Poultry

Sector Study

September 2023
© The Pakistan Credit Rating Agency Limited
Table
OMC |ofGlobal
Contents
Market

Contents Page No. Contents Page No.

Inputs 1 Local | Inputs 15
Outputs 2 Local | Feed Prices 16
Process Flow 3 Local | Outputs 17

Types of poultry farming 4 Local | Demand Dynamics 18

Global |Overview 6 Local | Price Dynamics 19

Global | Production 8 Business Risk 20

Financial Risk 22
Global | Consumption 9
Rating Chart 24
Global | Per Capita Consumption 10
Duty Structure 25
Global | Trade 11
SWOT Analysis 26
Global| Price Dynamics 12
Outlook 27
Local | Overview 13
Bibliography 28
Local | Production 14
Poultry
Inputs
Parent Flock of Birds:

Parent flocks are owned by integrated broiler farms or hatcheries. The female and male birds are bought
from a major breeding farm at day-old (DO). The birds are placed on specialist rearing farms until around
eighteen weeks of age and are then transferred to production farms.

Poultry Feed:
Conventional poultry food usually includes many cereals like maize, rice, wheat, oat, barley; and a few
cereal by products such as wheat-bran or rice polish, animal and vegetable protein sources like fish-meal,
meat-meal, soybean-oil-meal, groundnut-cake, etc. according to their availability. The quantity of feed
and the nutritional needs of the feed depend on the weight and age of the poultry, the rate of growth of
the poultry, the rate of development of eggs, the weather (cold or wet weather induces higher
expenditure of energy) and the quantity of nutrients received by the poultry from foraging.

Source: Department for Environment, Food and Rural Affairs 1

Poultry
Outputs
Day Old Chicks
The newly-hatched chick is the "day-old chick" (DOC). Day old chicks are obtained from the eggs laid by
the healthy parent flocks of different breeds.

Farm Eggs
In the shape most common to customers, fresh and in-the-shell, are table eggs or shell eggs. Although
commercial table eggs may come from a range of birds, many of the procedures are the same.

A broiler is any chicken that is bred and raised specifically for meat production. Most commercial broilers
reach slaughter weight between four and seven weeks of age, although slower growing breeds reach
slaughter weight at approximately 14 weeks of age. Typical broilers have white feathers and yellowish
skin.

Source: Department for Environment, Food and Rural Affairs 2

Poultry
Process Flow

Parent Stock Poultry Breeding Farms Layering Farms Eggs

Broiler Meat Broiler Farms Day Old broilers Hatchery Consumers

Source: PACRA Database 3

Poultry
Types of Poultry Farming
Layer Poultry Farming: Poultry birds that are used for egg production are involved in this method of farming. Generally, at ~18-19 weeks of
age, a commercial hen begins laying eggs and continues to lay eggs till broilers drop in the age brackets of ~72-78 weeks.

Producers typically hold hens from the first laying cycle for ~12 months and then transfer these hens to the slaughter house. Months of
warming for poultry birds laying eggs are favored over cooler months. Layer poultry is raised by a range of techniques, some of which are
explained below:

Free Range Organic Yarding Battery Cage Furnished Case

Method Method Method Method Method

Allowing certain Here, 3-8 poultry

Allowing all poultry number of poultry Allowing poultry birds are raised in Transformed
birds to freely roam birds to freely roam birds to be raised metal cages and version of battery
for a certain period for a certain period together with eggs are collected cage with better
of day of day cattle. on conveyer belt of space and facilities.
the cage.

Source: PACRA Database, Punjab.gov.pk, PPA 4

Poultry
Types of Poultry Farming
Broiler Poultry Farming: In this type of farming, poultry birds are raised for the processing of commercial meat. These birds are generally
referred to as broilers and are bred before becoming suitable for consumption in just ~5-7 weeks to achieve a weight of ~2kgs.

Most of these broilers are artificially picked and bred on a large scale and have white feathers and yellowish eyes. These birds are observed to
have a high rate of growth but a low degree of activity. The flow chart below shows a typical broiler poultry farming process:

Selection of the Feeding and Care and other

Housing Breeding Marketing
right breed Watering management

This follows the

whole process of This step involves This step
For Housing at Feeding the birds
This step involves breeding, regular medical involves all
least 1-2 square with good quality
selecting the including check, and the sales and
feet space is and nutritious
required breed hatching eggs vaccination marketing
required per bird food.
and raising routines procedures
parent stock.

Source: PACRA Database, PPA 5

Poultry
Global | Overview
• Poultry farming is one of the key components of agricultural sector. It is
an important part of livestock industry. It is divided into three distinct Particulars CY19 CY20 CY21 CY22 CY23*
segments including breeding, production and processing. There are
commonly two different types of poultry farming, i.e., broiler poultry
farming and layer poultry farming Turnover (USD bln) 319 311 319 351 379

• Finished output from poultry farming consists of day‐old chicks (DOCs),

farm eggs and meat. Poultry products are distributed through a variety Turnover per Capita
41 40 40 44 48
of channels including wholesale, retailers, corner shop retailers and (USD)
hawkers etc.

• Global Market Size: In CY23, the global turnover of poultry sector is Contribution to GDP 0.4% 0.4% 0.3% 0.3% 0.4%
expected to grow from USD~351bln in CY22 (CY21: USD~337bln) and
reach to USD~379bln, at a compound annual growth rate (CAGR) of
~7.6%. The expected global per capita turnover in CY23 is Growth Rate (YoY) 3.0% ‐2.7% 2.5% 10.1% 8.0%
USD~48/person (CY22: USD~44/person), with a YoY increase of ~9%.
The global sector’s share to GDP has stayed between ~0.3% and ~0.4%.
during CY18-22 and currently stands at ~0.4% in CY23. The sector is
expected to grow to USD~487bln by CY27 at a CAGR of ~6.5%.

*Estimated values for CY23. Source: USDA, FAO, World Bank, World Poultry Association 6
Poultry
Global | Overview
• Global Poultry market revenue is estimated to reach at USD~379bln in CY23 (USD~351bln in CY22), a modest increase of ~8% YoY basis.

• Growth in CY23 is expected to be driven largely by the three markets, USA , Brazil and China, having global meat production share of ~21%, ~15%
and ~14%, respectively. The global broiler meat production is estimated to stand at ~104mln MT in CY23 (CY22:~102mln MT).

Global Broiler Meat Production (mln MT)

106

104 104

102 102
102 101

100 99

98

96 95

94

92

90
CY18 CY19 CY20 CY21 CY22 CY23*

*Forecast values for CY23. Source: USDA, FAO 7

Poultry
Global | Production
• In terms of global chicken meat production, USA leads the market with a production of ~21mln MT in CY23 (CY22:~23mln MT), while China and
Brazil rank second with production estimated at ~14mln MT for CY23 (CY22: ~14mln MT).

• By contrast, China’s poultry meat production is forecast to drop, given the high probability of consumers switching to pig meat as well as an
expected economic slowdown. Pakistan ranks eleventh in terms of chicken meat production which was recorded at ~2mln MT in 9MCY23 (CY22:
~2mln MT).
Chicken Meat Production (mln MT)
CY21 CY22 CY23*
Sr. Country
% Share of World % Share of World
Amount % Share of World Market Amount Amount
Market Market
1 USA 20 20% 23 23% 21 21%
2 China 15 15% 14 14% 14 14%
3 Brazil 14 14% 14 14% 15 14%
4 European Union 13 12% 11 11% 11 11%
5 Russia 5 5% 5 5% 4 4%
6 India 4 4% 4 4% 4 4%
7 Mexico 4 4% 4 4% 4 4%
8 Thailand 3 3% 3 3% 3 3%
9 Turkey 2 2% 2 2% 3 3%
10 Argentina 2 2% 2 2% 2 2%
11 Pakistan 2 2% 2 2% 2 2%
Others 18 19% 16 16% 21 18%
Total 102 100% 101 100% 104 100%

*Forecast values for CY23. Source: USDA 8

Poultry
Global | Consumption
• Over the past two decades (CY02-22), poultry has become the most consumed livestock commodity in the world. In terms of poultry meat
consumption, USA again leads the market with no major change in the last three years, recording at ~18mln MT. China ranks the second with
consumption standing at ~14mln MT.
• Lately, there is a decrease in consumption of poultry meat in China as demand shifts to other meat products compounded by an economic
slowdown. Population growth, rising incomes in developing nations and urbanization have led to a surge in global poultry consumption. Pakistan’s
poultry meat consumption is forecast to record at ~2mln MT in CY23, similar to both CY22 and CY21 levels.
Chicken Meat Consumption (mln MT)
CY21 CY22 CY23*
Sr. Country % Share of World % Share of World
Amount Amount % Share of World Market Amount
Market Market
1 USA 17 17% 17 18% 18 18%
2 China 15 15% 14 15% 15 14%
3 European Union (EU) 10 10% 10 10% 10 10%
4 Brazil 10 10% 10 10% 10 10%
5 Mexico 5 5% 5 5% 5 5%
6 India 4 4% 4 4% 4 4%
7 Japan 3 3% 3 3% 3 3%
8 Thailand 2 2% 2 2% 2 2%
9 Argentina 2 2% 2 2% 2 2%
10 Malaysia 2 2% 2 2% 2 2%
11 Pakistan 2 2% 2 2% 2 2%
Others 25 26% 27 27% 28 27%
Total 98 100% 98 100% 101 100%

*Forecast values for CY23. Source: USDA, Mordor intelligence 9

Poultry
Global | Per Capita Consumption
• Poultry provides consumers an affordable protein source that is more readily available than other meats. Developing and emerging markets have
been the major drivers for growth in poultry consumption over the past ten years (CY12-22). Rising demand for poultry products and increase in
poultry imports can be attributed to a rise in real GDP per capita, which can be seen as a proxy for income. As incomes rise, consumers tend to
spend more on animal proteins. Additionally, growing population and urbanization trends also influence the growth in poultry’s trade.
• The world average broiler meat per capita consumption is estimated at ~29Kgs/person in CY23. Malaysia and USA both have the highest per capita
consumption of ~54Kgs/person. Meanwhile, Pakistan ranks eleventh with ~6Kgs/person, while India ranks twelfth at ~3Kgs/person in terms of per
capita broiler meat consumption.
• In CY23, the average per capita consumption of eggs of top 10 egg consuming countries is estimated at ~18Kgs/person. Netherlands has the highest
forecast of per capita consumption of eggs at ~22Kgs/person, whereas, per capita consumption of eggs in Pakistan is low and estimates for CY23
stand at ~4Kgs/person, while for India it is estimated at ~3kgs/person.
Broiler Meat per Capita Consumption (Kg/Person) | CY23* Eggs per Capita Consumption (Kg/Person) | CY23*
60 25

50
20
40
15
30
10
20

10 5

-
0

* Forecast values for CY23. Source: USDA, World Bank, FAO 10

Poultrytry
Global | Trade
• As demand for poultry products grew in the markets over the last two decades from CY02 to CY22, global imports increased at an average of ~4% a year.
For CY23, the total export of chicken meat trade is forecast at ~14mln MT (CY22: ~14mln MT). Brazil leads the market for exports estimated at ~4.8mln
MT for CY23 (CY22: ~4.4mln MT), an increase of ~9% YoY. Brazil has maintained the title of the world’s largest poultry exporter since CY07. Share of Brazil in
global exports is ~35% in CY23 (CY22: ~33%).

• On global imports side, Japan ranks the first with projected imports of ~1.1mln MT in CY23 (CY22: ~1.1mln MT), whereas Mexico ranks the second with
forecast imports of ~0.98mln MT in (CY22: ~0.92mln MT), a YoY increase of ~6.6%. Overall, trade levels have not exhibited any major changes over the
current period (i.e., projected CY23 data). Shares of Japan and Mexico in global imports are ~10% and ~9%, respectively, in CY23 (CY22: Japan ~10%, Mexico:
~8%).

Chicken Meat Imports (mln MT) Chicken Meat Exports (mln MT)
1.2 6

1 5

0.8 4

0.6 3

0.4 2

0.2 1

0 0
Japan Mexico United European China Saudia Iraq Phillipines Cuba South Brazil USA European Thailand China United Canada South South Saudia
Kingdom Union Arabia Africa Union Kingdom Korea Africa Arabia

CY22 CY23* CY22 CY23*

*Estimated values for CY23. Source: USDA 11

Poultry
Global | Price Dynamics
• Global poultry prices experienced an upsurge in CY22, owing to a rebound in poultry feed prices and global demand, in the aftermath of global
economies opening up post-COVID. The percentage increase from CY20 in CY22 stood at ~19%. Poultry prices are highly dependent on the cost
behavior and availability of major feed components. Major feed components are maize, soybean, soybean meal and rapeseed.
• On a historical basis (CY18-21), poultry prices in Brazil (the largest exporter of chicken meat) have remained moderately volatile (stayed between
USD~1,500/MT and USD~1,600/MT). In CY22, the poultry prices climbed to USD~2,000/MT, but in 1HCY23, the trend reversed and increased
production in Brazil and demand contraction led to a downfall in Brazilian poultry prices. Therefore, global meat price index which is derived from a
mixture of projected and observed prices of poultry products in Brazil and USA has resultantly dropped in 1HCY23 compared to CY22 and CY21 levels.
Global meat price Index stands at ~117.85 as at Jun’23 (Jun’23: ~112.4)

Poultry Meat Prices (USD/MT) Global Meat Price Index

2,500 150 143
1,985 1,922 140 131.07
2,000 124 124 124 125.98
130 128.49
1,618 1,626
1,537
1,407 120 118
1,500 1,338 115.77
1,238 121.9
1,164 110 116.51
970 972 962 101
100 100
1,000 96 105
90 96
93
500 80
85
70
- 60
CY18 CY19 CY20 CY21 CY22 1HCY23 CY18 CY19 CY20 CY21 CY22 1HCY23

Brazil USA Poultry Bovine Ovine

Note: Bovine and ovine are terms used for bull and sheep, respectively. Global Meat Price Index is the average of poultry Source: FAO 12
products’ prices.
Poultry
Local | Overview
• Pakistan’s poultry sector was recorded at PKR~1,962bln in FY23
(PKR~1,533bln in FY22), a YoY increase of ~28.0%. The increase is Particulars FY19 FY20 FY21 FY22 FY23
majorly owed to the rising cost of inputs such as poultry feed.
Sector Size (PKR bln) 1,168 1,082 1,190 1,533 1,962
• With the country’s population recording at ~241mln as of FY23
(FY17: ~208mln), Pakistan’s placement in the global poultry sector is YoY Growth 10% -7% 10% 29% 28%
also at a prominent position. Pakistan holds the 11th position among
Contribution to GDP
the world's largest poultry producers with a great potential for future 2.8% 2.4% 2.3% 2.4% 2.5%
(%)
growth and advancement, providing employment to more than
~1.5mln people in the country. Egg production
19,052 20,113 21,285 22,512 23,819
(mln Nos)
Poultry Meat
• Market Structure: The poultry sector has a large number of players 1,518 1,657 1,809 1,977 2,160
Production (000 MT)
but no single company exerts influence on the sector prices. The
sector comprises ~350** players. No. of Firms ~350 players

• Pakistan’s poultry sector is one of the largest agri-based sectors of

the economy with over ~15,000 poultry farms spread across the Sector Structure Competitive
country. The inputs of the sector are cocks, hens, chicken in
domestic poultry and layers, broilers, breeding stock and DOCs in Association Pakistan Poultry Association (PPA)
commercial poultry. The output of the sector are eggs and meat. The
capacity of farms ranges from 5,000-500,000 broilers.

**Number of players as of Sep’22 is the latest available data. Source: PES, PBS, PPA 13
Poultry
Local | Production
• Pakistan’s major poultry product is poultry meat and in FY23 it
Poultry Breakdown FY19 FY20 FY21 FY22 FY23
contributed ~39% (~2mln MT) to the total meat production of the
country, which was recorded at ~5.5mln MT. Other meat products Poultry Birds
1,321 1,443 1,578 1,725 1,887
include ~46% beef and ~15% mutton. Pakistan’s total meat (mln Nos)*
production has witnessed a YoY growth of ~5.5% during FY22-23.
Eggs (mln Nos) 19,034 20,116 21,285 22,512 23,819

• In FY23, poultry meat and eggs production recorded a growth of Total Day Old Chicks
1,248 1,370 1,504 1,651 1,813
~9.3% (FY22: ~9.2%) and ~5.8% (FY22: ~5.8%) YoY, respectively. (mln Nos)
Total poultry birds produced during the period were recorded at Poultry Meat
1,522 1,624 1,809 1,977 2,160
~1,887mln (~1,725mln in FY22). Owed mainly due to usage of (000 MT)
cutting edge technology for poultry production in controlled
environments, along with the focus on poultry disease control Breakup of Domestic Meat Production (mln MT) | FY23
procedures resulted in improving the health of poultry birds, local
production levels have traced an upward trend.
15% Beef
• The poultry sector was exposed to various challenges during FY23
that included high import costs and restrictions on the import of 46%
Poultry meat
soybean (one of the major components of poultry feed), absence of 39%
which resulted in broiler to reach the required weight in a much Mutton
longer time for consumption.

*Poultry birds include layers, broilers, hens and cocks. Source: PES, pc.gov.pk, NDMA 14
Poultry
Local | Inputs
• The sector’s produce comprises both domestic (individual) and
commercial outputs. On the domestic scale, cocks and hens are Domestic and Commercial Poultry (mln Nos)
produced, while layers, breeding stock and Day‐Old Chicks (DOCs) FY19 FY20 FY21 FY22 FY23
are commercially produced. Broilers are majorly produced at a
commercial level with a very small production on the domestic scale Domestic Poultry
too.
Hens 43 44 45 46 46
• Total commercial poultry, including Layers, Broilers, Breeding Stocks Chicken 33 33 34 34 34
and DOCs was recorded at ~3,571mln in FY23 (~3,249mln in FY22), a
Cocks 12 13 13 13 14
YoY growth of ~13%. This increase in production is partially owed to
the GoP that supports the industry in various ways such as providing Total Domestic Poultry 88 90 92 93 94
pre-vaccinated high-laying backyard birds distributed,
Commercial Poultry
implementation of supportive policies and ease of credit from
banks. Day Old Chicks 1,215 1,337 1,470 1,617 1,779
Broilers 1,163 1,280 1,408 1,549 1,703
• Domestic broiler produced during the period were recorded at
~34mln (~34mln in FY22) whereas commercial broiler recorded a Layers 56 60 64 68 73
growth of ~10% (~1.5bln in FY22 to ~1.7bln in FY23). Production of Breeding Stock 13 14 14 15 16
DOCs has increased over the period covered (FY18‐22) at an Total Commercial
2,447 2,691 2,956 3,249 3,571
average rate of ~46%. The production of DOCs increased from Poultry
~1.7bln in FY22 to ~1.8bln in FY23 (~6% growth YoY) due to an Total Poultry Input 2,535 2,781 3,048 3,342 3,665
increase in demand.
Source: PACRA Database, PES 15
Poultry
Local | Feed Prices
• In FY23, local maize prices rose by ~47% as against ~43% in FY22, which was due to
import restrictions of soybean that pushed up the demand for maize. Pakistan lacks Global Feed Prices
sufficient domestic production of plant protein to replace the ~2-3mln MT of 700 80,000

soybeans annually imported. Almost all the meal derived from soybean imports is 600 70,000

used for poultry feed. Local Maize prices (PKR/MT) have remained elevated in FY23, 500 60,000

despite international prices (USD/MT) slowing down, reflecting currency 400

50,000
depreciation. 40,000
300
30,000
200 20,000
• Maize crop is grown twice a year (in July-Aug & Jan-Feb). The production of maize in
100 10,000
the country remained smooth in FY23. Maize crop was not affected by the floods as
the areas where maize is grown were not hit by flood (Northern Punjab and Central 0 0
FY18 FY19 FY20 FY21 FY22 FY23
Punjab, where ~84% of the maize is grown). August’23 prices of soybean, soybean
meal and maize stood at USD~583.9/MT, USD~514.6/MT and USD~207.6/MT, Soybeans seed USD/MT Soybean meal USD/MT Maize USD/MT Maize PKR/MT

respectively.
Input Price Change FY22 FY23
• Soybean is a major ingredient of poultry feed and is mainly imported. In CY23,
Soybean seed and meal prices have been volatile due to contraction in global Maize (USD/MT) 29% 7%
production in some countries (i.e.,. China and Ukraine) and some production losses
in Brazil & Argentina. Maize (PKR/MT) 43% 47%

• In FY23, poultry meat producers in leading exporting countries confronted sharply Soybean Seeds 19% 4%
rising feed prices and dim growth prospects, mainly stemming from outbreaks of (USD/MT)
the Highly Pathogenic Avian Influenza (HPAI), in parts of Asia, Europe and North
America and ~58mln poultry birds were affected as at Feb’23*. Soybean Meal (USD/MT) 8% 8%

*latest available data Source: World Bank, FAO, gov.pk 16

Poultry
Local | Outputs
• The output of the sector comprises eggs, meat and DOCs, which are produced both commercially and domestically. The number of eggs produced
have exhibited an increasing trend over the years consistent with the rise in population. At a domestic scale, the egg output has increased by ~2% in
FY23 (FY22: ~2%), while commercial egg output increased by ~7%, same as FY22.

• In FY23, domestic poultry meat production depicted a growth of ~2% (FY22: ~2%), while commercial poultry meat production increased by ~10%
(FY22: ~10%).
Domestic and Commercial Poultry Output
Period FY18 FY19 FY20 FY21 FY22 FY23
Domestic Poultry
Eggs (mln Nos) 4,239 4,315 4,393 4,472 4,568 4,649
Meat (000 MT) 120 120 130 127 130 132
Commercial Poultry
Eggs (mln Nos) 13,779 14,719 15,723 16,797 17,944 19,170
Meat (000 MT) 1,300 1,400 1,500 1,682 1,846 2,028
Total Poultry Output
Eggs (mln Nos) 18,018 19,034 20,116 21,269 22,512 23,819
Meat (000 MT) 1,420 1,520 1,630 1,809 1,976 2,160
Source: PACRA Database, PES 17
Poultry
Local| Demand Dynamics
• Poultry meat demand is generally price inelastic. However, the poultry meat consumption fell to ~1.3mln MT during FY23 from ~1.5mln MT in FY22.
The consumption of eggs had increased over the years from FY18-21 with better capacity utilization and growing population. In FY22, following a
similar pattern as poultry meat, the total egg consumption also fell to ~10.9mln in FY23 from ~11.8mln in FY22. The reason for the decline in
consumption of both poultry meat and eggs is increase in prices by ~46% and ~54%, respectively, although, on the other side, production levels have
increased despite increase in poultry feed prices.

• Since Eggs and Meat remain essential food items both at domestic and commercial scale, the consumption to production ratio usually remains high
(average ratio during FY18-22 of poultry meat and eggs was recorded at ~0.9). Another reason contributing to the high consumption-to-production
is that poultry products are perishable food items, therefore their sales run on continuing basis.

Production and Consumption | Poultry Meat (000 MT) Production and Consumption | Eggs (mln Nos)
2,500 30,000
2,160
1,809 1,976 25,000 23,819
2,000 22,512
21,269
1,630 1,560 1,703 20,116
19,034
1,520 1,429 1,522 20,000 18,018
1,420
1,500 1,309 1,258
15,000
1,000
10,000 19,096 19,448 20,008
17,030
500 5,000 11,800 10,896

0 0
FY18 FY19 FY20 FY21 FY22 FY23 FY18 FY19 FY20 FY21 FY22 FY23

Poultry Meat production (000 MT) Poultry Meat Consumption (000 MT) Eggs Production mln Eggs Consumption (mln)

Source: PES, PPA 18

Poultry
Local | Price Dynamics
• Poultry products are considered a perishable commodity due to non‐availability of
holding centers across the country. If a bird is ready on the field, it has to be put Poultry Products | Average Prices
on the market and sold, without taking account of the prevailing open market 400

price of the animal. Poultry meat and eggs have witnessed a sharp rise since
349
Oct’22, after the customs authorities at ports stopped the release of soybean 350
shipments arriving mostly from the USA and Brazil due to import restrictions of
soybean. Weight of eggs in rural CPI is ~0.57 and in urban CPI ~0.51). 300

253
• Day Old Chicks: Average prices of DOCs during FY22 remained close to FY21 level 239
250
of PKR~50/chick. However, these increased to PKR~61/chick in FY23, a ~22% YoY
212
increase due to general increase in prices of essential items.
200
175
164
• Farm Eggs: Average prices of farm eggs grew by ~6% from PKR~154/dozen in FY21 159 159 154
to PKR ~164/dozen in FY22 as against ~54% increase in FY23 (PKR~253/dozen). In 150

Jun’23, farm eggs urban prices increased by ~37%/dozen YoY whereas rural egg 103 102
108
prices witnessed an increase of ~40.4%/dozen on a YoY basis. 100
61
51 50
• Broiler: The average price of broiler (live) increased by ~13% from PKR~212/Kg in 50 37 37
30
FY21 to PKR~239/kg in FY22 and further went up by ~46% in FY23 to record at
PKR~349/kg. In Jun’23, 1Kg broiler (live) contributed ~3.35% to Urban CPI (YoY
-
growth in price of broiler ~57.7%/kg) and ~3.24% to Rural CPI (YoY growth in price FY18 FY19 FY20 FY21 FY22 FY23
of broiler ~63.5%/kg). During FY23, Broiler Chicken was amongst the top 10
Day Old Chick - PKR/Chick Farm Eggs - PKR/Dozen Broiler (Live) PKR/Kg
contributors to both Rural and Urban Inflation.

Source: PBS, agbro 19

Poultry
Local | Business Risk
• The Business risk of poultry sector can be divided into operating risk and sales risk. The sector is highly influenced by the input dynamics of poultry
supply chain, as major raw material is imported therefore supply fluctuates with price levels. Another fact that can’t be ignored is the short‐mid
term shocks industry has to face on account of animal disease outbreaks, unfavorable weather conditions and natural catastrophes. The FY22
floods significantly damaged livestock and crops. Overall, ~31% of livestock holders have lost animal/poultry due to the floods, while more than
~50% of animal shelters/ sheds have been damaged. This kept the prices escalated during FY23.
• Operating Risk: This risk particularly refers to the difficulties relating to the operations of the poultry players which can hamper the profitability
and performance of the Sector. Poultry Sector inputs include both local inputs and imported inputs. The Sector’s costs, therefore, remain subject to
Exchange Rate volatility and International Poultry feed prices to the extent of the imported raw materials. This risk is further discussed in detail
later on.
• Sales Risk: This risk is focused on the demand side of the poultry chain. The poultry sector mainly receives its demand from food services. Any
disruption in demand from festive activities, restaurants, hotels or marriage halls can hamper the demand of the sector significantly. For
instance, closure of restaurants, hotels and marriage halls amid pandemic in CY20-CY21, had a direct and substantial effect on the sale of poultry
products. However, since poultry products are considered essential, the demand dip of the sector is short‐lived, with eggs and meat consumption
resuming again upon the easing of lockdown restrictions.
• Moreover the sector is vulnerable to price volatility. Seasonality, market demand, consumer preference and high input cost are the factors
affecting the output price. Other unavoidable factors include rising inflation rates alongside import duties and sales tax structure of the sector
which also indirectly impacts the profit making capacity of the sector players.

Source: PACRA Database, 20

Poultry
Business Risk | Margins
• The average gross margins of the sector (FY18-FY21) have historically Profit Margins
hovered around ~18%. In FY22, the sector’s gross margins clocked in at 30% 26% 25.6%
~12%, slightly better than the FY21 levels (~9%) and could likely be
25%
attributed to increased prices of poultry meat. This came despite a
decline in revenues from the DOCs segment, which posted a volumetric 20%

decrease of ~120.2mln in FY22 (FY21: ~122.8mln). In 9MFY23, average 15% 11%

12.3% 11.2%
8.8%
gross margins fell to ~11%, on account of slow consumption levels amid 10% 6.0%
5% 5%
high prices. 5% 2.3%
3.9% 2.7%

2.5% 2.7% 0.8% 2.0% 2.2% 1.8%

0%
• The sector has historically operated on thin operating and net margins. FY18 FY19 FY20 FY21 FY22 9MFY23
In FY22, average operating margins exhibited some improvement to Gross Profit Margins Operating Profit Margins Net Profit Margins
record at ~6% (FY21: ~3.9%). The trickle-down effect of lower sales figure
for the 9MFY23 has impacted the operating margin that fell to ~3%, even
though operating expenses in FY22 were higher than the figures in Cost breakup | FY22
3.6%
9MFY23. Net margins fell from ~2.2% in FY22 to ~1.8% in FY23 due to
higher finance costs as a result of higher interest rates.
7.9% Raw Material Consumed

• The largest component within direct costs is raw material comprising 7.9% Salaries, wages and Benefits

~69% of the total manufacturing cost. The major raw material for this 15%
Fuel and Power

sector is poultry feed whose prices have been on a continuous rise 65.6% Depreciation and Amortization

following FY20 in the aftermath of COVID-19 pandemic and rising Others

inflation worldwide.

Note: 1- Leverage figures are estimated based on PACRA-rated clients; 2- 9MFY23 only pertains to 1 client Source: PACRA Database 21
Poultry
Financial Risk | Working Capital Management
• The sector’s inventory largely comprises flock and feed. In FY22, the net working capital days decreased to ~95 days (FY21: ~101 days). The decrease is
associated with reduced inventory days, that is, ~62 days in FY22 (FY21: ~65 days). In FY19 and FY20, the inventory days had hiked up because of the slow
turnover due to the oversupply of stocks in the market.

• In FY22, both receivable and payable days moved up to ~21 days (FY21: ~14 days), ~54 days (FY21: ~50 days) since the payment methods were more tilted
towards credit rather than cash by both receivables and payables.

Working Capital (Days)

200
153

150 126
152 101
100 125 95
100

78
50 65 62
50 54
46
38 37
-
FY18(16) FY19(36) FY20 FY21 FY22(21)
(45) (14)
(50)

(100)
Inventory days Receivable days Payable days Net Working Capital

Note: Figures are estimated based on PACRA-rated clients Source: PACRA Database 22
Poultry
Financial Risk | Borrowing
• The poultry sector’s total borrowing as at Jun’23 stood at PKR~30,842mln (Jun’22 : PKR~35,048mln) a drop of ~12% YoY basis. The sector comprises
largely short-term borrowings, i.e., ~69% in Jun’23 (Jun’22: ~69%) to finance its working capital needs, majorly raw materials financing. This is
associated with the fact that the poultry sector majorly relies on external capital to meet their day to day operational needs due to their small size and
nature of business. Long-term borrowings comprised ~20% both in Jun’23 and SPLY. Percentage of import financing dropped from ~5% in Jun’22 to ~2%
in Jun’23 due to the import restrictions imposed by GoP during most part of FY23.
• The average leverage of the sector is recorded around ~35% (FY17-21), which slightly reduced in FY22 to~31% (FY21:~35%), due to improved capital
structure and the business's short-term trade leverage indicating room to borrow. Moreover, repayment of long-term debt is one of the reasons for
improved leverage.

Leverage Borrowing Mix| June'22 (Inner) and June'23 (Outer)

45% 5%
40% 4%
40% 2%
35% 36% Short Term at Normal Rates
35% 32%
31%
30% Long Term at Normal Rates
25% 20%
25%
Import Financing
20%

15%
Discounted Borrowing
10%

5% Bills Purchased & Discounted +

69% Others
0%
FY18 FY19 FY20 FY21 FY22 9MFY23

Note: 1- Leverage figures are estimated based on PACRA-rated clients; 2- 9MFY23 only pertains to 1 client. Source: PACRA Database, SBP 23
Poultry
Rating Chart
• PACRA rates 1 client in the Poultry sector. Rating category of the Sector is BBB-.

Rating Chart
2

0
A- BBB+ BBB BBB-

Source: PACRA Database 24

Poultry
Duty Structure

PCT Code Description Custom Duty

FY23 FY24*

01.05 Live poultry, that is to say, fowls of the species (broiler) 3% 3%

02.07 Meat and edible offal of the poultry, fresh, chilled or frozen 20% 20%

04.07 Birds' eggs, in shell, fresh, preserved or cooked (Fertilized eggs for incubation) 11% 11%
Birds' eggs, not in shell, and egg yolks, fresh, dried, cooked by steaming or by
4.08 16% 16%
boiling in water
Other prepared or preserved meat, meat offal or blood. Of fowls of the species
16.02 20% 20%
(broiler)
Other agricultural, horticultural, forestry, poultry- keeping, poultry incubators and
84.36 0% 0%
brooders
94.06 Prefabricated buildings 20% 20%

The Sales Tax on local poultry sheds, incubators, brooders and poultry equipment is 5% whereas, import of Poultry machinery & Equipment is exempt
from sales taxes.

*Budgeted Source: FBR 25

Poultry
Mobile Phone and Allied Products
SWOT Analysis
• Continuous availability of raw material • Artificial breeding of broilers
• Simple to operate controlled sheds • Lack of research and development initiatives
• Available capacity Outdated technology used for hatchery and
• Increased income levels and restaurants breeding
• Wide range of target market • Highly fragmented sector
• Product is basic protein requirement of body, so • Perishable Items
there is low price sensitivity
Fluctuating Input costs
Strengths Weaknesses •

• Increased Research & Development

• Economic instability
• Economic Recovery
• Lack of Government oversight and sector
support incentives. • Increase in per capita income
Threats Opportunities • Evolving consumer taste palette
• High competition
• Viruses and diseases in Parent stocks such • Change in eating habits
as Bird Flu • No brand loyalty
• Prevailing uncertainty due to COVID-19 • Vast distribution
• Higher Mortality rate of poultry birds in
Pakistan

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Poultry
OMC | Global Market
Outlook: Stable
• In Pakistan, Poultry sector is one of the largest agricultural based segments with a substantial investment of PKR~1,056bln, comprising domestic and commercial
poultry. It has an annual growth rate of ~10%-12%. Pakistan ranks 11th in terms of global poultry production and consumption per capita. The sector posted a turnover
of PKR~1,981bln in FY23 (SPLY: PKR~1,533bln), a ~29% YoY growth rate. Further, it recorded an increase in average commercial poultry production from ~3,249mln in
FY22 to ~3,571mln in FY23 (~10% YoY growth). Commercial poultry includes DOCs, Broilers, Breeding stocks and layers with YoY growth rates of ~10%, ~10%, ~7% and
~7%, respectively, in FY23.
• The key business risk of the sector comprises cost side factors due to vulnerability of feed price. In FY22, the sector’s gross margins clocked in at ~12%, slightly better
from FY21 (~9%), attributable to increased prices of poultry meat. This came despite the decline in revenue from the DOC segment. The trickle-down effect of lower
sales figure for the 9MFY23 also impacted average operating margins which fell to ~3%, even though operating expenses in FY22 were higher than those recorded in
9MFY23, whereas average net margins fell from ~2.2% in FY22 to ~1.8% in FY23.The net working capital days decreased to ~95 days in FY22 (FY21: ~101 days) and
leverage ratio in FY22 was ~31% (FY21: ~35%) decreased due to the decrease in borrowings by the sector.
• To strengthen and develop this industry, the poultry development strategy that is recommended by the agricultural department focuses on key areas which include
disease control, utilization of advanced technology for poultry production in controlled environments and expanding product diversification. To achieve these goals,
the GoP has implemented farmer-friendly policies such as giving incentives to commercial banks to provide loans to the producers in the sector and interventions to
support both rural and commercial poultry production.
• Prices of poultry products are expected to remain elevated in the days to come. However, since the output of the Sector is an essential food item, the demand of the
poultry sector largely remains unaffected (price inelastic) to a great extent despite price increases. One of the probable reasons is also that poultry meat costs the
lowest in comparison to beef and mutton meat, and so is the cheapest source of protein for human body. The poultry sector will continue to remain under pressure in
terms of high import costs and restrictions on the import of (genetically modified organism) GMO soybean which is the main import in poultry feed. Currently, this is a
key risk exposed to the supply chain of the sector, which is also putting poultry businesses, especially the small firms, at a high risk. Additionally, high inflation and
devaluation of Pakistani rupee remain an impediment to the sector’s overall performance.
• Pakistan lacks sufficient domestic production of plant protein to replace the ~2 to ~3 mln MT of soybeans annually imported. Almost all the meal derived from soybean
imports is used for poultry feed. Without soybean meal in poultry rations, the feed conversion ratio has worsened, and it is taking longer for broilers to reach market
weight. However, the sector is gradually shifting to alternatives for soybean such as cotton seed, rapeseed, mustard seed, sunflower seed and canola seed.
27
Poultry
Bibliography
• Pakistan Poultry Association
• Pakistan Economic Survey Saniya Tauseef Ayesha Wajih Sabeen Mirza
• State Bank of Pakistan Research Team Senior Manager Supervising Senior Research Analyst
• Pakistan Bureau of Statistics saniya.tauseef@pacra.com ayesha.wajih@pacra.com Sabeen.mirza@pacra.com
• Companies Financial
Statements
• PACRA Database Contact Number: +92 42 35869504
• Agbro
• World Bank
• USDA
• FAO
• World Poultry Association

DISCLAIMER
PACRA has used due care in preparation of this document. Our information has been obtained from sources we consider to be reliable but its accuracy
or completeness is not guaranteed. The information in this document may be copied or otherwise reproduced, in whole or in part, provided the source is
duly acknowledged. The presentation should not be relied upon as professional advice.

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