Sizing Pakistan’s poultry output

In recent years, BR Research has raised its fair share of concerns about the dubious measurement of Pakistan’s livestock GDP. As regular readers would recall, national and provincial statistics organizations have no way of measuring Pakistan’s animal and poultry population annually, and instead rely on assumptions based on Livestock Census, which last took place in 2006. Although this census is supposed to take place every 10 years, in absence of a fresh census, the good folks at National Accounts Committee instead rely on the inter-census growth rate between the last two censuses – held in 1996 and 2006 – two extrapolate the current size and value of the livestock sector.

That summarizes the official accounting methodology. The delay in holding of fresh national-level census is definitely an indictment of those responsible but need not indicate that the results are necessarily sketchy. So, why has BR Research previously claimed that livestock statistics are dubious? First, over the last 15 years, Pakistan’s green fodder production has grown at an annual rate of 0.15 percent, against growth in dairy and beef production of over 3.3 percent. (For more, read: “Hold Livestock Census now!”, published on December 16, 2021).

Two, while livestock output grows at a steady rate, dairy and beef retail prices have outpaced national CPI in 13 of last 16 years. (For more, read: “Count the cattle, not just the sheep”, published on June 17, 2021). Third, after making a downward correction in poultry output during the Covid-19 pandemic, the statisticians at National Accounts Committee pulled a stunt to dramatically revert poultry output to its pre-pandemic growth trajectory, in sharp contrast to on-ground trends. (For more, read: “Measuring poultry GDP”, published on November 25, 2021). Anecdotal evidence from the industry also indicate that the rise in practice of calf culling and 2010 floods losses to the livestock population suggested that the official growth rate was less than reflective.

It is in this backdrop that the below analysis becomes fascinating. The recent commotion over the halted soybean shipments highlighted the significance of this animal feed input to the livestock value chain. Many poultry industry representatives claimed that if soybean shipments were not released, poultry meat would effectively disappear from the market, while prices of farm eggs would skyrocket – maybe to a thousand rupees per dozen. Of course, commercial interests are almost always inclined to exaggerate. But background interviews conducted by BR Research at the time indicated that as a vital protein source, soybeans are in fact crucial to poultry value chain’s sustainability.

Those uninitiated would do well to keep the following in mind. First, almost all of soybean consumed in Pakistan is imported, with import volume statistics independently available from various sources such as PBS, USDA, and APSEA. Two, soybean oilseeds are then processed to extract soymeal, with a pretty standard extraction rate of 78 - 80 percent quoted universally (remainder 18 – 20 percent is oil which feeds the edible oil value chain). Three – and this may be the least substantiated bit – almost 90 percent of soymeal produced is consumed by poultry, although consumption by cattle and dairy industry is slowly rising. Four, soymeal share in poultry feed mix stands at 20 percent by volume (remainder largely consists of corn, wheat, canola cakes and rice polish). And lastly – and proudly claimed by the commercial interests – is that increasing dependence on soymeal has improved Pakistan’s average feed conversion ratio to 1.5 times, meaning that for every 1kg rise in bird’s weight, it consumes 1.5kg of feed (industry claims that the FCR stood between 2 – 2.5 times in the past, back when soymeal use wasn’t so widespread).

If these assumptions and claims are even remotely accurate, then a market sizing exercise based on Pakistan’s soybean import volume would reveal startling results. Pakistan’s poultry output – measured by poultry meat produced annually – may be understated by as much 50 percent, which pretty much renders any downward adjustment during Covid-19 irrelevant. And although BR Research’s analysis is not independently verified, consider the following. For the last three years, BR Research estimates poultry feed production at an average of 8 million metric tons, whereas Pakistan Poultry Association claims that annual feed production of 9.5 million metric tons was reached back in 2016. One expects that feed output should have only risen since.

BR Research has very little reason to insist that this analysis is highly accurate, and is cognizant that there must be more to the story. Fiddle around with assumptions, such as raising the share of dairy industry in soymeal consumption, and the output would change materially. However, it may be worthwhile to further investigate the line of argument, as the implications are dramatic: from tax collection from the feed industry to its share in national output. But most importantly, it would almost double Pakistan’s per capita poultry consumption, which has serious implications for the perceived malnourishment and protein deficiency levels in general population.

So, is Pakistan’s poultry output really understated?