Announced at the National Plastics Summit in Canberra on 2 March 2020, Nestlé and Australian recycler iQ Renew are launching a trial that aims to collect, sort and process soft plastics from over 100,000 homes through kerbside recycling and therefore be diverted from landfill. The trial aims to turn soft plastics from a waste to a resource. The project will commence with a pilot of 2000 households, with plans to expand to over 100,000 households later in the year, processing approximately 750 tonnes of soft plastic that would otherwise be sent to landfill.
“Most material recovery facilities (MRFs) can’t separate soft plastic from other items in household recycling, so while soft plastic can be recycled, what we lack is a robust, scalable system to collect and process it using existing kerbside collection. We’ve designed the trial so that at the front end, it will support householders to pre-sort their soft plastic and get it into a recycling stream, while behind the scenes, we’ll test using the sorted soft plastic as a resource in a range of different manufacturing processes,” said Danial Gallagher, iQ Renew CEO.
The trial will uncover how households understand soft plastics collection and provide insight into how it affects in-home recycling behaviour. Locations for the trial are currently under consideration.
“While we are working to make all our packaging recyclable, we know that soft plastics is an area that needs greater focus and collaboration. We need to find ways to drive more recycling here. As Nestlé plans to reduce our virgin plastic use and increase the amount of food-grade recycled plastic packaging we use, we need plastic to be collected. Given the low amount of soft plastic collected from consumers today, we hope this trial can unlock the significant potential for soft plastic packaging to become a resource,” said Sandra Martinez, Nestlé Australia CEO.
Tonnes of bread end up in landfill every year, but researchers have now found a way to repurpose this discarded bread and dough. Research published in Frontiers in Microbiology has revealed that old bread can be used as a medium for cultivating microbial fermentation starters, which could have applications in food industries like bakeries, dairy and winemaking.
“We believe that the introduction of innovative bioprocessing technologies might be the key to unravel the burden of food waste [and] improving sustainability of the agro-food system,” said Dr Carlo G Rizzello, team coordinator at the University of Bari Also Moro in Italy.
Researchers experimented with more than 40 different kinds of growing conditions to determine the best combination for various bacteria, yeast and other microorganisms used in food fermentation. This included finding the correct recipe of bread amount, enzymes and supplemental ingredients, as well as the ideal time and temperature for incubation. Researchers wanted to create a wasted bread medium (WBM) that could surpass current production methods that rely on raw materials; they achieved this by using 50% waste bread that was appetising to a variety of microorganisms, including bacteria used in yoghurt production. Researchers also estimated that the production cost of WBM is considerably lower than that of conventional media.
“The protocol we were able to set up combines both the need for disposing of the huge amount of bread waste with that of cheap sources for media production, while fitting for the cultivation of several food industry starters, and it is patent pending,” said Dr Rizzello.
WBM protocols could be adapted by bakers who currently rely on other companies to provide the starters. Bakeries could use their own waste to produce the medium and propagate the cultures, without modifying their existing technology.
“The strength of our study strictly relies on how easily applicable the protocol is, and proof of its feasibility is indeed the fact that the process is already scaled up at industrial level. Nevertheless, WBM offers a possibility for sustainable starter production to all the food industries working in the field of fermented foods and beverages,” said Michela Verni, lead author.
WBM has applications beyond microbial cultivation; a few changes to the WBM recipe could enable it to be used as a food ingredient or as fermentation with different starters. It could also serve as a substrate to feed microbes that produce compounds used in food supplements or cosmetics.
While WBM appears to be an effective medium for growing lactic acid bacteria and yeasts, Dr Rizzello said further study is needed to determine if certain components or lack of some micronutrients might affect microbial metabolism in some significant way.
Malaysian authorities have approved two Pakistani establishments for exporting meat and its allied products to Malaysia, which would open a new meat export market for the country, Trade Development Authority of Pakistan (TDAP) said.
Pakistan exports around four percent of beef and veal produced in a year. This was despite the fact that the country was among the top 10 beef and veal producers in the world, producing approximately 1.8 million tons.
According to details, TDAP and Animal Quarantine Department (AQD) of the Ministry of National Food Security and Research invited Malaysia’s Department of Veterinary Services, Ministry of Agriculture and Agro – Based Industry, to inspect and visit meat processing establishments in Pakistan.
The team of the Veterinary Inspection Section, Department of Veterinary Services Malaysia which consisted of four representatives, visited three establishments in Karachi and four establishments in Lahore. They also held meetings with TDAP and AQD, Islamabad officials during their visit.
“Department of Veterinary Services, Malaysia (DVS) and Department of Islamic Development Malaysia (JAKIM) has informed that they have approved two Pakistani establishments namely Zenith Associates, Lahore and Leiner Pak Gelatine Limited, Lahore for exporting meat and its allied products to Malaysia,” a statement issued by TDAP noted.
“This will now open a potential market for export of meat and its allied products for Pakistan, further giving an essential and prosperous boost for Pakistan’s exports of meat to Malaysia,” it added.
Exports of meat and meat preparations amounted to $242.799 million in the last fiscal year, up 7.61 percent over the preceding fiscal year. The exports accounted for merely 1.1 percent of the country’s total exports of $22.979 billion in FY2019. Pakistan is self-sufficient in meat production. Local consumption is estimated at 15 kilograms per capita.
According to data from market research and corporate management consulting company Coherent Market Insights, the global Halal food market was valued at $715 billion in 2018, and is expected to grow at a CAGR of 12.7 percent in the coming years (2019-2027).
Pakistan has a considerable share of the Halal market and is in a good position. Currently, Pakistan’s meat is mainly being exported to Gulf countries, Vietnam and Malaysia.
A few weeks ago, much to the utter joy of packaged food industry, the provinces agreed to a uniform standard of food and other consumer products as set by the Pakistan Standard and Quality Control Authority, which is an attached department of the federal Ministry of Science and Technology.
On the face of it this looks like a good move, because it will allow food players to meet single set of standards instead of following different standards for different provinces, which previously led to higher cost of production and management. But at this point there are some important aspects that are not very clear and demand public deliberation.
For instance, the license and inspection functions were and still are solely the domain of provinces. The constitutional standing of this matter has already been settled by the Supreme Court in its suo moto case of 2018. Accordingly, this implies that the provinces will have to own each other’s licensing and inspection policy and practice. In turn, this assumes that provincial food authorities will meet each other’s expectations in terms of technical capacity, financial resources, and lack of corruption in their licensing and inspection functions. In the absence of a strong coordination framework, this is a tall assumption to hold at this point.
Similarly, the question of halal food bodies also require deliberation. So far, Punjab already has a certain Punjab Halal Development Agency, which is separate from Punjab Food Authority. Sindh is also in the process of setting up a separate Halal food body. Must four provinces have different halal standards? And if so, then which platform is to ensure coordination between those bodies.
The issue of halal does not seem very urgent and important to some constituents. But for one, halal certified food is a big global market, and growing. And while the concept of halal is intuitively understood in the case of slaughtered goats and cows, it is not yet a part of public imagination that even bottled water has to be halal certified because food manufacturing processes and facilities often use certain products (filters in the case of bottled water) that ought to have halal properties.
A related problem revolves around the subject of food quality and prices. Speaking at an event organized by Korangi Association of Trade and Industry (KATI), Amjad Laghari, Director General of Sindh Food Authority said last week that they have no coordination with the local government officials who set the prices of unpackaged open-market (or ‘khula’) milk and meat.
Laghari’s views echo those expressed by Aijaz Mahesar, Secretary Livestock and Fisheries, Sindh, in his recent interview published by this newspaper. Responding to a question by BR Research, he agreed that price regulation of meat is a disincentive for growth in livestock industry but that his office can only provide feedback to price regulators. (See Brief Recording section Feb, 3, 2020)
This begs the question whether the subject of quality can ever be divorced from prices. Regulating, licensing and monitoring the quality of unpackaged, loose milk and meat is the domain of food authorities. But when (regulated) price prohibits quality at production, processing, distribution and retailing stages, then it is not a workable system. It will only lead to a system where food inspectors will take ‘chai-pani’ to look the other way.
Also missing from the discourse is the coordination between the food authorities and the civil society. So far, food authorities are working in collaboration with businesses associations. For instance, Sindh Food Authority (SFA) agreed to join hands with KATI last week, where KATI is to provide focal persons and food scientists to assist SFA in its various regulatory and monitoring efforts.
To some degree this is understandable and may even be appreciated. SFA is a new organization; it needs all the technical support, and it also needs to increase awareness and gain confidence of food industry players that it is not out there to strangulate businesses. A soft approach is often advised when a new regulatory body is set up. But food authorities must avoid falling into the trap of regulatory capture, the risks of which were all too evident at the KATI moot last Thursday.
At that moot, KATI officials requested SFA to work in close liaison with the former’s focal persons on a few regulatory aspects. The SFA publicly agreed to do so. But when Imtiaz Abro, Deputy Director of SFA requested KATI to appoint a focal person to streamline the regulation of kitchens for workers within factories and other industrial units, KATI’s President Umer Rehan completely ignored that request by saying that SFA should work on other priority areas instead of licensing workers’ kitchens because “obviously industrialists feed their workers good quality food”. That is a telltale sign of emerging risks of regulatory capture.
A bigger problem in this regard and the most important missing link in civil society is the absence of an effective food and nutrition think tank of sorts that mediates between the government, the producers and the consumers. This is both strange and unfortunate considering that food is not just Pakistan’s national pastime; food is also Pakistan’s recreation, its cinema, concerts, hobby and even sports.
Yet the society has failed to come together to periodically assess food quality and standards. Or to address the question of how to ensure basic hygiene and quality of food at roadside shacks, ‘dhabbas’ and carts. These informal economy players (aka street food) is a big attraction for growing number of foreign tourists. The regulations must not strangulate street food actors and kill their income streams. But it must not be too laxed either that it risks international headlines stating ’13 foreign tourists get hepatitis C in Pakistan’. Or even to assess nutritional aspects.
Regulating food isn’t only about rotten or adulterated food. It is a rather technical affair inseparable from the subject of nutrition and preventive health care – the benefits of both go far beyond the taste buds and the election cycle, and the requirements of which differ from one natural region and climate conditions to another. And this is why the idea of having one single national food standard for a diverse country may not be a good decision in the long term, not at least without public debate and deliberation.
The Honey Processing and Packaging Center set up by the Small and Medium Enterprises Development Authority (SMEDA) in Swat has enabled the country to export prime quality Honey at competitive prices in the open global markets, besides successfully meeting the domestic demand. It was observed at a projects review meeting of SMEDA held today in chair with Mr. Fuad Hashim Rabbani, Acting Chief Executive Officer of SMEDA. Addressing the meeting, he said that a modern honey processing plant with quality control functions and capabilities to produce refined, high quality honey was an imperative requirement of the country, which has been accomplished by SMEDA under patronage of the Ministry of Industries and Production with the cost of about Rs.38.17 million. The Center has positioned Malakand division as a key honey processing area in Pakistan by assisting the local honey farmers in realization of higher value margins for the final products, he said adding that value addition technology introduced in the center had enabled the area to increase its share in the lucrative markets at national and international market.
The Acting CEO SMEDA was glad to know that the Honey Processing and Packaging Center, operating as a Common Facility Center had provided the sophisticated equipment to process aiary as well as forest honey production of high quality refined Honey for bulk consumption. The technology installed at the center has a capacity to process approximately 2000 kg of honey in an 8 hour shift along with packaging capacity of 1500-2000 bottles of one KG.
It is notable that the Honey industry of Khyber Pakhtunkhwa is spread over to different districts of the province. There are many types of honey produced in Khyber Pakhtunkhwa but Seder (Ber in Urdu) and Acacia Modesta (Plai in Urdu) are produced more in quantity. There are about 3800 Bee-keeping entrepreneurs in Khyber Pakhtunkhwa, who have provided direct employments to over 17500 workers.
It is further to mention that Malakand Division has got unmatched potential in Marble, Granite, Gems, Hydel Power Generation, Horticulture, Apiculture (Honey Bee Farming) and Tourism sectors. These opportunities are translated into establishment of several industries and thousands of informal setups, therefore SMEDA has increased its interventions in the area to explore the potential for growth of SMEs.
China’s Ambassador to Pakistan Yao Jing has said Beijing is keen to import meat, potatoes, onions, mango and cherry from Pakistan.
He called on Federal Minister for National Food Security and Research Makhdoom Khusro Bakhtiar the other day and expressed his confidence on him as former Minister for Planning and Development vis-a-vis his contribution towards the expansion of phase-II of CPEC and his considerable contributions therein, a press release said.
Yao Jing said experts will visit quarantine facilities by next month to finalise the import of these commodities to further enhance bilateral trade between both the countries. He also acknowledged his dedicated efforts for giving new impetus to agricultural cooperation under the China Pakistan Economic Corridor (CPEC).
The Chinese ambassador said China has a great demand for meat and poultry and it can be a lucrative international market for Pakistan and both countries must work together for removal of technical barriers like SPS and quarantine requirements.
He further added China wants to build stronger socioeconomic ties with Pakistan and also wants to buy more from Pakistan. Khusro Bakhtiar said we are focusing on strategically structuring agriculture sector under CPEC. “We want enhanced productivity of cotton which has considerably plummeted, both countries can work on exchange of pest-resistant, high yielding germplasm(s) of cotton,” Bakhtiar added.
The Pak-China Centre of Excellence is going to be established in Multan with close coordination of Pakistan Central Cotton Committee (PCCC) to formulate a holistic strategy for the said purpose, he added. He also apprised the Chinese ambassador regarding the ongoing threat posed by locusts and efforts to contain the menace.
The minister added that under Prime Minister’s Agriculture Emergency Programme, “we are leaving no stone unturned to align this sector with international standards and for that we need to equip it with modern agricultural machinery, low cost of production and modern research.”
He said we are moving ahead to collaborate in achieving Foot and Mouth Disease (FMD) free zone and a memorandum for the establishment of FMD free zone is currently negotiated by both sides. He said, “we believe in ease of doing business and if we collaborate for the elimination of FMD, it will boost our meat export to China”.
The minister further underlined the importance of mutual cooperation in areas of value addition and food processing of horticultural crops.
He expressed his pleasure and satisfaction that bilateral relations are growing in right direction. It is pertinent to mention that the minister has nominated focal person from National Food Security and Research for coordination and Chinese side has also appointed agriculture councilor as their focal person.
Minister Teresa Kok was invited to deliver the keynote address at the 5th Pakistan Edible Oil Conference, 12th January 2020. She was joined at the event by Mr. Abdul Razak Dawood, Advisor for Commerce, Textile, Industry & Production and Investment, Government of Pakistan. The two leaders took the opportunity for a bilateral dialogue to explore various issues of common interest to both countries. Both emphasized the excellent cordial bilateral relations and further explored areas for enhancing trade. Pakistan is a key importer of Malaysian palm oil and products. In 2018, Pakistan imported 1.16 million Metric Tonne MT of palm oil from Malaysia valued at USD 0.83 billion (RM2.97 billion). Avenues to further expand Malaysian palm oil share in this growing market was also discussed. For example Pakistan is a net exporter of rice, fruits and other produces that are required by Malaysia and Mr. Abdul Razak Dawood encouraged Malaysia to consider in stinting trading practices that could allows other passage of these products into Malaysia. On her part, Minister Teresa Kok highlighted that Medium Density Fibreboards (MDF) exporters from Sri Lanka enjoyed lower duties whereas Malaysia’s higher quality MDF were subjected to higher import tariffs. Other product opportunities were also discussed and both leaders agreed to convey these matters to the concerned authorities in their respective countries so that solutions could be worked out to benefit better trade relations between Malaysia and Pakistan. Minister Teresa Kok, also delivered the Keynote address at the 5th Pakistan Edible Oil Conference (PEOC) in Karachi. She highlighted the importance of Pakistan as an end user of Malaysian palm oil and facilitated by the joint venture refinery between Malaysia and Pakistan in Port Qasim. She also described Pakistan as one of its most regular and dependable buyers of Malaysian palm oil an products. She emphasized that palm oil has the potential for higher uptake in Pakistan given that its local production of oils and fats meets only around 20% of its consumption needs. It thus depends heavily on imports to meet growing domestic demand and consumption. Demand has been increasing at a rate of 4.5% per year for the past seven years, due to increasing population, income and consumer spending. Palm oil is widely used for the manufacture of vanaspati (ghee) and it is also the preferred raw material for the food industry in Pakistan, especially for frying and in confectionery items. Malaysia has a significant number of investments made in Pakistan by Malaysian companies such as FGV, KLK and IOI, via joint ventures with Westbury Group since 1993. Minister Teresa Kok mentioned that Pakistan is among the first export destinations in which Malaysia has major investments in bulking installation and refineries, and the liquid cargo jetty dedicated for the handling of palm oil. She had earlier paid a visit to Rear Admiral Syed Hasan Nasir Shah, Director General at Port Qasim Authority in Karachi on Friday. She was also pleased to learn that the Prime Minister of Pakistan will be visiting Malaysia soon.
Pakistan food and beverage market size is poised to report strong growth rate over the forecast period due to increasing population, rising disposable incomes, coupled with changing trends and product innovations. On the other hand, intense government regulations, raw material price fluctuations can negatively impact the growth of the market.
The increasing number of restaurants, fast-food chains, and food delivery apps such as grub hub, caviar, and others enhance the availability to consumers, resulting in strong growth in the food and beverage industry. Besides, rising demand for organic, natural and fresh foods among consumers due to rising health awareness is the major factor expected to enhance the demand for the food and beverage market.
The food and beverage industry is one of the most essential components of several economies across the world. The 2020 global food and beverage market size is estimated to be $7 trillion. Changing consumer lifestyles and consumer preferences, growing demand for organic food products, and evolving consumption and selling patterns are the key trends in the global market. Streamlined manufacturing processes and enhanced cold chain facilities are further supporting the market growth.
Constantly shifting trends among the consumers is the primary factor shaping the strategies of Pakistan Food and Drinks companies. Change in lifestyles, growing demand for processed and ready to eat foods has increased among the consumers, which is boosting Pakistan’s food and beverages market growth.
The “Food and Beverages Market, Size, Share, Outlook and Growth Opportunities 2020-2026” research identifies that the competition continues to intensify year-on-year with emerging applications and widening product portfolio. This OG Analysis report covers the 2019 scenario and growth prospects of the Food and Beverages market for 2016-2026. To calculate the market size, revenue from the market sales of food and beverage products to retailers, wholesalers, and institutional buyers is considered.
It also presents a comprehensive analysis of the country’s food and beverage market. Key trends and critical insights into Food and Beverages markets along with key drivers, restraints, and growth opportunities are presented in the report.
Pakistan Food, Pakistan Bread, Pakistan Pasta, Pakistan Baked goods, Pakistan Meat, Pakistan Poultry, Pakistan Fish, Pakistan Dairy, Pakistan Oils and Fats, Pakistan Fruits and Vegetables, Pakistan Sugar markets are analyzed and forecast to 2026.
The food and Beverages market is compared against five of its competitive markets in the region to analyze the role of Pakistan on the regional front and benchmark its operations.
Global Food and Beverages, Asia Pacific, Europe, Middle East Africa, North America, and Latin America food and beverages market outlook is also presented in the report to provide a global perspective of the industry.
Pakistan population and economic outlook are also presented in the report to provide insights and forecasts of macroeconomic factors shaping the future of Food and Beverages markets.
Further, business and SWOT profiles of three of the leading food and beverage companies in Pakistan detailed in the report along with recent developments and their impact on overall market growth.
Pakistan can capture a big share for its products in international Halal food market of over $3 trillion as it has the potential and all required resources.
This was stated by Lahore Chamber of Commerce and Industry (LCCI) President Irfan Iqbal Sheikh while talking to a delegation at LCCI on Tuesday. LCCI Senior Vice President Ali Hussam Asghar and Vice President Mian Zahid Jawaid Ahmad were also present.
LCCI President said that volume of international Halal food trade was well over US $ 3 trillion but Pakistan had a meager share despite having all resources for becoming market of Halal food for the world. He said that some crucial measure by the government could help tap huge potential in this sector.
He said that promotion of Halal products should be national agenda as it could give a quantum jump to the exports. “It is a matter of concern that there is no Muslim country included in top Halal food exporters, despite the fact Pakistan has huge potential of exporting Halal meat globally.
With little efforts Pakistan can easily grab international Halal food market and can triple the exports of this particular sector,” he observed.
Irfan Iqbal Sheikh said that global Halal food market was becoming one of the fastest growing markets. Despite having best strategic position, dynamic Halal food sector and direct gateway to the millions of consumers in Central Asia and Middle East, Pakistan’s share in international Halal food trade was negligible while even a number of non-Muslim countries like Thailand were leading in this sector that should be a matter of concern for the Muslim countries.
He said that demand for Halal products had increased manifold because of growing Muslim population world over therefore the government should encourage the export of Halal products. He said, Lahore Chamber was doing the needful for the promotion of Halal products but the government would have to come up with a package of incentives so that quality Halal foods could be exported from Pakistan.
LCCI President urged the exporters to continue to explore available opportunities in the world market and focus on research that was a must while doing business at global marketplace. He said that hand-holding by the government could help jack-up exports of Halal products to over USD 10 billion.
Middle East, South Asia, East Asia, Central Asia, Europe and North Africa spent most on food and beverages therefore these regions should be targeted for Pakistani Halal products, he suggested.
He said that Pakistan’s strength was a 100 per cent Halal production base with over 200 million consumer in Pakistan and a direct access to millions Halal consumers in Central Asia, Middle East and Europe. He said that Pakistan had great opportunity to grab its share of global Halal product market by enhancing its production and improving quality.
Irfan Iqbal Sheikh said, the government should formulate a strategy in collaboration with private sector to lift Halal food exports. Government should also hold exhibition across the world in order to provide Pakistani exporters with the opportunity to showcase their products. He also called for availing modern technologies.
Rafiq Rangoonwala is the President of Pakistan Food Association and CEO Quick Food Industries, and has contributed over 39 years leading different food brands in Pakistan and abroad. BR Research sat down with him to talk about MonSalwa, the brand behind the company, how it is faring in the frozen food industry, how competitive the market is and what is the future of the brand. Here are edited excerpts of the discussion:
BR Research: How did you get into frozen foods, and why do you think the demand for frozen foods has picked up over the past decade in Pakistan.
Rafiq Rangoonwala: Quick foods are the oldest brand in frozen foods in Pakistan. It was a family owned business when it started. At the time, they were importing frozen food into Pakistan and testing the receptiveness and responsive to the market. If you all remember, frozen food was not considered fresh food so in the beginning, market reception was low. But gradually, with women entering the workforce and getting busier than ever before, they are spending less amount of time in the kitchen. And for generations to come, this time will be reduced further.
The family who owned this business decided to divest due to other business interests. Ijara Capital came into the picture and bought this business a year and a half ago. Since then, we have been running this business with our head office in Karachi and factory in Lahore supplying frozen foods across Pakistan. You would be surprised to know that our demand comes not only from large cities but even smaller small towns and villages which have responded positively towards this type of food. There are multiple reasons for that as well, but a dominant reason is the access to electricity and household appliances like deep freezers and refrigerators which have become more affordable and are now found at most homes, even in these smaller towns. Moreover, in Punjab, small towns are more connected because the road infrastructure is available. This allows them to be closer to urban centers, and commute more easily which allows for free movement of consumers from small towns to big cities.
Broadly I believe, access to internet is another strong reason. More consumers are online looking at products they can buy as well as following what is happening around the world. It is not only changing needs and eating habits but also changing mindsets- whether the consumer believes this food is worth eating or not. And we have seen this shift toward acceptability quite visibly over the past few years.
BRR: What is the market size? How is the market structure? It seems pretty crowded right now.
RR: A lot of new players have entered over the past five years, given changing consumption patterns and trends. This is good, competition is always healthy and it keeps us on our toes. Some businesses do go belly-up, unfortunately when there are too many players competing for the market share. But there are reasons for that as well- they either get too excited, spending far more than they should, or race to market without perfecting their product. Most of these businesses in the frozen food segment are family-owned so numbers such as total market size or market shares are not available. We only have guesstimates. My guess is that this market is somewhere between Rs35-50 billion every year which includes retail of raw chicken. In my opinion, this is growing by at least 5 percent annually. Estimating market share is difficult because there are many different segments within frozen foods and not all brands are operating in all segments.
BRR: Tells us about these different frozen food segments.
RR: One major segment is meat which includes chicken and beef. Then wheat which includes value-added products such as paratha or rotis. The third segment is snacks which include samosas and roll, and then there is seafood. But within the meat segment, in chicken for instance, we have raw as well as value-added chicken. Our brand is not into raw chicken and we mostly operate in the value-added chicken segment, which remains our biggest business.
BRR: Why are you not in the raw-chicken segment? There is a lot of potential in exports.
RR: Locally, it is a very competitive, low-margin business. Exporting, on the other hand, is not easy. Right now, our share in poultry exports is very small even though we are producing chicken. In Pakistan, export is an ongoing struggle. Most poultry exporting countries such as Brazil and Denmark continue to support their poultry industries-providing them with tax breaks and incentives to increase exports. They are able to export to markets abroad and be competitive. We don’t have a lot of support or facilitation from the government.
In ethnic food segments, Pakistan faces so much competition from neighbours like Bangladesh and India who are selling at prices which do not even match our costs. Our labour costs are high, utility costs are exorbitant and the transportation costs also increase when fuel prices go up. On the other hand, their costs of doing business are too low compared to us which puts us at a clear disadvantage in the global markets. Why is it that one of the biggest halal food exporters are developed countries like Australia and United States?
When rupee was depreciating, we thought our exports would grow but at the same time, prices for inputs and utilities rose so much that it neutralized everything. I’m not saying that there are not opportunities or potential for exports. I just feel that we are unable to capitalize on these opportunities due to the challenges businesses face every day. We are currently exporting to Europe, Canada, Australia and Hong Kong but our market share is paltry whereas the potential is huge.
BRR: What is the share of exports in total volumes?
RR: Exports is currently about 10-15 percent of our sales. We can go up to 30-40 percent if we get support from the government.
BRR: How do you price your products? Is price a USP for you?
RR: No, that is never a USP. Cheap product is not a good product-with the growing burden of cost of business, we cannot be cheap either. We cannot charge an extraordinary premium but we do charge it to the extent that we know the consumer would be able to absorb. Since we procure chicken and do not grow our own, we are at a certain cost disadvantage, but there are buying seasons where we do bulk buying through different poultry contractors and try to average out our costs. The premium is also based on products. For instance, wheat products and chicken nuggets tend to be very competitive so they have smaller margins.
BRR: Recent slowdown has seen demand for many consumer goods gone down. Has it affected your business?
RR: Honestly, no. Even though there has been a slowdown, consumers cannot stop consuming. Their needs have not changed. Perhaps they would reduce their consumption a little based on their disposable incomes but the needs remain the same. I think businesses need to be careful when the economy is facing tough economic conditions. Often, in order to sell more, they start compromising on quality. When that happens, they lose customers. We need to keep the quality and service consistent and customers will continue to buy. Prices are secondary. As a business, we never compromise on the product taste and quality, no matter the circumstances. We are still using the best quality inputs we can find in the market.
BRR: Do you import any inputs or final goods for onward sales? What is your view of the current import policy in the country?
RR: Most of our inputs are locally sourced. We imports some items such as bread crumbs which are a certain texture, taste and color. It is a completely unique product in itself. Imported content should not be more than 1-2 percent of total.
We got affected during the rupee depreciation phase recently because we are the sole distributor of McCain Fries. But aside from rupee devaluation, we also saw tariffs and taxes go up. This made our product in the market far too expensive, even though there are no local alternatives of comparable quality available in Pakistan right now. Volumes fell.
I think we have a very short term vision on imports. We believe that we can decrease the deficit by cutting down imports. Volumetric decline in imports is a cost to the Exchequer` because imports are a huge source of revenue. The government will have to make up for this loss in revenue. In addition, businesses that are supplying these imported products are also paying taxes- these taxes are also lost.
The alternative here is to raise exports but evidently, exports are not competitive in the international markets. If the government wants to cut down imports, it should first develop local industries which would help generate them the required revenue. In addition, when state protection kicks in, local businesses stop being competitive and become complacent.