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    DISCLAIMER

    The purpose and scope of this Pre Feasibility Study is to introduce the Project and

    provide a general idea and information on the said Project including its marketing,

    technical, locational and financial aspects. All the information included in this Pre-

    Feasibility is based on data/information gathered from various secondary and primary

    sources and is based on certain assumptions. Although, due care and diligence has been

    taken in compiling this document, the contained information may vary due to any change

    in the environment.

    The Planning & Development Division, Government of Pakistan, M/s. Arch Vision

    Consulting Engineers who have prepared this Pre-feasibility study, or National

    Management Consultants (Pvt.) Limited who have quality assured this document do not

    assume any liability for any financial or other loss resulting from this Study.

    The prospective user of this document is encouraged to carry out his/ her own due

    diligence and gather any information he/she considers necessary for making an informed

    decision

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    i

    TABLE OF CONTENTS

    ACRONYMS .................................................................................................................. iii

    EXECUTIVE SUMMARY ...........................................................................................iv

    CHAPTER 1 INTRODUCTION...................................................................................11.1 OBJECTIVE ANDSCOPE OF THE STUDY....................................... ................................... 31.2 METHODOLOGY ............................................................... ....................................................... 31.3 STUDY TEAM....................................................... ................................................................ .... 4

    CHAPTER 2 MARKET/ NEEDS ASSESSSMENT ...................................................52.1 LIVESTOCK POPULATION............................................................................ ......................... 52.2 POTENTIALANDPROSPECTSOFLIVESTOCKPRODUCTION ........................................ 72.3 POTENTIALFORMEATEXPORTS ............................................................ ............................ 9

    2.4 DOMESTICDEMANDFORMEATINPAKISTAN....................................... ........................ 132.5 LOCAL LIVESTOCK AND MEAT MARKETING........................................................ ...... 142.6 CURRENTFRESHMEATCHAIN....................................................... ................................... 15

    2.7 CLOSINGTHEDEMAND-SUPPLYGAP .................................................... .......................... 162.8 STATUSOFINDUSTRIALMEATPROCESSINGINPAKISTAN ....................................... 172.9 GOVERNMENTINCENTIVESFORTHESECTOR........................................................ ...... 192.10 FUTURE POTENTIALS IN MEAT MARKETING .............................................................. 19

    CHAPTER 3 TECHNICAL EVALUTION................................................................213.1 CATTLEFARMING........................................................ ......................................................... 213.2 ESTABLISHING MEAT PROCESSING FACILITIES ......................................................... 28

    CHAPTER 4 GOVERNANCE AND MANAGEMENT STRUCTURE.................39

    4.1 GOVERNANCE STRUCTURE........................ ..................................................................... ... 394.2 MANAGEMENT STRUCTURE ..................................................................... ......................... 414.3 LIVE ANIMAL PROCUREMENT & TRANSPORTATION ................................................ 43

    4.4 PLANT OPERATIONS .............................................................. ............................................. 434.5 MARKETING & SALES................................................................ .......................................... 444.6 FINANCE DEPARTMENT ................................................................. ................................... 454.7 HUMAN RESOURCE & ADMINISTRATION................................... .................................. 454.8 TRAINING NEEDED....................................................... ........................................................ 45

    CHAPTER 5 FINANCIAL EVALUATION.............................................................46

    5.1 CAPITAL COST OF THE PROJECT............................................. ...................................... 465.2 PROJECTED PROFIT & LOSS ACCOUNTS ................................................................... .. 495.3 PROJECTED CASH FLOW .................................................................... ............................... 505.4 PROJECTED BALANCE SHEET................................................................... ........................ 51

    5.5 INTERNAL FINANCIAL RATE OF RETURN ................................................................. 52

    5.6 RATES OF RETURN....................................................................................... ....................... 525.7 PAYBACK PERIOD................................... ..................................................................... ........ 535.8 FUNDING OF THE PROJECT.............................................................. .................................. 53

    CHAPTER 6 CONCLUSION ....................................................................................54

    LIST OF TABLESTABLE1LIVESTOCK POPULATION (MILLIONS)............................................................ ................. 5TABLE2PROVINCE-WISE LIVESTOCK POPULATION OF PAKISTAN ........................................ 5

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    TABLE3AVAILABILITY OFLIVESTOCK AND POULTRY PRODUCTS....................................... 6TABLE4ESTIMATED GROSS MEAT PRODUCTION BY ANIMAL TYPEAND

    PROVINCEWISE,2002-2003................................................................ .................................... 7TABLE5WORLDMEATPRODUCTIONIN2003 .................................................................... .............. 9TABLE6EXPORTPOTENTIAL:MIDDLEEASTSUPPLYANDDEMANDGAPIN

    METRICTONS......................................................... ................................................................ 11

    TABLE7EXPORTPOTENTIAL:MIDDLEEAST-MEATIMPORTSTOTALBEEFANDBEEFVARIETYMEATIMPORTS.................................................................. ....................... 12

    TABLE8EXPORTPOTENTIAL:SOUTHEASTASIA(MAJORIMPORTINGCOUNTRIES)TOTALBEEFIMPORTS...................................... ................................................................ ... 12

    TABLE9CURRENTIMPORTPOTENTIALFORNON-TRADITIONALMARKETSBEEFANDBEEFPRODUCTS................................... ............................................................... .................. 13

    TABLE10SUPPLY DEMAND GAPS IN MAJOR LIVESTOCKPRODUCTS OF PAKISTAN....... 14TABLE11MAJOR CHARACTERISTICS OF SELECTEDBEEF BREEDS IN PAKISTAN ............23TABLE12BREED CHARACTERISTICSNEEDED ....................................................... ....................... 24TABLE13CONTAGIOUS & INFECTIOUS DISEASES OF CATTLE............................................... 26TABLE14PRODUCTSANDBY-PRODUCTSFROMTHESLAUGHTEROF

    A400KGBEEFCATTLE........................ ............................................................... ................ 32TABLE15CAPITALCOSTCATTLEFARMANDMEATPROCESSINGUNIT .................................46TABLE16PROJECTEDPROFIT&LOSSACCOUNTS......................................................................... 49TABLE17PROJECTEDCASHFLOWS..................................................... ............................................. 50TABLE18PROJECTEDBALANCESHEETS..................... ............................................................... ..... 51TABLE19PROJECTEDIFRR .......................................................... ........................................................ 52TABLE20RATESOFRETURN...................................................... ......................................................... 52TABLE21PAYBACKPERIOD ...................................................... ......................................................... 53ANNEXURE-1 PAKISTAN A PROFILE

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    ACRONYMS

    ADB Asian Development Bank

    ASEAN Association of South East Asian Nations

    BSE Bovine Spongiform Encephalopathy (Mad Cow Disease)

    CAR Central Asian Republics

    CEO Chief Executive Officer

    FAOSTAT Food & Agricultural Organization of UN Statistics

    FMD Foot and Mouth Disease

    GCC Gulf Cooperation Council

    GDP Gross Domestic Product

    GNP Gross National Product

    GoP Government of Pakistan

    IFC International Finance Corporation

    IFCN International Farm Comparison Network

    IRR Internal Rate of Return

    MINFAL Ministry of Food, Agriculture and Livestock

    PISDAC Pakistan Initiative for Strategic Development And Competitiveness

    Rs Pak. Rupees

    SAARC South Asian Association for Regional Cooperation

    SBP State Bank of Pakistan

    SECP Securities and Exchange Commission of Pakistan

    SMEDA Small and Medium Enterprise Development Authority

    SPS Sanitary and Phyto Sanitary

    SWOG Strategic Working Group

    UNICEF United Nations International Childrens Emergency Fund

    WTO World Trade Organization

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    EXECUTIVE SUMMARY

    Pakistan has not been able to exploit its large livestock population to become a major player

    in the international meat trade. The major reasons include; non-availability of indigenous

    meat breeds, lack of proper animal husbandry, absence of modern abattoirs and meat

    processing plants and the low priority which was accorded to this sector by the policy

    makers in the past.

    The Government of Pakistan has recently announced a Livestock Development Policy

    which addresses legal framework and development strategies and action plans for farmers,

    using livestock as supplementary source of income. The policy aims to bring about a radical

    change in the current livestock production system which is expected to help in the

    exploitation of potentials in the livestock sector. Under this policy the import of dairy and

    livestock machinery, not manufactured locally, is allowed duty free; in addition, the policy

    aims at encouraging the establishment of slaughterhouses in the private sector and allows

    access to credit for the small farmer.

    The total market for meat products in the Middle East is currently estimated at US$12.0

    billion while the international market for halal foods is estimated at US$150.0 billion

    which is expected to grow to US$500.0 billion in the next few years. In addition the current

    demand-supply gap in Pakistan is estimated at 4.1% per annum.

    This Pre Feasibility Study explores the possibility of setting up a cattle farm of 2,000 heads

    of cows and buffalos and 5,000 heads of sheep/ goats, in addition it will also have a modern

    abattoir and meat processing plant capable of processing 1,500 heads of sheep/goat and 200

    heads of cow/buffalo per day.

    The Project is proposed to be established on a 150 acre piece of land in Gharo near Karachi

    on the National Highway. Ample supplies of water are available which is essential for both

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    the cattle farm and the slaughter house and meat processing plant. The cattle farm will

    develop a hybrid meat breed by crossing the local indigenous breeds with high meat yielding

    animals from other parts of the world. The feed lot system will be used as range land is not

    available also it is proposed to develop special feeds at the farms which can be commercially

    sold at a later date.

    Pakistan suffers in the international markets as meat slaughtered in the traditional abattoirs

    fails to meet international standards. In order to overcome this handicap, it is proposed to

    have a modern abattoir plus meat processing plant. It is not recommended that initially a

    completely automated plant be installed so as not to offend religious feelings of thestakeholders. The plant will be able to process 1,500 heads of lamb/ mutton and 200 heads of

    beef per day working on a double shift basis. Recovery of usable by-products will form an

    important part of the process and it is expected that the quality of the by-products like skins,

    offals, blood, heart, kidneys will be superior to that obtained from the conventional

    slaughter houses.

    In order to assure availability of live animals for the meat processing plant, it is proposed to

    develop strong links with the traders of live animals as well as with farmers in the vicinity of

    the plant. A campaign will be launched to convince the local dairy farmers not to cull the

    infant male buffalo calves as these can fetch a premium price in the international markets

    because of their tender meat.

    The total cost of the project is estimated at Rs.600.0 million with a payback period of about

    2.2 years.

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    CHAPTER 1

    INTRODUCTION

    Agriculture is the largest sector of Pakistans economy, contributing nearly 22%

    of the total output (GDP) and employing around 45% of the total labor force.

    Livestock contributes nearly 50 percent to the value addition in the agricultural

    sector, and almost 11 percent to Pakistans GDP. Livestock is the main supplier

    of basic raw materials to the Pakistani food processing industry, with milk being

    the most important sub-sector; the value of milk produced is higher than the value

    of two major crops, that is, wheat and cotton. Livestock production is an integral

    part of the rural economy of Pakistan. More than 6.5 million families consistingof 30-35 million people are involved in livestock farming. Also in rural Pakistan,

    it complements agriculture income by converting crop residues, agriculture by-

    products and wastes into milk, meat, wool, hair etc.

    Inspite of the big potential of the large livestock population, meat industry in

    Pakistan has not been able to make its mark in the international meat trade; the

    primary reason for this has been the lack of corporate cattle farming and the

    absence of modern state of the art abattoirs and meat processing plants. In

    addition, Pakistan has also not been able to enter the Halal Food Market which is

    estimated at US$500 billion although it enjoys a unique position because of its

    strong Islamic character.

    Analysts and livestock marketing experts agree that there are massive

    opportunities for Pakistan to tap into and network with international distributors

    to cater to the demand for halal meat and other halal foodstuffs globally.

    Considering this potential, there is no doubt that there are ample opportunities for

    Pakistani entrepreneurs to involve in livestock production and marketing. While

    the demand for halal meat and other foodstuffs is growing internationally, the

    demand in the Gulf countries alone exceeded $12 billion in 2005. There is,

    therefore, a huge market for international distributors and producers to create

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    opportunities to build the essential relationships to do business in the region.

    Pakistani entrepreneurs can penetrate this growing market, having a clear edge

    over other countries because of proximal location to the Gulf countries. Besides

    generating additional foreign exchange, this would also serve the needs of the

    growing number of Muslims settled in many countries who look for halal meat

    and other foods. This pre-feasibility study gives necessary background and

    information necessary to plan for investment in the cattle farming and meat

    processing sector of the halal foods market.

    The proposed project consists of a cattle farm and a modern abattoir complete

    with a meat processing unit. The cattle farm will have a herd of 2,000 cows/

    buffalos and 5,000 heads of sheep/goat. This farm will develop meat-breeds by

    creating a hybrid between the local breeds which are predominately draught/milch

    animals and western meat-breeds. In addition it will work with the local farmer

    community to save the male calves, which are culled at infancy, by helping to

    provide an assured outlet for young cow/buffalo meat which because of its

    tenderness has good export potential.

    The project will also consist of a modern abattoir with a capacity to slaughter and

    process 200 heads of cattle and 1,500 heads of sheep/goat per working day. All

    animals will be slaughtered under the Islamic traditions. The plant will have a

    high level of hygiene which will enable its production to be exported to the West.

    Initially it is proposed that live animals be bought from the local market and sell

    the processed meat both locally as well as in the Middle East.

    The total cost of the project is estimated at Rs.600.0 million with a payback

    period of approximately 2.2 years.

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    1.1 OBJECTIVES AND SCOPE OF STUDY

    The objectives of this Pre-feasibility Study are to help determine the viability of

    setting up a modern cattle farm and a modern fully automated meat processing

    plant. This Pre-feasibility aims to: Identify current markets and determine gaps; Identify potential animal breeds and animal husbandry techniques with

    reference to the development of meat breeds;

    Identify the markets for processed meat and to develop a framework forsetting up a modern meat processing unit; and

    Study the financial viability or otherwise of modern cattle farming andmeat processing.

    1.2 METHODOLOGY

    The methodology employed for this study consists of review of published data as

    well as exhaustive interviews of the stakeholders including farmers, dairy and

    cattle experts, dairy and meat marketing companies, multilateral agencies and

    Government of Pakistan officials as well as those belonging to MINFAL and the

    Governments of Punjab and Sindh. We would also like to thank those individualswho are currently involved in the meat chain and who were willing to share

    there skepticism about the possibility of Pakistan becoming a major player in the

    international meat trade under the present conditions. Lastly, we would like to

    bring on record the cooperation extended by those Individuals and companies

    who though no longer associated with the Industry, were willing to share their

    opinions and experiences to facilitate new entrants coming into the industry.

    The data collected has been analyzed using quantitative and qualitative

    techniques, where required necessary assumptions have been made which have

    been mentioned in the report.

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    1.3 STUDY TEAM

    The study team comprised of experts in the fields of dairy and cattle breeding,

    animal husbandry, meat processing, economics, engineering, food processing,

    international marketing and finance.

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    CHAPTER 2

    MARKET/ NEED ASSESSTMENT

    2.1 LIVESTOCK POPULATION

    Pakistan possesses a herd of about 26 million cattle, 28 million buffaloes, 26

    million sheep, 62 million goats, 387 million poultry, four million equines and

    700,000 camels. Livestock population is increasing with a positive annual growth

    as is evident from the following tables.

    TABLE -1

    LIVESTOCK POPULATION (MILLIONS)

    Species 2001 - 02 2002 03 2003 04 2004 -05 2005 -06*

    Average

    Growth

    Rate

    Cattle 22.8 23.3 23.8 24.2 25.5 2.4%

    Buffalo 24.0 24.8 25.5 26.3 28.4 3.7%

    Sheep 24.4 24.6 24.7 24.9 25.5 0.9%

    Goats 50.9 52.8 54.7 55.6 61.9 3.9%

    Poultry 306.9 314.3 315.58 372.0 386.5 5.2%

    Source: GOP (2006); Ministry of Food, Agriculture & Livestock (Livestock Wing)* Projected estimates:

    TABLE -2

    PROVINCE-WISE LIVESTOCK POPULATION OF PAKISTAN

    (thousand of Heads)

    Region Cattle Buffalo Sheep Goat

    Punjab 10,580 16,591 6,094 22,965Sindh 8,231 9,753 5,057 14,763

    NWFP 5,576 1,672 3,595 11,203

    Balochistan 1,619 377 10,940 12,999

    Total (Pakistan) 25,954 28,393 25,686 61,930

    Source: Medium Term Development Fund - 2005-2010

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    Per capita availability of milk and meat is 160 liters and 20 kg per annum while

    actual and projected availability with demand and supply of livestock and poultry

    products is as under:

    TABLE -3

    AVAILABILITY OF LIVESTOCK AND POULTRY PRODUCTS

    (Production in thousand tons)

    PRODUCTS 2001 02 2002 03 2003 04 2004 05 2005 06

    Average

    Annual

    Growth

    Rate

    Milk 27,031 27,811 28,624 29,438 31,295 3.15%Beef 1,034 1,060 1,087 1,115 1,175 2.73%

    Mutton 683 702 720 739 782 2.90%

    Poultry Meat 355 370 378 384 463 6.10%

    Source: Ministry of Food, Agriculture & Livestock (Livestock Wing)

    A comparison of livestock products in 2001 - 02 and 2005-06 shows that milk

    production has increased rapidly mostly due to significant increase in the

    population of larger ruminants in the country. Production of beef also shows a

    considerable increase, probably due to a greater off-take of male animals, whilst

    mutton production has not increased as rapidly as might be expected from the

    increase in the number of goats.

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    2.2 POTENTIAL AND PROSPECTS OF LIVESTOCK

    PRODUCTION

    2.2.1 BUFFALO AND CATTLE

    There are 28.4 million buffaloes in the country. Nili-Ravi is predominantly raised

    in Punjab and Kundi in Sindh. In the last livestock census (GOP, 1996), Nili-Ravi

    and Kundi buffaloes were reported to be 34 and 21% of the population

    respectively, while rest were grouped as non-descript. Buffalo population has

    increased by nearly 5.0 million in the last five years. The buffalo is not only a

    draught animal; it is also a vital source of milk and meat. India with a similar

    climate is the largest exporter of buffalo meat in the world having exported a total

    of 425,000 metric tons of boneless buffalo meat in 2005; it is worth mentioning

    that the total buffalo population of India is estimated at 93.0 million. The averageweight of the Nili-Ravi is 800 Kg for the male and 600 kg for the female,

    similarly the average weight of the Kundi is 600 Kg for the male and 375 Kg for

    the female. As the buffalo has been replaced as a draught animal because of the

    mechanization of agriculture, the population of the male buffalo has declined;

    most of the buffalo meat which is available consists of animals which have

    completed their useful life, and as such has a lower price.

    TABLE - 4

    ESTIMATED GROSS MEAT PRODUCTION BY ANIMAL TYPE

    AND PROVINCE WISE, 2002-2003

    (in thousand tons)

    Type of Animal Production

    Description NWFP Punjab Sindh Balochistan Pakistan

    Cattle 147 203 125 20 495

    Buffaloes 100 261 198 5 564

    Sheep 28 53 43 98 222

    Goats 85 178 114 101 478

    Source: GOP, MINFAL, Updated data on Livestock and Livestock Products in

    Pakistan, September 2003.

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    Similarly there are 25.5 million cattle in the country with a positive population

    growth rate. More than half of the cattle population is non-descript. Sahiwal, Red

    Sindhi and Cholistani are the distinguished dairy cattle breeds. The draught breeds

    besides Thari (also called as Tharparkar and partially dairy-cum-draught breed),

    include Kankaraj, Bhagnari (Sind), Bhagnari, Lohani (Balochistan), Dajal,

    Dhanni and Rojhan of Punjab. Here again, like in the case of buffalo, the local

    breeds are predominantly draught in nature, however local cattle crossbred with

    Holstein and Jersey has resulted in a sizeable population of cross breeds which

    have better dairy and meat characteristics as compared to the indigenous breeds.

    According to estimates of the FAO (Food & Agricultural Organization) the total

    population of cattle and buffaloes is estimated to increase to approximately 54.0

    million by 2015 while the production of meat from cattle and buffaloes is

    estimated at 3.2 million tones in 2015, almost doubling from the 2000 production

    figure of 1.7 million tones. In addition, one major area which has not been

    adequately developed is the fattening of male buffalo calves for export markets.

    The meat of calves, as compared to that from end of useful live adults, is more

    tender and carry a price premium.

    2.2.2 SHEEP AND GOATS

    Sheep with a population of about 26 million have 28 breeds of which 12 are

    fat-tailed. Punjab and NWFP have seven each; Balochistan and Azad Jammu and

    Kashmir four each. Goats numbering about 62 million have 25 breeds. Being

    grazing animals, water courses, road side plantation, fallow lands, stubbles, crop

    residues and vast rangelands are the main source of feed supply while very little

    stall feeding is practiced except in few dairy breeds of goats or sheep during

    pregnancy.

    There are a number of systems for sheep and goat raising in Pakistan. These

    include nomadic, transhumant and sedentary flocks and households with a few

    sheep and goats. Nomadic flocks are constantly moving in search of grazing,

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    whereas transhumant flocks have a fixed base to which they return in winter of

    each year. All female progeny are kept for flock replacement or build-up but

    nearly all males are sold before one year. There is therefore great potential to

    undertake exploitation of transhumant production system in the form of fattening

    of sheep and goats and its processing for exports besides meeting local demand.

    In the current scenario, however, export of Pakistani sheep and goat will continue

    to be limited to the Middle Eastern Countries where the demand is generated by

    the Pakistani expatriate community.

    2.3 POTENTIAL FOR MEAT EXPORTS

    Opportunity for Pakistan to develop its international meat trade very rapidly

    exists, however Pakistan will need to develop separate strategies for its bovine

    and sheep/goat meat exports. At the moment the world meat production figures

    are as follow:

    TABLE - 5

    WORLD MEAT PRODUCTION IN 2003

    (million tons)

    Meat Type Production

    Beef 62

    Mutton 12

    Poultry 77

    Pig 97

    Total 247

    Source: Small & Medium Enterprise Development Authority (SMEDA)

    Historically, there have been four major bovine meat producing clusters:

    North America (USA and Canada) South America (including Brazil, Argentina and Uruguay) Oceanic countries (Australia and New Zealand) Europe (British Isles and continental Europe).

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    Food and Agricultural Organization (FAO), a body of the United Nations, has

    estimated world bovine meat production in 2003 at 62 million tons carcass weight

    equivalent (cwe). World statistics of bovine meat is always denoted as Carcass

    Weight Equivalent. Carcass Weight Equivalent is roughly 1.66 times boneless

    meat weight. The four bovine meat producing clusters in 2003 produced 35

    million tons.

    Due to the Mad Cow Disease or Bovine Spongiform Encephalopathy (BSE) crisis

    of the 90s, Europes meat export has declined substantially. Further as a result of

    the European Unions decision to reduce agro subsidy gradually and eliminate it

    over the next 5 10 years, bovine meat prices in Europe have already risen and

    with a strengthening of Euro are not viable for exports. Infact with declining

    production in Europe, it has, for the first time in 2003 become a net importer of

    bovine meat. It is expected that Europe, in the next 5 years, will become the

    biggest new market for bovine meat with expected annual imports to reach over a

    million tons by the end of 2010.

    North America, with one incidence each of BSE in USA and Canada in 2003 and

    another in Canada later, lost most of its export markets, importantly Japan. It is

    not expected that North America will come out of the crisis, with more incidences

    of dormant BSE likely to surface; moreover investments in the sector are not

    being made. However, USA and Canada continue to be very large bovine meat

    consumers, majority of which is produced domestically. The total production and

    consumption of USA and Canada in 2003 was 13.3 million and 13.5 million tons

    respectively.

    Bovine meat production in South America particularly Brazil has expanded

    substantially to fill the world bovine meat supply gap. The total production in

    South America was 12.7 million tones out of which Brazil accounted for 7.2

    million tons which included 1.2 million tons of export. Due to their improving

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    economies, domestic demand in the South American countries is growing rapidly,

    leaving exportable surpluses lower while firming up prices.

    Draughts in recent years in Australia has reduced the production of bovine meat

    but this is expected to reverse in the next few years. Interestingly, data shows that

    per capita consumption of bovine meat is very high in countries where production

    is high. Countries in the Middle East, West Asia, North Africa and South East

    Asia have a comparatively low per capita consumption but it is expected to grow

    substantially in the next few years resulting from economic growth and changing

    lifestyles and eating habits. This is good for Pakistan which can avail this

    opportunity for tapping into rapidly growing markets

    The growing world market for meat is valued at US$81.0 Billion. Middle Eastern

    countries especially provide a good opportunity for Pakistan as a supplier of Live

    Cattle and Meat. The Supply and Demand Gap for the Middle East is shown

    below:

    TABLE - 6

    EXPORT POTENTIAL: MIDDLE EAST

    SUPPLY AND DEMAND GAP IN METRIC TONS

    (in thousand tons)

    Country Production Consumption GAP

    Saudi Arabia 25,630 75,630 50,000

    Egypt 440,000 533,000 93,000

    Bahrain 1,440 4,600 3,220

    Oman 4,148 18,000 13,852

    UAE 9,500 43,185 33,685

    (Source: United States Department of Agriculture 2004)

    The actual imports in the Middle East for Beef are as follows:

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    TABLE 7

    EXPORT POTENTIAL: MIDDLE EAST - MEAT IMPORTS

    TOTAL BEEF AND BEEF VARIETY MEAT IMPORTS

    (metric tons)

    2000 2001 2002 2003

    Saudi Arabia 32,327 36,360 51,728 52,122

    Egypt 195,841 130,692 140,240 113,915

    UAE 50,722 31,103 37,263 30,765

    Kuwait 57 19 71 144

    All Others 68,930 70,571 65,246 93,595

    (Source: World Trade Atlas)

    In addition to Middle Eastern markets, potential exists for the development of the

    markets in South East Asia; the Export Potential for these markets is given below:

    TABLE- 8

    EXPORT POTENTIAL: SOUTH EAST ASIA (MAJOR IMPORTING

    COUNTRIES) TOTAL BEEF IMPORTS

    (metric tons)

    2000 2001 2002 2003

    Malaysia 86,649 85,561 92,475 99,460

    Philippines 87,579 82,291 82,200 83,341

    Indonesia 38,383 20,151 25,477 30,605

    Singapore 16,718 15,895 20,637 21,856

    All Others 6,403 4,272 5,427 9,459

    Total 235,732 208,170 226,216 244,721

    (Source: World Trade Atlas)

    In addition to the above markets which have clearly identified demand patterns,

    there are some non-traditional markets in which Pakistan can have a first-mover-

    advantage, these and their estimated potential demand is as follows:

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    2.4 DOMESTIC DEMAND FOR MEAT IN PAKISTAN

    Considering the present trend and increasing local demand, it is expected that in

    future, demand for livestock products will increase at higher rates induced by

    various factors. First, the growth in population will bring direct increase in the

    demand for livestock products. Secondly, the animal based products are required

    for fulfilling the protein and calcium requirements of the population on health

    grounds. Thirdly, in Pakistan, the income elasticity of demand for meat and milk

    has been greater than unit, implying that with the rise in per capita income, more

    than proportionate expansion in the demand for animal based products is

    expected. Fourthly, the changes in consumption patterns induced by rural-urban

    migration and general development, for instance modernization of cities,

    introduction of the concept of food streets in cities like Islamabad, Lahore and

    Karachi, increase in the number of hotels and restaurants in urban centers etc will

    also be expected to generate additional demand for animal based products.

    TABLE 9

    CURRENT IMPORT POTENTIAL FOR NON-TRADITIONAL

    MARKETS BEEF AND BEEF PRODUCTS

    (metric tons)

    Country Current Imports

    Iran 30,000

    Algeria 50,000

    Syria 30,000

    Indonesia 50,000

    Thailand 30,000

    Philippines 80,000

    Russia 100,000

    Ukraine 50,000

    Kazakhstan 25,000

    Kyrgyzstan 25,000

    Tajikistan 25,000

    Total 495,000

    Source: All India Meat & Livestock Exporters Association (AIMLEA)

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    Keeping in view the future requirements, it is very likely that the supply-demand

    gap in animal based products will get widened with the passage of time as is

    evident from the table below:

    TABLE10

    SUPPLY DEMAND GAPS IN MAJOR LIVESTOCK

    PRODUCTS OF PAKISTAN

    (million tons)

    2003 2020Products

    Supply Demand Gap Supply Demand Gap

    Milk 27.8 31.32 3.52 43.43 98.91 55.48

    Beef 1.05 1.21 0.16 1.43 3.74 2.31

    Mutton 0.70 0.80 0.10 1.03 2.50 1.47

    Note: The information was extrapolated from the projected demand and supplyestimated by MINFAL, from1999-2000 and 2004-05

    Source GOP, 2003.

    2.5 LOCAL LIVESTOCK AND MEAT MARKETING

    In Pakistan local livestock markets have been established by municipal and local

    authorities but the right to manage the market is let by tender to a contractor.

    Under this system the collection of fee takes priority over the provision of

    services and amenities to market users. Stock brought to the local market by flock

    owners or by small traders, who have made purchases locally, is sold un-graded

    and un-weighed, and generally on an age and condition basis. The stock often

    passes through the hands of one or more intermediaries who are essentially

    brokers, before purchase by the wholesale or retail butchers for slaughter.

    Livestock and meat marketing is however characterized by the following:

    a) It is virtually completely in the hands of the private sector.b) Absence of reliable data on the main marketing channels, on the number of

    livestock and quantities of meat that enter them, and on the price formation.

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    c) Inadequacy of marketing infrastructure, slaughterhouses and meat markets.d) A shortage of high and medium level commercial type management available

    to the public sector, and the absence of public sector marketing institutions.

    However, the marketing system procures and transports large volume of stock

    employing large number of traders who penetrate the most remote corners of the

    country. Off-take entering the market suggests that the system is effective and

    technically reasonably efficient.

    2.6 CURRENT FRESH MEAT CHAIN

    Livestock are slaughtered in recognized/unrecognized slaughterhouses and on

    private premises. They are subject to only limited official control by the

    municipality staff. Majority of such slaughterhouses, except a few in the

    provincial capital cities, consist of simple sheds with little or no water supply and

    electricity. Floors are normally damaged, drainage is poor and cleaning and

    maintenance virtually non-existent with no holding or inadequate holding

    facilities for the stock

    Lack of suitable slaughtering facilities and unsatisfactory slaughtering techniques

    cause considerable losses in meat as well as invaluable by-products like blood,

    offals, hides and skins. Animals are slaughtered in places which are frequently

    polluted with blood, intestinal contents and dirty effluents and are not well

    protected against insects and germs. Meat produced under such conditions loses

    its keeping quality and can become a source of bacterial infection and food

    poisoning particularly in summer months. In the absence of inspection, meat from

    sick or parasitic infested animals may well be a vector for spreading diseases,

    affecting human beings as well as animals. In addition, by-products are not

    properly handled / utilized and instead of being an asset, are considered a source

    of annoyance. This traditional method of slaughtering also means that meat from

    Pakistan in unable to pass the strict hygiene standards of the major export

    markets.

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    2.7 CLOSING THE DEMAND-SUPPLY GAP

    There are two options to fill in the widening gap between production of livestock

    and demand; either expand the import of animal based products or increase the

    production of these products domestically. The import option is costly in terms ofincreasing foreign exchange requirements; therefore, the only choice left is of

    increasing domestic production.

    Almost 60% of total red meat supply is from cattle and buffaloes. Buffalo beef is

    increasing in proportion to total supply. Cattle are kept primarily to provide milk

    and farm power requirements; beef is produced as a by-product, predominantly

    from slaughter of redundant milch and working animals and from culled male

    calves. Production of buffalo beef has however surpassed cattle beef in view of

    off-take from increasing buffalo population as compared to cow population. The

    increased usage of tractors has resulted in a decrease in the on-farm requirement

    of oxen-power.

    Meat production covers all three aspects of livestock farming:

    1. Selective breeding program with improved sires.2. Crossbreeding program of local cattle with exotic beef breed.3. Feed Lot Program.

    In addition following alternatives are also available for increasing meat

    production:-

    a) Fattening of redundant working animals and cows before disposal;b) Fattening of male buffalo calves that are being slaughtered presently at the age

    of just 2-3 weeks to save milk depriving the country of enormous beef

    potential,

    c) Fattening of marketable lambs and kids for about 100-120 days beforeslaughter.

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    d) Cross bred steers of exotic dairy breeds and redundant exotic dairy cows canbecome a good source of beef production. Without doubt the dairy breeds are

    the most important source of supply, and of those Friesians are most

    numerous. The Friesian has shown itself, beyond all doubt, to possess the

    attributes required, and when fattened at 18 to 20 months of age it is

    economical to both butchers and the consumers.

    2.8 STATUS OF INDUSTRIAL MEAT PROCESSING IN

    PAKISTAN

    In the past a few interventions in public sector for provision of improved

    slaughtering and meat processing facilities were either provided or contemplatedbut did not yield any fruitful results for a number of reasons:

    A) SLAUGHTERHOUSE, SIHALA

    The first industrial abattoir in Pakistan was completed in 1969 at Sihala, some 35

    km from Islamabad. It has a slaughtering capacity of 600 sheep and goats and 60

    cattle per shift and is fully equipped with chill rooms, by-products processing

    units and ancillary services. The plans to operate the new plant were however

    opposed by the butchers who refused to deliver their stock to the abattoir

    authority for slaughter and dressing. The plant had been operating under the

    supervision of the Punjab Livestock Development Board till recently. Local

    butchers only used part of the premises, slaughtering under their own

    arrangements.

    B) INDUSTRIAL ABATTOIR, KARACHI

    The countrys other industrial abattoir was constructed at Landhi, near the cattle

    colony, some 35 km from Karachi. The plant had designed capacity of 4,000

    sheep and 400 cattle per shift of 8 hours and the plant was comprehensively

    equipped for by-product processing and had cold storage facilities. The plant has

    not operated because, as in Sihala, the butchers refused to deliver stock to the

    authority for slaughter and dressing.

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    C) SEMI-MANUAL SLAUGHTERHOUSE, QUETTA

    A new slaughterhouse of semi manual type with improved facilities for hygiene,

    sanitation, handling of meat, hides/skins and other by-products catering for 1200

    sheep/goats and 240 large ruminants per shift had been established at Quetta

    during 1997 under an ADB assisted Livestock Development Project. The facilities

    which were to be let out by the Quetta Municipal Corporation through leasing or

    out right sale for operation by the private sector have still not been utilized and

    are lying unutilized as such.

    The main reason has been, as per past practice, the butchers, retailers or

    wholesalers wanted to avail and use such facilities of the slaughterhouse on

    individual basis and were not ready to work as distributors of the new set up

    which was envisaged as a separate administrative unit created for the efficient

    operation and management of the modern slaughterhouse. Moreover the said

    situation appears to also have arisen because of the introduction of a totally new

    and untried technology without adequate prior consultation or planning with the

    powerful established interests in the meat trade.

    This is however a story of the past decades when export of meat had not started

    and these modern slaughterhouses had to depend on local consumers who had

    long clientele association with traditional butchers. With the opening up of the

    international markets, a few semi-automatic plants have been established in the

    private sector for the slaughtering and processing of meat for exports, these are

    however in their early stages and will need to improve quality standards.

    Pakistan has been unable to make its presence felt in the international meat trade

    as it has been unable to get certification for its meat primarily because of the

    unhygienic conditions in which meat is slaughtered/ processed in Pakistan. If the

    country is going to make its presence felt in the international markets it will have

    to improve slaughtering and meat processing facilities.

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    2.9 GOVERNMENT INCENTIVES FOR THE SECTOR

    After the green revolution in agricultural production in the 1960s and the on-

    going white revolution in the form of increased production of milk in the dairy

    sector, the Government of Pakistan is trying to promote the next pink revolutionwhich aims at increasing domestic production of meat. A number of measures

    have been undertaken by the government, these include:

    A new Livestock Development Policy which addresses legal framework anddevelopment strategies and has an action plan for farmers using livestock as

    supplementary source of income. The Policy aims at the development of small

    and medium enterprise (SME) and large businesses in the livestock sector.

    The policy aims to bring about a radical change in the current livestock

    production system and will help in exploitation of potentials of the livestock

    sector.

    Two private sector led companies namely Livestock and Dairy DevelopmentBoard and Pakistan Dairy Development Company have been established to

    increase the pace of development in the livestock sector.

    Import of dairy and livestock machinery/equipment not manufactured locally,is allowed duty free.

    To provide access to credit to small holders, micro credit schemes have beeninitiated through commercial banks.

    Establishment of slaughterhouses and temporary quarantine stations isencouraged in private sector.

    2.10 FUTURE POTENTIALS IN MEAT MARKETING

    There are bright prospects of export of Halal meat to Middle Eastern countries.

    Pakistan is expected to be preferred on account of cultural, religious and distance

    concerns. Moreover, great demand in Saudi Arabia on the eve of Hajj can also be

    met by imports from Pakistan. Some of the Muslim countries import large

    quantities of livestock products from other countries. However, Pakistans

    contribution to export to these countries remains insignificant; nevertheless,

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    Pakistan being located in proximity of the Persian Gulf countries can easily

    penetrate these markets provided quality products and reliable supplies are

    ensured.

    In addition to the market for live animals and frozen meat, the international

    market for halal processed/ready to eat foods is increasing at a rapid pace. With a

    huge expatriate Pakistani population spread all over the world, it is expected that

    demand for ready to eat-home-cooked-style Pakistani food has good potential;

    some Pakistani entrepreneurs in these foreign markets are selling such pre-

    prepared foods and are fairly successful, however their growth is being limited by

    high input prices of halal meat as well as other inputs like spices, vegetables,

    labour etc.

    That Pakistani foods have good acceptability internationally can be gauged from

    the success of the manufacturers of pre-packaged spices, expatriate Pakistanis as

    well as locals are enjoying delicious Pakistani cuisine prepared in halal meat

    using these ready to use spice mixes.

    Pakistan has a great advantage in the halal food market that all meat available in

    Pakistan is slaughtered using Islamic method and no other form of slaughtering is

    allowed / practiced in the country. In addition the total absence of Pig / Horse

    meat means that there is no danger of the abattoir which is slaughtering halal meat

    of ever being used for the slaughter of other unlawful animals, other Muslim

    countries can also claim this, however they for most part are importers of live

    animals / processed meats and as such cannot compete with Pakistan in the

    international meat market.

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    CHAPTER 3

    TECHNICAL EVALUTION

    There are three major components of the project. One involves farming of cattle,

    the second deals with meat processing including slaughtering of animals and

    packaging of the processed meats, and the third component deals with the

    marketing of the processed meat both domestically as well as for export. All three

    components are part of the integrated project although they maybe operated

    independently.

    3.1 CATTLE FARMINGCattle farming on scientific lines is one aspect of the livestock sector which has

    received very little attention in the past. Realizing a large market for cattle in the

    Gulf Countries as well as Saudi Arabia, especially the increased demand during

    Ramadan and the Hajj and Eid ul Azha period, it seems pertinent to start cattle

    farming on a large scale so as not only to export cattle but also to produce meat

    for local and international markets. In addition to the international halal food

    market which is estimated to grow to US$500 billion in the near future, thedomestic demand for meat in Pakistan is growing at 6% per annum while the

    supply is growing at 1.8% per annum.

    CAPACITYFor achieving an annual off-take of about 1,000 healthy beef animals which

    besides export on the eve of Hajj can also be slaughtered locally to supply quality

    beef and its premier cuts, a viable cattle farm of 2,000 cattle is envisaged. It is

    proposed that the farm be set up on the National Highway linking Karachi with

    Thatta near Gharo in Sindh Province. The proposed area is characterized by the

    availability of fresh potable water in addition to land holdings being in large

    chunks, the greatest advantage would, however, be in its nearness to the largest

    concentration of buffalos in Sindh which is at the Cattle Colony in Karachi and

    from which it is proposed to integrate the development of a supply chain which

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    will ensure that infant male calves are not culled but reared for meat. The farm

    can also subsequently, raise sheep and goats, which have high export potential to

    the Middle East. It is proposed to have a flock of about 5,000 sheep and goats to

    produce an off-take of a desirable number of heads of marketable sheep and goats

    annually. It is proposed that these animals be sold only on Eid-ul-Azha in

    Karachi, the annual off take of sheep and goats is usually about 35% of the herd.

    LAND REQUIREMENTFor the proposed farm, an area of about 150 acres would be required. The project

    does not consider production of its own fodder, as for feeding a herd of 2,000

    cattle, and approximately 5,000 heads of goat and sheep a very large area under

    cultivation will be needed. The economics of dedicating such a large tract of good

    agricultural land would reduce the viability of the project, as such feed lot method

    is being suggested. Major part of the land would be used for construction of

    animals/dairy sheds, pens and paddocks for different categories according to age

    and sex groups besides other infrastructure and allied facilities.

    Sheds and paddocks for the animals will be made airy for protection of the

    animals from extreme temperatures and strong winds. Adequate supply of water

    for drinking and cleaning will be necessary. The sheds will be designed to

    maintain hygienic conditions. The animals will be dehorned for easy handling and

    avoiding accidental injuries to other animals, handlers or structures. In addition,

    the farm will utilize the animal waste for the production of bio-gas and it will be

    disposed off in an environmentally friendly manner as compost or natural manure.

    BREEDINGIn Pakistan the local indigenous breeds are mostly draught animals with no

    specific meat breed in Pakistan, some of the dual purpose and heavy built breeds

    of cattle can be selected for the purposes of this project:

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    It would be seen that some of the above native cattle breeds of draught type i.e.

    Bhagnari, Tharparkar, Kankrej and Dajjal (an off shoot of Bhagnari) are quite

    massive and heavily built which is evident from their body weight as compared to

    milch type cattle breeds. These breeds possess good beef potentials and are being

    TABLE 11

    MAJOR CHARACTERISTICS OF SELECTED BEEF BREEDS IN

    PAKISTAN

    Adult Weight (kg)Breed Type Areas ofConcentration

    Male Female

    Age at

    Maturity

    (days)

    Milk Yield

    (Lit)/

    305 days

    1.RedSindhi

    MilchWestern Sindh,

    Lasbela530 326 852 1,675

    2.Sahiwal MilchSahiwal, Okara,

    Multan,Faisalabad

    544 408 861 1,852

    3.Bhagnari(Kachhi)Balochistan

    DraughtBhag, Sibi

    Nasirabad andNorthern Sindh

    650 480 966 950

    4.Dhanni Draught

    Attock,Rawalpindi,

    Chakwal,Jhelim

    412 285 910 800

    5.Lohani DraughtLoralai, D. I.

    Khan315 253 900 613

    6.Rojhan Draught

    Suleman Rangemountain, D. G.

    Khan, D. I.

    Khan, Kohat,Bannu

    370 267 - 735

    7.Tharparkar DualTharparkar and

    surroundingareas

    470 285 891 1,584

    8.Cholistan Milch Cholistan area 470 341 609 1,471

    9.Kankrej DualSouthwest partof Tharparkar

    591 432 - 1,200

    10.Dajjal DraughtDajal area of D.

    G. Khan587 400 - 900

    Source: Government of Pakistan Publication

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    raised in an area having summer temperatures ranging between 43-48 oC and

    sometimes even rising to 52-53 oC. Heat tolerance and tendency to fatten even

    under poor feeding conditions has made these breeds much more suitable for

    utilization as beef breeds. Cross-breeding with exotic beef breeds would achieve

    cross bred animals possessing more hybrid vigor. This is necessary to overcome

    the problem of late maturity, long calving interval and daily weight gain in Feed

    Lot System, which is the only drawback that local cattle breeds possess and

    render the projects uneconomical. The following table would clearly illustrate the

    breed characteristics:

    CROSS BREEDINGA number of exotic beef breeds like Aberdeen, Angus, Simmental, Charolias and

    similar other breeds are reported to have yielded good results when used for

    crossbreeding. Base population in different groups numbering 100 to 150 heads of

    each local draught breed would be maintained under the project and frozen semen

    of breeding proven sires of above exotic breeds will be imported for cross-

    breeding. Only those crosses will be reared and fattened, which would possess

    hybrid vigor for yielding best results. Some percentage of male and female off-

    spring of the hybrid breeds can be maintained at the farm as a nucleus herd for

    future. Establishing an artificial insemination centre with trained technicians at

    the farm would therefore be an integral part of the project.

    Although local cattle breed Thari or Tharparkar which is a dual purpose animal

    would appear to be most appropriate, the final breeding policy will only be

    TABLE - 12

    BREED CHARACTERISTICS NEEDED

    Sr# ParametersLocal draught

    breedsCross-breeds

    1. Age of cow at 1st calving 1200 -1400 days 770 - 800 days

    2. Calving interval 450 - 500 days 420 - 500 days

    3. Dry period 170 - 200 days 125 - 145 days

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    developed in consultation with the Animal Breeding and Genetics Specialists in

    order to achieve desired results.

    The project envisages production and marketing of one year old steers which,

    with proper cross-breeding program, can achieve a good source of income from

    the sale of quality beef. In addition to the cattle, it is proposed to breed male

    buffalo calves that are currently being culled at infancy and of which a huge

    supply is available at the Cattle Colony in Karachi. Buffalo is a great friend of

    man. It is not a draught animal only, it also gives milk and meat at affordable

    prices. The buffalo meat has a great water holding and binding properties, and is,

    therefore, used for industrial purposes in the production of sausages, patties,

    nuggets, corn beef, etc. A large part of the meat in the Philippines, Thailand, Iran

    etc., is used for the production of corn beef.

    FEEDFeed supplies are available according to different feed formulae to be chalked out

    keeping in view the prices, nutrient value and availability in the market. Daily

    requirements would be worked out for each category and class. Balanced

    concentrated feeds containing minerals and vitamins are being prepared in the

    country by a few reputed Feed Mills, which can also manufacture feed as per own

    formula and supply order. In the future, it is proposed to develop in-house feed

    formulation capabilities.

    Fodder and wheat/rice straws would be purchased/ contracted from the nearest

    markets at the time of harvest. Straw is a common crop residue and is fed to cattle

    as roughage but it is low in nutrients. Treating it with Ammonia or Urea

    improves the quality of the straw and has a marked effect on cattle weight during

    the fattening period. A restricted feeding regime for steers will be developed

    which will lead to an improved feed/gain ratio.

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    MEDICATION AND VACCINATIONBesides encountering non-contagious diseases of digestive, respiratory, urinary,

    gynecological and obstetrics, surgical and other non-specific nature which would

    require symptomatic treatment from a veterinarian, regular vaccination of the

    whole herd against following contagious and infectious diseases will have to be

    carried out as a prophylactic measure: -

    Fresh stocks of vaccines can be procured either from government run Veterinary

    Research Institutes operating at Lahore, Peshawar, and Quetta or from the open

    market. Pakistan has the advantage of being free from Foot and Mouth Disease

    which is a major factor in the demand for Pakistani meat in the export markets.

    HOUSINGInitially cattle sheds will provide shelter to the animals. This will be followed by

    one or two dairy sheds to be used for milking purpose of lactating animals only.

    Cattle sheds are economical and durable and provide a simple structure

    TABLE - 13

    CONTAGIOUS & INFECTIOUS DISEASES OF CATTLE

    Sr. # Name of disease Period of vaccinationImmunity

    period

    1.HemorrhagicSepticemia

    May and JuneNovember andDecember(twice in a year)

    Six (6) months

    2. Black QuarterMarch and April(once in a year)

    One year

    3. Anthrax August One year

    4. Rinderpest

    Initial vaccination atthe age of six monthand second vaccination

    at the age of Two years

    Life long

    5. Foot and Mouth diseaseFebruary and MarchSeptember and October

    Six months

    Source: Ministry of Food and Agriculture, Government of Pakistan

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    comprising brick walls on three sides and poles in front covered with a roof of T-

    irons and asbestos sheets. For a cow, 40 sq ft covered and 80 sq ft open space will

    be required, whereas calves will be provided 20 sq ft covered and 40 sq ft open

    space.

    A dairy shed will have a provision of 3.5 feet wide and 6 feet long space for each

    cow to be arranged in two rows with other structures like 2 feet wide manger on

    each side with feed trolley channel along mangers, central passage and drains. A

    separate calving pen, sick pens, dispensary, feed stores, office and garages will

    also be provided at the farm according to its strength.

    LAYOUTProper lay out of the farm buildings, paddocks, office, stores and residences

    would be prepared keeping in view the environment, climate, wind direction,

    proximity to market and road.

    Feedlot design involves integrating each of the following standard components

    into a functional operating system:

    Feeding systemgrain, silage and other commodity storage and processing equipment, feed mixing

    and delivery trucks, feed alleys, troughs and self feeders.

    Watering systemwater source, pumps, mainlines, temporary storage, pen reticulation system and

    water troughs.

    Cattle management systemreceivable and induction facilities, cattle lanes, production pens, hospital yards

    and dispatch facilities.

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    Effluent management systempens, drains, sedimentation system, retention pond, effluent treatment utilisation

    and disposal areas.

    Manure management systemmanure cleaning and transport equipment, manure stockpile and screening

    facilities, bio-gas production and utilisation area.

    Staff/ business facilitiesoffice, weigh bridge, car park and amenities.

    ENVIRONMENTLivestock manure and other bye-products of the processing stage pollutes the

    environment. It is necessary to establish facilities to compost the manure to

    stabilize it and make it pleasant to handle. It can then be used as a soil amendment

    and nutrient source for crops, fetching a good price.

    3.2 ESTABLISHING MEAT PROCESSING FACILITIESPakistan does not have a modern meat processing plant due to which the country

    suffers as current facilities are unable to pass the stringent health requirements of

    the European and the US health authorities. This effectively shuts Pakistan out of

    the lucrative halal markets of the world where a large expatriate Pakistani

    community lives.

    The processed meat industry incorporates a range of activities, from simple

    slaughtering and butchering of various species for human consumption through

    to complex cooked, preserved and fermented products. These processes add value

    to the product by dividing it into smaller units or transforming them into more

    complex products. As part of the project it is proposed to have a modern meat

    processing unit which will process 150 cattle head per day along with 1,000 goats

    and sheep.

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    3.2.1 LOCATION OF THE PLANTIt is proposed to locate the meat processing plant near the cattle farm in Gharo

    near Karachi in the province of Sindh. The cattle and the sheep/goats will be

    purchased from the local animal markets the biggest of which is located about 30

    minutes from the proposed location. The processing plant will be located on the

    road which leads to the main cattle market and through which nearly 90% of the

    animals which are sold in the Karachi Cattle Market pass. It is hoped that in a

    short period of time, the Plant can develop into a first stop for traders heading for

    the main market trying to sell directly to the Plant.

    In addition, the plant is proposed to be located in an area which is well connected

    to the international markets as the Karachi International Airport would be less

    than an hours drive from the Plant, this will ensure that export shipments fully

    comply with international requirements. The main market for domestic meat is

    located in Karachi which has got a thriving food catering/ restaurant/hotel

    business in addition to a population of more than 16.0 million inhabitants, having

    the highest levels of education and international exposure. It is expected that the

    market will readily accept the packaged meat concept.

    3.2.2 THE SLAUGHTERING PROCESSThe live weight of the cattle slaughtered for meat can vary from 250 kg to 600 kg

    depending on the age and the breed of the animal The basic slaughtering

    procedure for beef cattle has become more automated and efficient over the past

    few decades. Most improvements have occurred in slaughtering, hide removal,

    evisceration and splitting techniques.

    The basic process for the slaughtering and processing of cattle is shown in Figure 1;

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    FIGURE - 1

    SLAUGHTERING PROCESS

    Pre-handling of Cattle: Cattle are delivered to the abattoir in trucks and

    unloaded into holding pens, where they are rested for one or two days before

    slaughter. Any cattle classed as dirty are washed. Veterinarians will subject the

    animals during rest period to ante-mortem examination; only after approval the

    animals will be slaughtered.

    Dhabia or zabiha of the animal: Prior to the slaughter, the animal's eyes and

    ears are checked to ensure that the animal is healthy and suitable for slaughter. If

    the animal is deemed to be healthy, it is first given water to drink (in order to

    quench its thirst) and is then pointed towards Mecca to be slaughtered.

    According to Islamic tradition, the conventional method used to slaughter the

    animal involves cutting the large artery in the neck along with the esophagus and

    trachea with one swipe of a no-serrated blade. This method of slaughter serves a

    dual function: it provides for a relatively painless death and also helps to

    effectively drain blood from the animal. The latter is important because the

    consumption of blood itself is forbidden in Islam. This method of killing the

    animal is cleaner and more merciful to the animal. During the blood draining

    process, the animal is not handled until it has died. Once the animal has died, it is

    then shackled by a hind leg and hoisted on to the overhead rail or dressing trolley

    any blood still left in the animal is collected in a trough.

    Delivery and

    holding of livestock

    Slaughtering under

    Islamic Method

    Hide removal/

    dehairing

    BoningTrimming and

    carcass washingEvisceration

    Chilling Packaging Cold storage

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    Dressing and hide removal: The bled carcasses are conveyed to the slaughter

    hall where dressing and evisceration takes place. The first stage of the this

    process, dresssing, can be performed as the carcass hangs from the overhead rail,

    or the animal can be unshackled and laid in a cradle. The head and hoofs are

    removed, the head is cleaned with water and the tongue and brain are recovered,

    hide is then removed and conveyed to the hide processing area where it is

    preserved by salting or chilled in ice.

    Evisceration: The carcasses are then opened to remove the viscera The stomach

    (paunch) and intestines are emptied of manure and cleaned in preparation for

    further processing. Edbile offal (tongue, lungs, heart and liver) is seperated,

    washed and chilled. The carcass is then split, rinsed and conveyed to a cold

    storage area for rapid chilling.

    Cutting and Boning: Carcass cutting and boning often takes place after chilling

    since a carcass is easy to handle and cut when it is chilled. Boning is the term

    used to describe the process of cutting meat away from the bone

    Inspection: Carcasses and viscera are inspected to determine if they are suitable

    for human consumption. Each carcass and its components are identified and kept

    together wherever possible until inspection is complete.

    By-products: At various stages in the process, inedible products such as bone,

    fat, heads, hair and condemned offal are generated. These materials are sent to a

    rendering plant for rendering into feed materials.

    Table 14 below shows the major products and by products from the slaughter of a

    400 kg cattle or buffalo.

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    TABLE 14

    PRODUCTS AND BY-PRODUCTS FROM THE SLAUGHTER OF

    A 400 KG BEEF CATTLE

    Description Weight (kg) Percentage of LCWLive carcass weight (LCW) 400 100%

    Boned Meat 152 40%

    Inedible material for rendering (bones,fat, head, condemed offal etc.)

    155 39%

    Hide 36 7%

    Edible offal (tongue, liver, heart, etc.) 19 5%

    Blood 12 3%

    Miscellaneous 26 6%

    3.2.3 BY-PRODUCT PROCESSINGThe mechanized slaughter houses produce huge quantities of offal and digesta

    from the slaughtered animals which could be profitably utilized for production of

    value added products, like Meat-cum-Bone Meal (MBM), Tallow, Bone Chips,

    Pet Foods and methane as a source of energy for value addition in most of the

    modern plants. MBM contains about 50% of good quality protein and is a cheap

    source of protein for poultry feeding. It is a good source of lysine and other

    sulphur containing amino acids. Similarly, tallow is a cheap source of energy for

    broiler production vis--vis the vegetable sources which are expensive. Tallow is

    also used for soap manufacturing. The rendering plant cooks the byproduct at 133

    degree Celsius at Bar 3, which completely sterilizes the MBM.

    Pakistan has a large number of dogs and cats, which are kept as pet animals;

    however, there are only very few companies which have recently come forward

    for producing pet food. The international market is vast and demand for pet foods

    runs into billions of dollars. The slaughterhouses produce large quantities of raw

    material for pet food, which need to be commercially exploited.

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    3.2.4 SPACE REQUIREMENT Waiting yard (Lairage) 40,500 Sq.ft.

    Sheds for large animals

    Sheds for sheep/goats

    Covered Area (excluding Admin block) 9,000 Sq.ftAnte mortem room

    Doctors room

    Slaughtering area 20,000 Sq.ftButchers:

    Dressing rooms

    Lockers

    Bathrooms

    Setting area for Rigor mortis process

    Chillers

    Cool area for chilled carcasses ready to deliver

    Administration block 2,500 Sq.ft.

    Parking area/ ground 10,000 Sq.ft

    Edible Offal processing area 10,000 Sq.ft

    Total Area 90,000Sq.ft.

    Capacity of waiting yard is calculated on the basis of the following yardstick:

    3.2.5 SPECIAL CONSIDERATIONS IN THE CONSTRUCTION OF THEPLANT

    For the success of the venture it is important that the Plant comply with

    international standards, some of these include:

    Area/Animal(Sq.ft)

    Animal/Shift(Nos.)

    Required Area(Sq.ft)

    Sheep/goat = 15 1,250 18,750

    Large Animal = 50 125 6,250

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    The plant needs to be designed, built, and equipped to meet internationalsanitary standards. This applies particularly to the layout and product flow,

    which determines shapes and relative locations of processing areas.

    All slaughtering and edible product handling needs to be carried out insingle-storey structure having a smooth, flat, non-toxic, non-absorbent

    floorings and brick walls. The walls need to be finished on the inside to give

    an impervious, washable surface. Floor will be finished with non-slip and

    impact-resistant surface. Inspection and work areas will be furnished with

    standard level of illumination.

    Mechanical ventilation which is required in all edible meat processing areasand all openings will be screened.

    Double self-closing doors to be provided from dressing floor to edible offal,casing and skin department. Doors to be equipped with buffer rail on both

    sides for meat trucks to pass through.

    All equipment that would come into contact with animal products shall be ofstainless steel. No wood will be used for any purpose within the production

    areas for either edible or non-edible products. Washbasins and sterilizers will

    be carefully located and access to the processing area should be confined to

    control points using a strict hygiene routine.

    Chiller rooms will be built adjacent to the main building and will be designedto chill beef and mutton carcasses. Consequently, meat or cooling rails will

    be fitted to internal support frames. Chillers will have the capacity to bring

    down carcass temperature quickly so that the chiller can be vacated for the

    next days product.

    The refrigerating plant will be as simple as possible without unduesophistication. Reciprocating compressors and a two-stage ammonia system

    will be involved. Each compressor will be of sufficient capacity to carry the

    entire load.

    The processing of inedible by-products will be carried out in a separatebuilding adjacent to the main building, having concrete floor with drains and

    brick walls. Natural ventilation will be sufficient. The buildings required to

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    house utilities and provide storage for skins will be of similar construction as

    that of cleaning room, engine, and maintenance and vehicle workshop.

    Covered livestock pens will be provided only for one days stay. Pens willhave a concrete floor with a minimum slope of 1 in 50 towards an outside

    drain. It will have sanitary curbs and water troughs. A standard suspect pen

    (for animals suspected to be diseased) and a race leading to the slaughtering

    floor will also be provided.

    Water will be supplied from a tube well delivering 27,000 liter per hour.Provision has also to be made for an on-the-ground storage tank of 300,000

    liter and an over-head tank of 40,000 liter. To achieve the desired standard of

    chlorination, a small automatic chlorine-dosing unit will be installed.

    3.2.6 SLAUGHTER HOUSE EQUIPMENT1. Weight Scales: Types of scales that measure the animal as well as various

    parts of the animal at different stages.

    2. Animal testing Equipment: Prior to slaughtering the animal, various checksare made to confirm the meat quality.

    3. Tool Kit & Tool Sterilizing Box: Specialized tools designed forslaughtering and cleaning the animal and kept in boxes specially designed for

    storing and sterilizing at all times.

    4. Blood Mixer: Blood is mixed in the container to avoid coagulating.5. Co- Extrusion Line6. Bleeding table7. Cooling equipment8. Crate Washing Machine9. Degreasing/Clean-up platform: This platform is used for cleaning up half

    cattle carcasses. The fat and meat which is cut off is transported away

    separately.

    10. Cattle splitting saw11. Parameter Combination

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    12. Intestine Cleaner: Used for degreasing and declaiming of large intestines,stomachs, etc.

    13. Compost Machine14. Restrainer15. Organ spin chiller: Spin chiller is best used for cooling animal giblets16. Parameter Offal Lift: Lift belonging to Paunch cleaning equipment.17. Paunch Carousel: Carousel with automatic discharge of the paunch18. Quartering sheers: Quartering sheers for cattle or halving/ quartering sheers

    for animals

    19. Stainless Steel Scalding Tank20. Sticking Knife21. Tube rail systems: The systems include:

    Overhead beams Mounting consoles Tube rail (straight, bends) Switches Scales Conveyors

    22. Waste Water Treatment: Complete unit to recycle the water for sanitarypurpose.

    23. Water Treatment Plant: To process water for cleaning purpose of meatproducts processed.

    24. Trolleys & Utensils: Various kinds of trolleys for carrying various types ofmaterial with special design utensils to carry different parts of the animal.

    3.2.7 MISCELLANEOUS SLAUGHTER HOUSE EQUIPMENT

    In addition the Slaughter House will require the following equipment and support

    facilities:

    Chillers to hold 6 days export kill. Refrigeration Plant. Stand-by generator 150 KVA

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    Laboratory Equipment. Maintenance workshop including necessary equipment and tools. Scales.

    Vehicles Blast Freezer and edible offals cold store with carton racks and pallets. Skins, casings and Rendering Departments containing deslimer, strippers Engine Room, Refrigeration plant and stand-by generator Water Storage Amenities Block includes washrooms, laundry, kitchen and dining room,

    Office Block with offices for General Manager, Chief Engineer, Veterinary

    Surgeon, Accounts Marketing Manager, Workshop Manager, VeterinaryLaboratory, Cashier, Stores, etc.

    3.2.8 RECOMMENDED STRATEGY FOR SELECTING EQUIPMENT

    There are a number of meat processing equipment suppliers available with the

    state of art technology like machines that automatically undertake skinning

    process and perform other sophisticated processes but it is not advisable that they

    be used in the beginning, especially in light of cultural and religious customs.

    Such machinery will also increase the project cost to a great degree. It is

    suggested that the proposed slaughterhouse should adopt non-sophisticated

    technology at first stage and after due consideration and analysis when

    management will have experience coupled with demand of importing countries, it

    may adopt more sophisticated technologies.

    3.2.9 TECHNICAL STAFF REQUIREMENT FOR SLAUGHTER HOUSEAs no modern fully automated Slaughter House exists in Pakistan, the sponsors

    will have to train the local labor in its operation. Semi-skilled and unskilled labor

    with a family tradition of working in the meat chain are readily available in the

    area. In addition, the required managerial staff is also readily available as are the

    veterinary staff for checking the animals.

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    3.2.10 TRANSPORTATION OF MEAT

    It is anticipated that the transportation of processed meat for the local market will

    be done in the Companys own refrigerated vans. The meat will be sold in shops

    which have the provision for keeping the meat at the correct temperature. There

    are a large number of small stores and now supermarkets which deal in frozen

    poultry products. These may be solicited for keeping beef and mutton products as

    well.

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    CHAPTER 4

    GOVERNANCE AND MANAGEMENT STRUCTURE

    4.1 GOVERNANCE STRUCTUREIt is proposed that a special purpose company be set-up to establish and operate

    the proposed cattle farming and meat processing unit. The Companies Ordinance

    1984 with amendments thereof, and Code of Corporate Governance issued by

    the Securities and Exchange Commission of Pakistan (SECP) regulate

    establishment and governance of a limited company (public or private) in

    Pakistan.

    Corporate Governance is a set of institutional and market-based mechanisms that

    encourage controllers of a company to maximize the value of a company for its

    owners. The conduct of the corporation is a three-way process involving the board

    of directors representing the shareholders, top management and employees. At the

    core of corporate governance is empowerment at all levels shareholders, the

    board, and top management. The law applicable to a company is the law of the

    country.

    Principles and rules on corporate governance need to be laid down in the Articles

    & Memorandum of Association (Incorporation) and the Regulations of Board of

    Directors. The proposed governance structure is illustrated on the following page.

    The business of the company is to be managed under the directions of the Board

    of Directors. The Board will be responsible for establishing broad corporate

    policies and for the overall performance of the company. The core responsibility

    of the directors is to exercise their business judgment and to act in what they

    reasonably believe to be in the best interests of the company.

    The Boards Corporate Governance Committee is required to review the

    principles and rules regularly in the light of prevailing best practices and it is

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    required to forward suggestions for improvement to the Board for approval.

    The Boards Corporate Governance Committee is also responsible for considering

    matters of corporate social responsibility and matters of significance in areas

    related to corporate public affairs and the company employees and shareholders.

    The Boards job should be to create and maintain a structure that will ensure

    harmony and cooperation between management and the employees in pursuing

    the goals and objectives of the organization rather than simply rubber-stamping

    the actions of management.

    The Boards Audit Committee will have two fundamental responsibilities;

    internally it will oversee the annual external audit to ensure the accuracy and

    integrity of the financial statements as required by legislation. It will also ensure

    that there are no breakdowns in corporate governance rules and procedures,

    including the rules of ethical conduct and internal control. The Audit Committee

    would also be the practical monitor collecting information regarding corporate

    misconduct and encouraging those with such information to come forward.

    FIGURE 2

    PROPOSED GOVERNANCE STRUCTURE

    The CompanyShare-Holders

    Board of Directors

    Chairman

    Chief Executive

    Officer

    CorporateGovernance

    Committee

    Corporate AuditCommittee

    PlantManager

    ManagerProcurement

    ManagerMarketing

    ManagerFinance

    ManagerCattleFarm

    ManagerHR &Admin

    Manager Quality Internal Auditor

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    4.2 MANAGEMENT STRUCTURE

    The paramount duty of the Board of Directors is to select a Chief Executive

    Officer (CEO) and to oversee the CEO and other senior management staff in the

    proper and ethical operation of the company.

    The Board would identify, and periodically update the qualities and

    characteristics necessary for an effective CEO of the company. With these

    principles in mind, the Board should periodically monitor and review the

    development and progression of potential internal candidates against these

    standards.

    The CEO will be in-charge of the day-to-day management of operations and will

    be responsible for ensuring that the company and management functions are

    organized, run and developed in accordance with the law, Articles of Association

    and decisions taken by the Board, and the Annual General Meeting of the

    Shareholders.

    The management structure, presented in Figure 6, comprises of various

    departments including cattle farming, plant operations, procurement of cattle,

    buffalos, sheep and goats for slaughter and processing, quality assurance, human

    resource, finance, marketing & sales, internal audit and field staff.

    The structure is characterized by clear assignment of responsibilities as well as a

    reduced number of interfaces.

    The selected CEO will be responsible for delivering policy and performance for

    customers, society, staff, suppliers and the business. The core activities are briefly

    described as under:

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    Cha

    irman

    Direc

    tors

    Secre

    tary

    Genera

    lManager

    ChiefEng

    ineer

    ChiefAccoun

    tat

    Eng

    ineer

    (QC)

    ChiefEng

    ineer

    Managers

    Foremen

    Ma

    intenance

    Eng

    ineer

    Plan

    tEng

    ineer

    Tec

    hn

    ican

    Jr.

    Officers

    Staff

    Loa

    der

    QC

    - - - 1 1 - - - - 8 1 - 6 4 20 10 -

    - - - 1 - 1 - - 2 10 - - 5 5 30 20 10

    - - 1 - - - - - - - - - - - - - -

    - - - 1 - - - - 2 10 - - 5 - 4 10 2

    1 6 - - - - - - - - - - - - - - -

    - - - 1 - - - - 2 - - - - 10 10 - -

    - - - 1 - 1 - - 1 - - - - 4 10 - -

    - - - - - - - - 1 - - - - 4 6 - -

    1 6 1 5 1 2 0 0 8 28 1 0 16 27 80 40 12

    CHART - 1

    HUMAN RESOURCE DEPLO

    Processing

    Plant Manager

    Secretary

    Board

    - Chairman

    - Directors (6)

    Live Animal

    Procurement

    Marketing

    Finance

    Total

    The Company

    Corporate Audit

    Committee

    HR &

    Admin

    CEO

    Cattle Farm

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    4.3 LIVE ANIMAL PROCUREMENT & TRANSPORTATIONThis department will be responsible for purchasing live animals from the local

    animal markets, the success of the project will hinge on this crucial function, as it

    will only be successful in the long run if it is able to have a secure and regularsupply of healthy animals at competitive prices. Other than the main animal

    market in Karachi, a sub-office will be opened in Tharparkar near the Indian

    border to purchase animals which are brought from India for sale in Pakistan. In

    addition to the purchase of the animals, it will also be ensured that animals are not

    stressed during transportation. For this purpose the Companys own transportation

    will be used. Each animal purchased will be marked by the purchase team to

    ensure that it can be if required, traced back to the supplier. As a control measure,

    all animals will be weighed and checked to ensure that the correct rates have been

    paid for the animals purchased. In addition a team will also visit the farmers to

    motivate them to raise their male buffalo calves for meat and prices will be

    ensured so that the farmer can become a source of regular supply of quality beef

    and mutton. The department will undertake activities to promote livestock

    farming to ensure regular supply of live animals on the same pattern as has been

    done by the dairy companies.

    4.4 PLANT OPERATIONSA Plant Engineer with a degree in food processing will be appointed to run the

    meat processing plant after proper training by the plant and equipment supplier.

    He will be assisted by qualified and experienced staff including quality assurance

    staff h