressed (Expellers) leaving 7% oil in it and utilized in cattle feed.

By the year 2010, a shift in the poultry-farming sector will be the factor determining the course of the poultry industry in the country. Its beginning has already started and large environmentally controlled farms are being constructed to achieve better performance.

Table 13. Raw material prices poultry feed ingredients (Rupees per kg)

The average percentage increases in ingredients prices from 1996-97 to the 2004-05 Jan comes to 84.97 %, while feed prices during the same years increased by only 49.26 %. Increases in the end-product farm gate and market prices have shown little increase due to the consumer economic conditions, attitude and purchasing power.

Table 14. Balance and demand of raw materials (million tonnes)

*Based on present consumption 42% of total maize production
** Based on average increase of 10%

Data in tables 13 and 14 reveal that in the past, increases in feed ingredients prices encouraged the production of different raw materials in the country, especially grains. On the other hand the end-product price remained within the reach of a common person, thus supporting increased consumption of poultry products. Availability of processed poultry products in major cities of Pakistan has brought changes to the poultry-farming sector.

The availability of most of the raw materials in the country is encouraging. More difficult times will be encountered by the feed millers now due to acute shortage of grains in reasonable price, and forecasted that the demand of raw materials are more dependent on imports. Among 55-60 items used in the feed industry, about 90% are imported, contributing 35% of the feed. Policy makers should consider if the remaining 65% grain portion is to be imported, then what will the cost of poultry production be justified within the county or will poultry imports become inevitable?

Conclusions

There are constraints and also opportunities in the poultry feed industry business in Pakistan. In the coming five years the feed ingredient situation is not as bleak with respect to grains, as most raw materials will use each other synergies to fill the demand of the feed industry. There is a need to establish the grain storage and drying facilities near to the grain production areas in the country.

Beyond the year 2010, the industry will start facing difficult periods for grains as well as the supply of protein by product meals, as the new feed mills will came into production but the availability of Indian meal via train to Lahore will provide relief to the feed industry.

Poultry products availability and poultry meat consumption has increased by 4% in 2004, due to lower prices in the times of bird flu syndrome and other disease outbreaks. The consumption utilization dips due to the above mentioned reasons are also restrict raw material utilization, thus imposing natural balance.