The Competition Commission of Pakistan (CCP) on Wednesday released a comprehensive study on the meat sector in Pakistan for public comments, covering issues such as price monitoring and quality of meat and also exploring the growth potential of the sector.
The CCP has recommended limited export of animals, quality meat availability be enforced by district Livestock departments, public-private partnership to run the government slaughterhouses, an independent slaughterhouse for Islamabad, increase in numbers of animal Mandis, monitoring of informal meat sector through advocacy measures by district governments and improved regulatory mechanism for both price and quality of meat and pricing of meat on the basis of meat quality and grading.
The study has been conducted as part of the assessments the CCP undertakes to understand competition issues in sectors that have implications for consumers. Meat is one of the heaviest weighed essential food items in the Consumer Price Index (CPI). The livestock sector fulfils the country's meat, milk and poultry demand. CCP in its report identified ineffective price and quality monitoring at the district level that result in high price and low quality of meat that affects both urban and rural consumers. Smuggling of animals to neighbouring Afghanistan is also an issue that affects availability at affordable price to domestic consumers.
The report says that establishing new slaughterhouses and improving facilities at the existing ones is necessary to ensure quality safeguards. Moreover, increasing the accessibility of farmers to the Animal Mandis is essential for providing quality meat to the consumers at reasonable prices.
Therefore, CCP recommends a public-private partnership to run the government slaughterhouses for efficiency and quality and to increase animal mandis so that farmers can easily access them. The CCP also recommends that price setting, which takes place every six to twelve months, needs to be regulated during the interim periods and meat prices should be based on both the quality of the meat and it's grading.
Another market identified by the CCP is the growing international demand for Halal meat and meat products. The demand for Halal meat has been growing globally. Pakistan produces 100 percent Halal meat and export of Halal meat and meat products can be a significant source of foreign exchange earnings.
In the light of this study conducted on meat industry, the CCP recommendations are proposed to improve meat value chain. Firstly, food prices of essential items are regulated and meat is one of them. However, the meat price control mechanism is not effective. If the government decides to deregulate meat prices the problem of profiteering and hoarding will increase so meat price regulation is used as deterrence against this practice. This price control mechanism, however, needs to be made more effective and efficient. The price control mechanism to regulate meat prices at district level is ineffective and inefficient. Since meat is an essential commodity, the government regulates its prices. Meat prices are set every six months or 12 months, but remain unregulated in the interim period. It is recommended that the regulatory mechanism for both price and quality should be improved and pricing of meat should be on the basis of meat quality and grading.
Secondly, meat prices for urban and rural apply to all retailers whether in the formal or informal sector. These prices, however, in the formal and the informal sector differ by a large scale. The district food authorities have a mechanism of fining where the retailers of meat charge exorbitant profits. These fines range from Rs 1000 to Rs 100,000, however, charging higher than the regulated meat price by the district authorities is a common practice by the meat retailers. The price regulation of the meat sold in formal sector is weak as a result the meat prices are higher. Meat quality is improved nonetheless to make the meat industry more efficient and competitive price monitoring, as a consequence, needs to be more vigorous to ensure availability of quality meat at affordable prices for the consumers.
Thirdly, the government runs slaughterhouses are in dilapidated condition and animal slaughtering is manually done under unhygienic conditions which pose severe consequences to the human health. Conditions of slaughterhouses in the private sector are better therefore it is recommended there should be public-private partnership to run the government slaughterhouses. This will bring efficiency as well as improvement in animal slaughtering.
Fourthly, there is no slaughterhouse is Islamabad and the meat butchers/retailers use the local government slaughterhouses of Rawalpindi which are overburdened and unable to meet the growing animal slaughtering of the two cities. These slaughterhouses of Rawalpindi are understaffed to check the health of animals before animal slaughtering and to ensure hygiene while handling the meat animals and the animal waste. It is therefore recommended that Islamabad should have an independent slaughterhouse to meet the growing needs of the capital city. There are financial constraints to enter this sector therefore easy access to credit must be available to the farmers at small as well as at corporate level to improve livestock production and enhance quality meat availability in the meat market.
Fifthly, training of farmers is vital to increase per animal meat production. The government should train farmers at grassroots level where most of the meat production takes place. Small workshops should be conducted in villages to train rural farmers about animal breeding, disease control, feed and fodder and animal sale.
Sixthly, one main issue in the meat sector still remains the accessibility of farmers to the mandis. Animal mandis across Pakistan are limited in number and located at extended distances from the farmers who are discouraged to bring their animals to these mandis. Farmers therefore sell their animals at low prices to the middlemen who in turn bring them to animal mandis for sale and sell them at high profit margins. To make meat market more competitive the numbers of animal mandis need to be increased so that farmers can easily access them and get their due reward from the sale of these meat animals. This will result in lower profits of the middlemen and higher rewards for the farmers and at the same time meat prices will become more competitive as increased number of farmers will bring their animals for sale to mandis.
Seventhly, the CCP recommended that export of animals including live animals and animal meat is done and its permit is given by the Ministry of National Food Security and Research (MNFSR). However, smuggling of animals to neighbouring Afghanistan is a common problem. Export of animals should be limited as meat is an essential food item and the government must ensure it availability at affordable price to domestic consumers. This is an issue highlighted by the association of meat retailers for higher domestic meat prices.
Eight, meat quality which is sold in domestic market is a key issue that needs attention of the district livestock office comprising of veterinary doctors and health officials. They have the technical expertise to check the problems of water mixing, meat of under age, dead and Haram animals. Meat is an essential food item and therefore much attention is needed to enforce quality meat availability. The district livestock departments therefore need to be more efficient and become more effective.
Ninth, the research on the meat industry shows that consumers lack access of information about meat quality and meat prices. And as a result they cannot make informed choices. There is no information to consumers in the informal meat market about animal health, its slaughtering, meat quality, its expiry and variation in price compared to the regulated price by district government. It is recommended that district governments address this issue by monitoring informal meat sector more robustly and through advocacy measures in Print and Electronic Media. This will enable consumers to make better choices and as a result improve meat production, slaughtering and its pricing mechanism.
It has been found from research that information failure exists in informal meat sector and, as a result, consumers cannot make rational decisions. There is efficiency loss in the market as there is misallocation of scarce resources due to which consumers pay more and farmers get less in the market. In meat market information failure exists in the form of asymmetric information and moral hazard. The CCP recommended that the government should ensure that information failure is reduced or eliminated in meat market. The supply of information in meat market can be increased if the government asks the meat retailers to provide accurate information about their meat products. Information can also be improved through public broadcasts on meat market so consumers can make rational decisions. It added that the meat prices are regulated by the district authorities who set the prices by market survey and consultations with the stakeholders. The mechanism of price control of meat is ineffective and inadequate. Market lacks the check and balance due to which meat retailer and butchers sell the meat at increased prices and exploit the consumer interest by enticing excessive profit which ultimately results in increase of meat prices. The packaged meat prices are monitored but not regulated. In the domestic market meat animals are sold by their apparent health and quality and not on the basis of live weight which causes losses to the farmers. At most of the slaughterhouses, animal slaughtering is done under unhygienic conditions, there is use of unsterilized instruments and no temperature control. Slaughtered animals are transported without transportation chillers, no check on hygiene and often the meat is not fit for human consumption.
CCP has acknowledged efforts of the government especially the Ministry of National Food Security and Research, which undertook certain regulatory measures to encourage livestock sector and for the establishment of value added meat market in the country.