Scaling-Up Bovine Meat Exports of Pakistan

The report explores the potential of the bovine meat sector for the export market. Pakistan’s bovine meat sector presents an opportunity for growth, but is stymied by factors primarily related to the lack of traceability of the cattle stock, the presence of the Foot and Mouth Disease (FMD), the outdated methods and technologies used in aggregating, transporting and slaughtering animals, and the lack of capacity to produce frozen de-boned beef cuts for the international markets.

The size of the global market for trade in bovine meat is USD 52 billion. The global market size has grown four-fold during the last two decades and is geared to continue growing in the future as incomes rise and the propensity to consume beef as a primary source of protein diet increases in developing countries. The global beef market is an opportunity for Pakistan to diversify its exports, given the existing agrarian base of the country, and about 12.5 million families involved in cattle rearing activities.

While there has been a lot of improvement in the productivity of dairy animals, with an improvement in milk production by 15 percent and 46 percent for buffalos and cows respectively over the last three decades, the yield of animals in producing meat is still low. The milk yield of Pakistan’s buffalo was ranked third best in the world in 2018 at 1,935 kg/animal per annum. There has been limited focus by livestock farmers to rear animals exclusively for meat production, and typically, spent animals which stop producing sufficient milk are sold for meat.

The yield gap for buffalo meat produced in Pakistan when compared to the top three best meat producing countries, Australia, USA and Brazil is about 35 percent, whereas the top performers produce an average buffalo carcass weight of 297 kg/animal versus 196 kg/animal produced in Pakistan. One of the key drivers of the low yield in Pakistan is the unattractive domestic market for beef. In Pakistan, animals are bought and sold by appearance and not by weight, a disincentive for farmers to invest in fattening animals. Furthermore, there is a price control regime in place to ascertain the sale price of meat sold in the domestic market, which is a constraining factor for profitability of the livestock farmer and hence the lack of investment made on improving the meat yield drawn from the animal.

Keeping in perspective the export opportunity of beef, upgrading the value chain to meet the international demand in addition to the domestic demand for beef is essential to benefit Pakistan’s economy. With better earnings from the sector, Pakistan will improve the per-capita income of the rural areas and increase foreign exchange inflow from exports.

Currently, Pakistan exports about USD 250 million worth of bovine meat to eight countries including the six GCC countries, Vietnam and Afghanistan. This constitutes 0.44 percent of the global market. 80 percent of Pakistan’s exports in 2019 were of chilled bovine carcasses and a total of 91.6 percent were in the chilled category which included carcasses, bone-in and de-boned bovine meat. Pakistan’s exporters have leveraged the demand in the near markets for premium chilled meat, mainly sold in restaurants and retail stores. In contrast, the exports of the three largest meat exporting countries which include Australia, Brazil and India are in the frozen beef category and constitute 65 percent, 86 percent and 90 percent of their meat exports respectively. Frozen beef, which is generally considered as lower quality and cheaper, has a longer shelf life and can be transported by sea to the far markets. This improves the marketability of the product and provides better returns due to cheaper transportation costs by sea, as opposed to by air cargo in the case of chilled meat. However, the appropriate processing capabilities and transportation cold chain is required to process frozen beef which is an extra investment. Furthermore, a competitive exchange rate is essential to ensure the ability to match competitor prices, since the frozen beef market is high volume and price sensitive.

In order to compete in the international market for frozen beef, with China, Japan, USA and South Korea being the top buyers of beef, Pakistan needs to comply with the quality standards and phyto-sanitary standards of the importing countries. The Foot and Mouth Disease (FMD) present in Pakistan limits its access to most global markets, for which the government is undertaking a vaccination programme and making an animal quarantine zone in Cholistan. The intervention is expected to move Pakistan from the World Organization for Animal Health’s (OIE) Stage 2 category for countries, (in which FMD is reduced to target areas) to Stage 3. In the third stage the FMD virus is curtailed through an organized national Official Control Programme. Once Pakistan achieves the Stage 3 status, the opportunity to export frozen beef to larger markets such as China will open up.

However, in order to also meet export requirements, traceability of animals is required. This means that Pakistan requires investments in establishing farms where animal herds can be reared exclusively for backgrounding and fattening. In Pakistan, the meat processing companies have started making investments in vertically integrated feedlots which will enable them to assure their customers of traceable animals. However, purchasing land for making feedlots is capital intensive, for which reason the government should consider leasing land to the private sector in the quarantine zone for enabling more players from the private sector to establish feedlot farms and increase the stock of traceable animals.

The federal and provincial governments should redouble efforts to help farmers make their animals traceable, liberalize the price control regime and import suitable breeds of animals and their semen to making high meat yielding bovine breeds available in Pakistan.