Published in The Daily Star on Sunday, 26 January 2014.
Poultry needs stimulus
Shahzeen Hafiz
The poultry industry has been an integral part of the private sector in the recent past. Growing steadily over the last decade, the sector has successfully been the second highest employment provider in the country. Poultry rearing can play a vital role in a country like Bangladesh where a significant number of people are landless, disadvantaged and/or devoid of formal education or skills to participate in income generating activities. In this respect, the poultry sector has emerged as a saviour in fighting against the evils of poverty as the exercise requires minimum land, short capital and skills.
In addition to the macroeconomic agenda of signifying food security and economic growth, the sector also provides raw materials for products like biogas and organic fertilisers. Besides, it also supplies reasonably low-cost chickens and eggs and ensures quality animal protein.
It is needless to mention that poultry is an essential part of the livestock industry. It contributes fairly to the gross domestic product (GDP) of Bangladesh and plays a pivotal role in the income generation and socio-economic context of the rural and semi-rural households. Investments have soared in the sector since the 1990s. Investments figures were as high as Tk 15,000 crore in 2013 and the sector is creating employment for more than 60 lakh people. Besides, the sector has proved to be an affordable business for many, offering opportunities for fulltime or part-time employment, particularly for women, children or the elderly associated with farm operations.
However, more attention should be diverted to this sector because enhanced investment would exploit further employment opportunities and provide for better GDP realisation.
The recent political instability in the country has taken its toll on the poultry sector. With an annual investment of Tk 25,000 crore and annual turnover of Tk 30,000 crore, this promising industry has now come crumbling down. Consequently, the loss that the farmers had to suffer due to the recurrent spells of strike and violence has been disappointingly very high; it is estimated the loss figures could range from Tk 800 crore to Tk 1,000 crore.
Specifically, disruption of the transport sector has been the most prominent factor behind the huge loss figures. It was reported by Bangladesh Poultry Industry Co-ordination Committee that about 70 to 80 transports carrying chickens, chicks and feed have been burnt or partially vandalised in the last few months (till December 25, 2013). The perishability of the poultry sector products is another reason for the sector to be hampered at such a large scale.
Unlike other sectors where production can be stopped, stalled or delayed, the case with the poultry sector is that its production is impossible to halt. Chickens are bound to lay eggs and if these eggs are hatched, then the chicks have to be fed. In addition, necessary heating for chicks and their medications, which is very important for their proper growth, have also been disrupted. It is the case that around 60 percent of poultry birds and eggs remained unsold every day during the last few months.
The loss the poultry feed manufacturing industry has incurred in the last three months is almost irrevocable and paints a very sad picture. With the total loss estimated to be around Tk 1,000 crore, more than 36,000 poultry farms have already been shut down while losses still continue to pile up.
To state a couple of specific examples, breeders made a loss of Tk 382 crore in the production of day-old chicks, production of eggs caused a loss of Tk 630 crore, commercial poultry lost around Tk 975 crore and medicine producers and their subsidiaries bore a loss of Tk 158 crore during the period. In addition, factors like bank interest rates, buying raw materials at excessively escalated prices, transport disruption, port delays and other logistical loss is estimated to be more than Tk 900 crore.
Due to scarcity of necessary medication, feed and proper heat, breeders were bound to destroy approximately 3 million day-old chicks everyday which caused a 30-40 percent loss in production costs everyday. Also, the exorbitant rise in truck fares from an average of Tk 20,000 to Tk 1 lakh during the blockades and medicines worth Tk 15 crore remaining unsold added to the farm owners’ frustration and misery.
Chickens had to be sold at almost half the price. For instance, broiler chicken originally costing Tk 110 was later sold at a disappointingly low rate of Tk 70 to Tk 80, eggs having a cost of Tk 6 to Tk 6.5 were sold at a price of Tk 5 only and the day-old broiler chicks were being sold at Tk 25 whereas its production cost stood at Tk 35. Lower sales have also caused a fall in the demand for inputs such as feed, falling by 20-25 percent in the last three months.
As a mark of protest, poultry farm owners gave away 25,000 pieces of day-old chicks to passersby in front of the National Press Club last December. The absolute indifference of the political leaders and the sheer frustration from the massive damage had compelled them to vow to take further actions if the situation was not contained. A few suggestions have thus been mentioned which could be the first of many steps in order to put this sector back on track.
One imperative suggestion would be the rescheduling of bank loans for layer and broiler farms, hatchery farms and breeders, for feed producers, medicine producers and marketers and other associated institutions. Last year the bank interest rate in this sector was fairly high, for example an average of 12-14 percent per annum and real effective interest rate was around 18-20 percent per annum. This is taxing for the already suffering farmers. Therefore, for the months following the instability, bank interest rates should be waived till the sector reaches a stable and solvent position.
Special incentive packages should be offered so that the poultry farms which have been shut down can resume operation. Furthermore, there should be financial compensation and other forms of support together with the waiver of port-related duties and taxes.
Businesses, irrespective of the sector that they represent, necessitate one very important aspect at this current juncture — a stable economic and political environment for business. It is projected that the poultry sector would create employment for about two crore people by 2021 and play an integral role in achieving the present government’s ‘Vision 2021’. Thus, crippling this sector would not only spell out huge loss for the country but also for a large section of rural and semi-rural population.
The writer is a Programme Associate at Centre for Policy Dialogue (CPD), and can be reached at hafiz.shahzeen@gmail.com. Views expressed here do not reflect those of CPD.