Pakistan’s Agriculture Sector-2(Livestock/Dairy)

Challenges and Response

Shahid Hussain RajaIndependent Consultant-Public Policy

www.sanoconsultants.co.uk

August 15,2013

Introduction

Livestock/dairy sector-significance

SWOT Analysis

Challenges

Response

Conclusion

Sequence

Livestock sector has not received the attention it deserves although Pakistan has a great potential for its development due to its rich inheritance of different species of animals, domesticated thousands of years ago and the love for these animals among the people

Its slow development is a cumulative result of decades of neglect and underinvestment, a weak policy and regulatory framework, production and productivity problems, marketing issues etc

These problems, coupled with the fact that it is a secondary activity for farmers, contributed to low rates of return on investment that consequently fail to attract new investment.

This presentation explains the ground realities about the livestock sector of Pakistan and suggests a strategy to develop this sector to its full potential

Introduction

Despite its relative decline in formal economy in percentage terms, agriculture is still dominant sector in overall economic structure

Pakistan’s survival and growth are directly dependent on its agriculture due to its socio-political interconnectedness and its economic and financial linkages-backward and forward

Its performance still dictates all our macro indicators - GDP, Poverty, External Balance, Inflation etc

Pakistan’s Agriculture-Importance

The total area of Pakistan is approximately 80 million hectares out of which about 58 million hectares have been surveyed so far by the Soil Survey of Pakistan

According to them, the area under cultivation is 22 million hectares (38%) out of which nearly 19 million hectares is irrigated; the rest is rain fed

The area under forest is 4 million hectares (7%) and the balance surveyed area 8 million hectares can be classified as the cultivable waste

Coupled with suitable climate and availability of fairly good water resources, agriculture has been the major activity for centuries in this part of the world

Pakistan’s Agriculture-Basic Facts

Agriculture sector of Pakistan comprises four sectors - livestock, crop, forest and fisheries

Livestock contributes 55% of the total agriculture production while crop sector adds 38% to it out of which the contribution of major crops is 25% and minor crops is 13%

Fisheries and forestry contribute 2% each

Around 8 million families, consisting of 40 million people are dependent on farming and allied activities n the rural areas

Pakistan’s Agriculture-Composition

Human Food Source: Animals are very good source of high quality protein-rich food as well as providing other essential micronutrients for humans. They make the food balanced and nutritious by converting inedible protein found in forage into digestible form, fit for human consumption

Animal Feed Source: Poultry manure is commonly used for ruminant feeding and also to generate algae as a feed for fish. Slaughterhouse wastes, when adequately processed, make a good source of protein (offal and viscera) and mineral (bones) supplements in animal feeds.

Income/employment Source: Livestock farming is a labour-intensive

activity involving both males as well as females. It is even feasible to earn side income for farmers with no land of their own or with small land holding.

Saving/investment Source: livestock is an important means of saving and capital investment, often providing a substantially higher return than alternative investments. Animals and birds can be bought and sold on easy terms and conditions can be sold to meet petty-cash requirements

Livestock Sector-Significance

Draught Energy Source: Most of the animals are used by the farmers to carryout agricultural operations for pulling agricultural implements, pumping irrigation water and skidding in forests.

Fuel Energy Source: cow dung is highly valued as fuel for cooking and heating Biogas production from manure is an excellent substitute for fossil fuel or fuel wood for farmers in rural areas.

Fertilizer Source :Crop residues, such as straw, are more efficiently utilized through ruminant feeding, including the production of organic manure for the fields

Livestock Sector-Significance

Pakistan has a lot of potential for becoming a leading producer and exporter of livestock products because variety in land and climate provides ample opportunities for raising of a wide range of small and large animals

A large number of indigenous animals are reared in the country while there is scope for commercial production of exotic animals. In some animals, Pakistan occupies prominent world position in terms of production i.e.5th largest producer of milk,

The sector is informal, profit margin is low and land holdings are small which has diverted investment to other sectors. Lack of financial resources and high interest rates of financial services available have further retarded its growth

Approximately35 million rural population is engaged in livestock raising and are deriving 30-40% of their income from this sector which contributes 55% to agricultural production and 11.2 % of export earnings of the country.

Livestock/Dairy-Sector Profile

Livestock/Dairy-Animals ProfileName of animal Number of animals(Millions)

Cattle 37

Buffalo 33

Sheep 28

Goat 63

Poultry 721 Billion

Livestock/Dairy-Products ProfileProduct Name Quantity (annual production)

Millions

Milk 37.25

Meat (Total) 3.15

Beef 1.72

Mutton 0.62

Poultry 0.77

Eggs 12.5 (billions )

SWOT Analysis

Availability of vast barren land for grazing of animals and cultivated land for their feed

Vast number and variety of large and small animals for meat, milk and poultry

Extremely favourable terrain and climate for raising of every type of animals-exotic and indigenous

Centuries of accumulated knowledge about good livestock practices among the people who love animals

Strengths

Landlessness and small land holding prevents the farmers to raise livestock on commercial basis, mainly subsistence farming

Limited knowledge and facilities for veterinary services in the rural areas

Almost for every farmer, livestock farming is a secondary activity and not the main occupation, thus giving secondary importance

Weaknesses

Growing population and rising prosperity is fueling the demand for animal based food

Global and regional demand for high quality Pakistani meat is growing

There is rapidly emerging niche market for Halal food which can be profitably utilized

Increasing interest of local/foreign investors in food industry including livestock

Opportunities

Reduced areas for natural grazing and feed production in the face of increasing urbanisation and food security requirements

Trans-boundary diseases in the wake of increased imports of exotic animals for cross breeding

Rising food safety concerns of the developed countries can be a threat for export of livestock

Wholesale slaughter and smuggling is fast depleting the gene pool of the livestock in the country

Climate change and environmental degradation

Threats

How to ensure adequate supply of safe, quality livestock and dairy products on sustainable basis at affordable prices to meet their growing demand from a rapidly increasing and becoming prosperous population in the backdrop of looming threat of climate change and environmental degradation

Challenges

We need to formulate a comprehensive livestock policy which should indicate the broad direction for this sector, create institutions and define their respective roles, make rules for coordination, set safety standards and provide an incentive and rewards system for various stake holders

Government’s role should be confined to legislation, policy development, regulation, capacity building and facilitation, while the private sector should take the lead in investment and value chain development on its own or on Public Private Partnership basis

Within the national policy settings, livestock should be developed on the basis of following five broad objectives;

Response-Livestock/Dairy Policy

Increase productivity by increasing efficiency in all livestock/dairy operations

Increase profitability by rationalizing input and output prices and ensuring fair returns to the farmers

Making livestock/dairy produce competitive in the rapidly globalizing world

Ensuring sustainability by promoting environment friendly good livestock practices

Ensuring equitable distribution of gains from enhanced productivity to all stakeholders

Response-Policy Objectives

Accelerating the national economic growth by increasing the rate of growth of livestock, an important subsector of the economy

Reducing the unemployment by creating job opportunities

Increasing Pakistan's foreign exchange earnings by increasing quantity, quality and variety of livestock exports

Ensuring food security and nutritional balance of the people’s food

intake by providing them protein rich livestock products in their food

Helping the state in its poverty alleviation efforts by providing them a labour intensive, low capital intensive investment

Improving the condition and status of women by providing them opportunities to own resources

Strategic Objectives

Research, Development and Extension Skills Development Increasing the Production-Milk/Meat Inputs-genes, vaccines, credit Marketing and Value Addition Commercialisation Mechanisation Cross cutting issues

Livestock/Dairy Sector Strategy

Our agricultural Research& Development and Extension suffer from many structural and management weaknesses-low funding, weak coordination and linkages among research, education and extension, inadequate technical and professional capacities of the agricultural research institutions, infrastructure etc

Government should introduce need based agriculture education, creating effective inter and intra institutional linkages and collaboration with reputable foreign universities

It should also promote demand driven quality based R&D and

extension services by encouraging public-private partnerships that are linked to livestock value chains

Research and development programs must focus on finding solutions in terms of increasing productivity, reduce burden of diseases and increase farmers’ profitability.

Education,R&D and Extension

Pakistan is woefully short of skilled manpower at all levels of livestock and dairy industry- management, supervision and field.

Skill development through in-service training at different R&D institutions can enhance capabilities of extension staff. Such programs should be initiated in agriculture universities and research institutes in all provinces

Postgraduate programs in livestock and dairy management should help providing skilled human resource for the industry.

Skilled labor should be attracted and retained through competitive minimum wages for the agricultural labor and the development of industry vocational training programs

Skill Development

Pakistan already ranks fifth largest producer of milk in the world despite its being an informal sector, non commercial operations and low profit margins. This potential can be doubled in five years by adopting an appropriate strategy.

For this purpose more emphasis should be on productivity increase rather than increasing the number of animals through indigenous genetic improvement and import of high milk producing animals

Local and foreign investment should be encouraged and directed towards modernisation, commercialization ,diversification and value addition through proper legal and regulatory framework, financial assistance and technical support

Government should concentrate on two core areas-R&D plus Extension and improving the infrastructure to ease the movement of milk and its products, reduce the costs of doing business and hence increasing the profitability of this subsector

Increasing the Production-Milk

Although Pakistan globally ranks very high in terms of number and quality of meat animals, its exports ranking in this sector are abysmally low .Being an informal sector, non commercial operations and low profit margins, its potential has not been adequately exploited

For this purpose emphasis should be placed on both-productivity increase as well as increasing the number of animals through indigenous genetic improvement and import of high meat producing animals

Local and foreign investment should be encouraged and directed towards modernisation, commercialization ,diversification and value addition through proper legal and regulatory framework, financial assistance and technical support

Government should concentrate on two core areas-R&D plus Extension and improving the infrastructure to ease the movement of meat and its products, reduce the costs of doing business and hence increasing the profitability of this subsector

Increasing the Production-Meat

Wholesale slaughtering of animals to meet the growing domestic and export needs are threatening the indigenous species of our cattle, reducing their gene pool resource. Add the unabated smuggling to neighboring countries and you will have a perfect recipe for a disaster

Besides taking policy and programmes measures to preserve our indigenous genetic pool, variety development and local production of good quality genetic pool in the private sector be encouraged by providing them appropriate legal cover and technical and financial support for establishing partnerships between bio-tech research institutes and private companies

Allowing import of high yielding animals, semen and embryos for crossbreeding, expansion / improvement and modernization of laboratory facilities to diagnose and treat livestock diseases are some other measures to preserve and improve our indigenous stock

Inputs-genes

There are various estimates of animal losses due to non-use of proper veterinary medicines by the farmers. Fear, Ignorance and costs are the main reasons for this neglect

Government should popularize the efficient and judicious use of these medicines for reducing production losses with minimum side effects on human and animal

It should also ensure timely availability of un-adulterated veterinary medicines at reasonable prices to the nearest possible doorsteps of the farmers through rationalisation of prices, in time import and provision of subsidy when needed

Inputs-Medicines

Streamlining the traditional informal sources of rural credit by integrating them with the formal banking system is the need of the day

Making financial products tailor-made to the needs of small livestock farmers and of micro, small and medium non-farm rural enterprises to become efficiently linked to the agri-based supply chains

Increasing the volume and outreach of formal banking network for timely and easy access to credit by farming community

Inputs-Credit

One of the biggest handicaps for the development of livestock sector is the absence of modern, efficient marketing infrastructure on the supply as well as on the demand side. There is thus need for establishing modern markets on public-private partnership basis

Value addition is another activity which can increase the sectoral profitability and earn valuable foreign exchange for the country for which the government has to come forward in a big way.

Encouraging quality consciousness among the farmers through awareness campaigns, introducing and implementing grading standards and improving marketing system of agricultural produce and making agricultural produce competitive in rapidly globalizing world by enforcing SPS standards and introducing international certifications are some of the measures needed for value addition

Another niche market for value addition is the certification of Halal products which are becoming very popular and their demand is increasing rapidly.

Marketing and Value Addition

◦ In order to achieve rapid growth in meat and milk production we will have to convert this sector from a subsistence and side business to commercial and mainstream activity through its shifting to market oriented enterprises

◦ For this purpose not only big commercial farms should be encouraged but small livestock farmers be also given the same technology package and financial support

◦ Similarly females who normally rear these animals should be encouraged and facilitated to own these farms on commercial basis

◦ Government should expand animal health service, allow duty free import of veterinary dairy, and livestock machinery/equipment and also allow import of feed inputs, vaccines etc at concessional rates

Commercialisation

We cannot visualize a vibrant livestock sector without increasing its efficiency which is possible only by introducing mechanization. There is thus an urgent need to encourage good practices among the farmers and incentivize them to use machines and equipment in livestock and dairy operations

In order to ensure easy access of the farmers to essential livestock and dairy machinery and its efficient and optimal use private sector should be facilitated to open farm machinery leasing/hiring outlets in villages instead of farmers owning these costly equipment

Similarly expansion and modernization of local agricultural machinery manufacturing can be facilitated by providing them training, incentives and technical/financial support to produce agricultural and other implements as per international standards

Mechanization

Cross Cutting Issues

Increasing horizontal farming and urbanisation are gradually squeezing the space traditionally reserved for animal grazing and rearing. Add to it the declining fertility of our agricultural lands due to non sustainable agricultural practices plus the degradation of our lands due to water logging and salinity going on for decades, a negative side effect of our irrigation practices

Lastly we are misusing our scarce land resources as we are cultivating crops on lands extremely suitable for horticultural use

All these issues needed to be addressed by formulating a long

term comprehensive land use policy by the government for rational use of land resources to stop rapid conversion of valuable arable land for non-farming purposes

Land Use Policy

Agricultural transformation demands restructuring, not merely fine-tuning, the political economy of the rural areas which are an integral subset of the overall economic structure of Pakistan

One of the ways to do so is to improve the terms of trade between agriculture and the other sectors of the economy so that the farmers get fair returns for their efforts and investment

Rationalize the prices of the inputs farmers use, provide subsidy on them and as well as those of commodities they produce and improving the marketing infrastructure

Selective procurement when the prices of agricultural commodities crash and introduction of crop/livestock insurance schemes are other methods to improve the terms of trade of agriculture sector

Terms of Trade

Although it is not possible to replace the centuries old production relations of land cultivation in the rural areas of Pakistan in the short term, efforts can be made to introduce the three modern forms of farming

Contract farming-encouraging agri-based processors to supply inputs & technology packages to farmers on deferred payment with buy-back of produce at guaranteed prices

Cooperative farming-facilitating the formation of rural cooperatives to improve the bargaining position of the stakeholders and ensure their easy access to quality inputs at affordable prices at their doorsteps

Corporate farming-promoting lease of commercially viable tracts of land to corporate level entrepreneurs who are willing to practice high-tech export oriented agriculture and share profits with the owners

However all the above three need comprehensive legislation about contract making/dispute resolution as well as their strict implementation through a specially created institutional infrastructure

Production Relations

Rural infrastructure i.e.roads, schools, hospitals and other infrastructure are in deplorable condition in most of the towns and villages

This not only adversely affects the productivity but also results in increased costs of marketing, high prices of inputs, reduced quality of rural life, disincentive for investment etc

No doubt the government has invested a lot in farm to markets roads, construction of health facilities, schools and also rural electrification.

However there are complaints of substandard workmanship and their fast wear and tear due to paucity of maintenance funds. Similarly there are complaints of shortage of staff to man these health and educational schools.

Rural Infrastructure

◦ Rural Non Farm Sector(RNFS)provides 40-60% of incomes/jobs in rural areas, much of its activity occurs in the trading, services and processing sector having strong forward and backward linkages with agriculture

◦ Sustained growth of the rural economy lies in the development of an efficient and effective RNFS that link the agriculture sector with national and international markets because its being an informal and low capital using sector, presents opportunities for providing value addition to primary production at the farm level

Rural Non-farm Sector

There is an urgent need to create awareness among the farmers about the looming threat of climate change/environmental degradation and popularizing the good sustainable agricultural practices among them

We will have to synchronise the extension services of the provincial agricultural departments and marketing outlets of the private agro services providers to promote environment friendly practices

Government should promulgation legislation for stopping of practices aggravating the threat of climate change and allocate resources for carrying out research to develop varieties responsive to climate change and environmental degradation which will adversely affect their crops, animal feeds, habitats and livestock

Climate Change and Environment

Rural women are under three pressures-nature, society and family, all treat them unfairly in terms of status, ownership of resources, job opportunities and empowerment

One of the most important ways to improve their conditions is to Improve healthcare and family planning facilities in the rural areas to relieve them of excessive child bearing burden

Launching of special rural female literacy and education campaign by offering attractive monetary rewards would help in their empowerment and reduce domestic violence

Ensuring women’s access to resources and assets, including ownership of land by creating awareness about their rights and strict enforcement of legal framework priority

Providing equitable opportunities to women by developing

marketing oriented skills and remunerative employment in the rural

Gender Mainstreaming

We need to enhance the productivity of the agriculture at micro and macro level by increasing efficiency in all agricultural operations, including livestock and dairy, through public as well as private sector investment in R&D, extension services, rural infrastructure, marketing, value addition etc.

Unfortunately, the flow of investment funds towards agriculture, which has recently picked up, is still far below the desired levels. This needs to be increased to make livestock sector more dynamic

Conclusion

Thanks