The Nation, Pakistan
FTAs with China, Malaysia damaging poultry industry
28 April 2014
By Salman Abduhu
LAHORE - Free Trade Agreements signed with Malaysia as well as China, without taking the real stakeholders onboard, are damaging the local poultry industry, as the imports of processed chicken products under FTA with Malaysia are subject to zero percent import duty and from China at 16% import duty. On the other hand, local processors are unable to export their products to these countries as they are absolutely uncompetitive owing to hosts of reasons, industry experts said.
“If imports are not checked immediately, the entire poultry industry in general and the emerging poultry sector in particular will suffer a serious setback, they warned.
Pakistan Poultry Association North Zone chairman Raza Mehmood Khursand observed that presently Pakistan’s normal import duty on import of chicken is only 25 percent against India, which has slapped 100 per cent import duty on chicken to protect its local industry. Chicken processing is the need of the day but Pakistan is processing just 3-4 per cent poultry while 90 per cent of the poultry is sold as raw. “At present several poultry processing units are under progress in the country as the processing plants have been imported and construction is underway and if relaxed import policy continues billions of rupees investment in poultry processing industry will be shattered,” he warned. Raza Khursand stated that Pakistan required at least Rs200 billion investment to provide hygienic chicken to whole nation of 180 million. However, the easy import of processed chicken will restrict the new investment in this industry, he added.
He said that the Brazilian Poultry industry, which is very competitive due to less cost, is also focusing Pakistan for its poultry products export. Pakistan has approved the import of chicken meat from Brazil - currently the largest exporter of halal chicken in the world. The government will have to impose 100 per cent duty on import of chicken products from any country in line with the Indian government, as it does not violate WTO rules, he pointed out. K&N CEO and Pakistan Poultry Association Senior Vice Chairman Khalil Sattar suggested that Pakistan should enter into Free Trade Agreements and Preferential Trade Agreements with only those countries where it has a clear and mutual competitive advantage.
That local cost of production is already high on account of electricity and gas outages and prevalence of epidemic diseases on account of lack of regulations, coupled with import duties on inputs, making the local production uncompetitive.
Pakistan, being predominantly a Muslim country, stands to benefit from growing demand of Halal food world over. Even restaurants like McDonalds, Subway, KFC, etc. are offering Halal products in Europe, USA, Canada, Thailand and other parts of the world. “Worldwide, there are subsidies on export of processed chicken. Some provide subsidies on freight, some have lower preferential rate of electricity for agriculture, poultry and livestock and some purely as an incentive for foreign exchange earnings. There is a need to bring down the cost of production of the poultry processing plants by increasing their capacity utilization particularly in the face of power and gas outages. Bilateral Trade Agreements such as FTAs and MFNs with countries which have different regulations and protocols, defeat the principle of bilateral trade, as such, our capacity utilization decreases, increasing our cost of production.”
He said that until the signing of FTAs, no imports of processed value added chicken products was taking place. Khalil Sattar, who has recently celebrated 50th anniversary in poultry industry, proposed that until international community’s regulations requirements are fulfilled, no further FTAs be signed which include processed chicken meat and its value added products.
Pakistan is the only country in the world that has an absolute open door policy. No questions asked; one can import from anywhere in the world, he said. The industry experts asked the government that all impediments which increase the cost such as lower capacity utilization, import duties on inputs, lack of protection against imports and lack of regulations for disease identification need to be addressed for making exports feasible. Consequently, the government should restore Zero Rating to reduce cost of production, besides withdrawal of Import Duties on Inputs under specific requirements of poultry processing industry.