ISSUES AND ECONOMICS OF POULTRY PRODUCTION  

• Asif Maqbool
• Muhammad Rasheed

 Introduction

Every Government in the world is responsible to provide adequate food to their inhabitants and assured an atmosphere free from hunger and malnutrition. The food security objective becomes more important when 15-20% of the world population is under threat of not getting sufficient food to meet minimum nutritional requirements for a healthy and productive life. The poor nutritional status is prevalent due to lack of sufficient energy and protein in the food or due to not having sufficient food.

Until 1964 poultry production was a cottage industry in Pakistan. The management and production on modern scientific lines was not known and disease control measures were also not sufficient. In 1964, the foundation of commercial poultry production was laid by PIA shaver by introducing new and improved breeds of layers and broilers and by Lever Brothers with the production of poultry feed on modern lines. The Govt. on her part, exempted this industry from income tax and sales tax, allowed export of table eggs, day old chicks and broiler on subsidized rates. Poultry has still remained a neglected and unimportant sideline of our agricultural industry. Productivity of local birds in terms of eggs or returns has been low and was not considered it as a paying enterprise. Principally it was raised as stray birds on which particularly no cash outlay had been involved.

A balanced diet is essential for good health, vigor and productive capacity of the people. Protein plays an important role in the formation of balanced human diet. There are mainly two origins of proteins i.e. animal and plant. The human diet in Pakistan is deficient with respect to proteins of animal origin. At present 66% Pakistanies are deficient in protein. The requirement of protein is 102.7 g per person per day while only 69.61 g per person per day is being used in Pakistan. The existing gap between supply and demand of protein is 33.09 g per person per day. The main source of animal protein in Pakistan is beef, mutton, milk, poultry meat and eggs, respectively. To overcome the gaps between and demand of protein, poultry meat is contributing a dominant share and further its share can be enhanced by improving the profitability of producer and by decreasing prices at the retail level. However, existing infrastructure of poultry sector has capability to narrow down the gap between supply and demand of proteins. 

The cost of distribution from producer to the consumer is very high mainly due to high share of middlemen involved at various stages.  The extraction of abnormal profit by middlemen reduced the profit of bird growers’ and it discourages them to expand the production process. The profit share of middlemen also needs to be reduced in order to lower prices at the retail level.  The objective of the present study is to look at the profitability of different stake holders involved in poultry sector and then to formulate the policy that can distribute profits among different stake holders on rationality basis. We should keep in mind that producers’ cannot be motivated to expand their production system without increasing their profitability.

The paper is organized as follow.  The section 2 discusses the marketing issues and channels of poultry production.  Section 3 explains the data collection procedure and delineates the methodology and section 4 summarizes the results and discussion. Last section illustrates the conclusion.

 Marketing Issues and Channels

The marketing of broiler is in the hands of few functionaries who bound the farmers to sell their product at the maneuvered prices.  The farmer’s can’t take the risk of keeping the broiler after the recommended growth period because after that certain period cost of production increases rapidly than the weight of broiler. After interviewing different stake holders we observed that rapid price fluctuation, under weighing, high charges of commission are the major problem of present marketing system. .

 Disposal of Broiler output

Farmers mainly have three outlets for the disposal of their product namely main market, town market and farm. About seventy per cent of producers sell their output in the main markets. At town and farm level, the retailers and feed dealers work as intermediaries. The procedure of current marketing system was highly criticized by farmers.

 Price Fluctuation

The business of poultry farming is expensive and risky and it is operated on purely traditional lines without any modern marketing facilities. Farmers are producing broilers without foreseeing the supply and demand situation in the market. In high supply situation, prices prevail at low levels and vice versa. Such a situation creates uncertainty in the market and as a result, the farmers are unable to plan their businesses. They are totally frustrated and dissatisfied over the existing price mechanism. Therefore, the farmers jointly suggest for creation of an institution that can properly monitor the market and disseminate market information.

  Under Weighing

The majority of farmers claim that intermediaries do not follow business ethics and try to fetch maximum profit from business transactions. They use many tactics such as juggling with weighing scales, under counting and under weighing to deceive the farmers. In view of this, the farmers suggest a tripartite market arrangement in the form of farmers, middlemen and the government.

 High Charges by Commission Agent

Generally, the main broiler business is operated through intermediaries namely commission agents, feed dealers, and butchers who charge certain amount as commission fee for their services. Farmers for timely disposal of their output use the intermediaries, but they report that commission fees of these intermediaries are very high. Sadly, there is no agency to check such unfair commission rates.

 Marketing Channels of poultry meat

Marketing system remains still in traditional and heterogeneous condition. As a result, producers could not develop direct linkages with the consumers. As a result producers are not getting expected prices while consumers are paying high prices and it is one of the main hindrances to improve the contribution of poultry in protein uptakes. First of all it is important to understand the present channels of marketing system .

 Marketing channels of Birds

Commission agents/Wholesaler is the major player in deciding the price at the retailer’s level. Reasons of non remunerative price to producers are: a) Missing direct linkages between producers and consumers. The missing linkages do not provide chance to producer to understand consumer’s behavior.  b) Lack of investment to develop infrastructure could enable them to reach directly to the retailers. The provision of credit to the bird growers will allow them to reach directly to the retailer and could kick the commission agent out of the process.  Government should also take initiatives to develop laws which can allow producers’ to sell their products directly in market.

To improve the efficiency of existing marketing system a detailed analysis is required to suggest the policy interruptions.  The existing poultry marketing system has been functioning without much attention of planners and policy makers. The present study was planned to look into poultry marketing channels prevalent in the present setup with a view to see their efficiency and suggest remedial measures for their improvement.

 Data Collection and Methodology

The present study was conducted on commercial poultry industry. This source contributes a dominant market share in supply of poultry birds almost in all big cities. However, present study was focused at the local market of Faisalabad city. The nature of the problem deserved much wider focus like that of province or the country as a whole but due to obvious limitations of research viz. time and financial resources, the study was restricted only to 10 miles radius of the Faisalabad city.    

An adequate and scientifically sound sample is essential to yield valid results. By keeping this in view, the information was collected from all those stakeholders involved in the chain of transporting poultry from farm level to ultimate consumers. Thus, a representative sample of commercial poultry producers, commission agents, wholesalers, retailers was taken for detailed investigation. Fifteen commercial poultry producers were taken to collect information on production of birds. Twenty commission agents were taken form the wholesale market. There were no wholesalers of birds in the market. Commission agents act as wholesalers. Similarly, twenty retailers were taken randomly.

For the purpose of getting information, separate questionnaire was developed for each category of respondents. The questionnaire was filled in by direct interview method with respondents. Finally the data collected were tested statistically and analyzed for discussion purposes.

 Effective Marketing  System for Farmers

• Muhammad Rasheed
• Asif Maqbool

Information is significant to the social and economic activities that comprise the development process. Development economy has witnessed agricultural, industrial and information technology revolutions. Good communication system and information system reinforce commitments to sustainable productivity. 

Information system is a process that transforms data into information. When this information is further refined it acts as a basis for decision-making leading to the development of decision support system. Thus, strategic questions posed by researchers and policy makers in agriculture sector can best be answered by thorough and reliable exploration of related data. This is very essential in agricultural marketing system.

Market information is an important facilitating function in the agriculture marketing system. It facilitates marketing decisions, regulates the competitive market process and simplifies marketing mechanisms. Market information is a means of increasing the efficiency of marketing system and promoting improved price formation. It is crucial to the farmers to make informed decisions about what to grow, when to harvest, to which market produce should be sent and whether or not to store it. Improved information should enable traders to move produce profitably from a surplus to a deficit market and to make decisions about the viability of carrying out storage where technically possible.

In fact, marketing information plays a vital role in the functioning of the whole market, by regulating the competitive marketing process. By helping ensure that produce goes to markets where there is a demand for it, it shortens marketing channels and cuts down on transport costs. It helps ensure that each marketing transaction is a fair one, and that all participants share the risks and benefits. However, this does not happen if marketing information is distributed unequally, as is generally the case when many small-scale farmers in Pakistan are selling to a relatively few large-scale dealers. The farmers then end up bearing the greater part of the risk, while the dealers end up with the greater part of the profits.

Recent advances in information technology are making it more feasible to provide small-scale farmers with the marketing information they need. However, farmers may not benefit from sophisticated facilities, if the system is poorly managed or not designed for their needs. It is not enough for marketing information to be collected; it must also be disseminated in a form accessible to farmers and adapted to their needs.

The essential data of marketing information are price data. Agricultural price data are based on thousands or millions of transactions, many of them on a small scale, that are taking place every day all over the country. Collecting an adequate sample and making sure that these are representative enough to be useful is not an easy task. In many countries, the central government office is linked to numerous reporting stations in the provinces which report regularly on the local prices of a range of commodities. 

In developed countries, there is a well developed system of wholesale markets in towns and cities. It is the prices in these wholesale markets which provide the basic price data, collected and transmitted to head office by market officials as a normal part of their duties. The data is collected and transmitted by an on-line computer network. 

In the less industrialized countries, there are not many wholesale markets and a different system is used. In Pakistan, price information is based on surveys of both the farm gate prices and the prices paid by consumers, carried out regularly by designated farmers and dealers. The marketing information from these countries is usually collected and given preliminary processing at the reporting stations manually and transmitted to the head office by fax, radio, or telephone.

Each system has its basic difficulties. It is obviously much easier to collect price data from wholesale markets, where prices are being discovered openly and publicly during auction. However, there is the problem that wholesale markets charge fees, and farmers often try to avoid them and sell privately. These private sales may represent a considerable market share. Obviously they are distorting the accuracy of official price data, but nobody knows to what extent. In countries where wholesale markets are not well developed, most sales between farmers and dealers are taking place at the farm gate or in small markets. Since price discovery is occurring in a series of scattered, private transactions, the reliability of price data is a major concern.

Another major problem shared by both systems is that information about prices is not very useful unless quality is taken into account. Prices for good quality fruits and vegetables and preferred rice varieties may be more than double those paid for poorer quality foods. For farmers to be able to use price data, they need to be able to compare what has been sold with the produce they themselves are planning to market. This needs a uniform national grading system. National marketing information systems usually provide price information through the mass media, such as newspapers and radio. However, it is not clear how useful such information is likely to be to farmers.

In most marketing information systems, regional data is transmitted to a central national facility where it is processed and amalgamated with similar data from all over the country. The result is useful to those working for central government agencies, who need to know what is happening over the whole country. It is of less value to the farmers in the rural areas which provided the original data.

Recommendations for improving Marketing Information Systems

• Poor awareness of farmers on available market information clearly highlights the need to create awareness on market led extension among the farmers through the agricultural extension agencies. so that the marketing information on agriculture commodities are incorporated in the extension services along with production aspects to the farmers.

• Advanced information technology is suited to government collection and analysis of large quantities of
   data. It is of little relevance in terms of a direct information service for farmers, although it might be valuable if suitable intermediaries are used. Generally speaking, farmers benefit more from simple technology which communicates information in a lucid and relevant way. It should be noted that farmers are interested, not only in current price information, but also in marketing issues and news, and demand forecasts.

• There is wide price variation according to quality. Fruit and vegetable prices are particularly influenced by quality, including size. The lack of a uniform national grading system is a major constraint to the development of an efficient national marketing information service. 

• Farmers must be able to seek out and compare the information available for different outlets if they are to sell to best advantage. Price information is less useful if there is only a single market outlet, or if farmers are price takers rather than price seekers. Where there is a very wide gap between the farm gate price and the price paid in wholesale markets and by consumers, marketing information can help narrow the gap, but only as part of an efficient marketing system. 

• Farmers are interested mainly in prices in local markets where they sell their goods for efficient dissemination to farmers, market information services need to be decentralized, especially in remote areas where there are wide regional price differences. 

• There is a need to develop a system of market information utilizing the modern information communication techniques so that the farmers are provided with the required market information at the village itself so as to make appropriate decisions with respect to production and marketing plans including post harvest management storage, processing and sale of agriculture commodities.

• Farmers’ dependence on informal sources such as fellow farmers, friends and relatives for market information indicates the inability of formal sources in disseminating the required information to the farmers which calls for revitalizing the Market Intelligence System especially on dissemination aspects in public institutions like State Department of Agricultural Marketing, State Agricultural Universities etc. with modern communication technology.

• The existing marketing information is restricted to arrivals and prices. There is a need to cover other components of market information such as quality standards, post harvest management, storage, transportation, imports / exports apart from production scenario.

• Though the manpower and infrastructure was found to be a constraint in market information system, it can be overcome by policy changes. There is enough funds and trained manpower to improve upon the system.