Meat Industry Research

Report on Meat Industry July 25 2011

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

Global Meat Industry

The global population reached 6.9 Billion in 2010. The current growth rate is 1.15% per annum and is expected to decline steadily to less than 1% by 2020 Average per Capita Production of Meat elevated from 40.6 Kg in 2007 to 41.1 Kg in 2010 with CAGR of 0.41% Beef Production hiked from 62,838 KT in 2005 to 64,927 KT in 2010 with CAGR of 0.8% Poultry Production increased worldwide from 83,234 KT in 2005 to 97,546 KT in 2010 with CAGR of 3.3% The Sheep Meat Production rose from 12,455 KT in 2005 to 12,819 KT in 2010 with CAGR of 1.1%

Global Beef and Veal Production

70,000 68,500 67,000 000 MT 65,500 64,000 62,500 61,000 59,500 58,000
Rising Commodity Prices Curtailed Production

2005

2006

2007

2008

2009

2010

Source: OECD FAO

Global Sheep Meat Production

13,400 13,200 13,000 000 MT 000 MT
Global Recession declined mutton production in wake of lower demand

Global Poultry Meat Production

110,000 100,000
Global Recession declined production growth rate in wake of lower demand

12,800
12,600 12,400 12,200

90,000
80,000 70,000 60,000 50,000

12,000
11,800 2005
Source: OECD FAO

2006

2007

2008

2009

2010

2005
Source: OECD FAO

2006

2007

2008

2009

2010

Global Meat Industry

The meat consumption worldwide had a steady growth from 2005 to 2010. Average per Capita Consumption of Meat from 2007 to 2010 elevated from 38.5 Kg to 38.99 Kg with CAGR of 0.55% The consumption of Beef from 2005 to 2010 rose from 61,621 KT to 64,273 KT with CAGR of 0.87% Global Poultry Production from 2005 to 2010 hiked from 82,820 KT to 97,511 KT with CAGR of 3.41% Global Sheep Meat Production from 2005 to 2010 rose from 12,318 KT to 12,802 KT with CAGR of 1.27%

Global Beef and Veal Consumption

66,000 65,000 64,000 000 MT 63,000 62,000

61,000
60,000 59,000

2005

2006

2007

2008

2009

2010

Source: OECD FAO

Global Sheep Meat Consumption

13,000 12,800 000 MT 12,600 12,400 12,200 12,000 2005
Source: OECD FAO

Global Poultry Meat Consumption

100,000 95,000 000 MT 90,000 85,000 80,000 75,000

2006

2007

2008

2009

2010

2005
Source: OECD FAO

2006

2007

2008

2009

2010

Global Meat Industry: Demand & Supply Forecast (Beef)

Global Beef and Veal Demand Forecast Factors that derive the Meat demand are human population Growth Rate, Per Capita GDP and Meat Prices Per Capita GDP is an important factor that effects the meat demand, given the fact that most of the Global population is poor. The relation between the marginal propensity to consume meat and Per Capita GDP will not be linear ,in fact, it will have an exponential relationship Meat Prices are inversely proportional with Meat Demand The Global demand for beef is expected to grow at a CAGR of 1.3%

Global Beef and Veal Demand Forecast 2011 - 2015

70,000 68,000 000 MT 66,000 64,000 62,000

2011
Source: OECD FAO

2012

2013

2014

2015

Global Beef and Veal Supply Forecast The primary drivers of Meat Supply are Animal Breeding Rate, Commodity Prices and Meat Prices
000 MT

Global Beef and Veal Supply Forecast 2011 - 2015

70,000
68,000 66,000 64,000 62,000 2011
Source: OECD FAO

Meat Supply is directly related to Animal Breeding Rate and Meat Prices while inversely related to Commodity Prices as Commodity Price determines the cost of raising animals Beef Supply is expected to grow at CAGR of 1.3%, although Demand & Supply growth rates are equal, the Global Beef Supply is expected to exceed Beef Demand by 674 KT in 2015 due to higher base effect

2012

2013

2014

2015

Global Meat Industry: Demand & Supply Forecast (Poultry)

Global Poultry Meat Demand Forecast Global Poultry Meat Demand is Forecasted to grow from the base of ~100,135 KT to 109,491 KT with a CAGR of 2.44%
000MT

Global Poultry Meat Demand Forecast 2011 - 2015

115,000 110,000 105,000 100,000 95,000

The growth of Poultry Demand can be primarily attributed to the following factors: Increase in Global Human Population. Lower Poultry Prices as compared to Beef and Mutton.

2011
Source: OECD FAO

2012

2013

2014

2015

Increase in GDP per Capita

Slightly lower Supply Base as compared to Demand base and lower Poultry Meat Supply Growth Rate as compared to Poultry Meat Demand Growth Rate will produce a deficit of 18 KT in 2015

000MT

Global Poultry Meat Supply Forecast Global supply of poultry meat is forecasted to grow from the base of 100,115 KT to 109,473 KT with a CAGR of 2.4%

Global Poultry Meat Supply Forecast 2011 - 2015

115,000 110,000 105,000 100,000 95,000 2011
Source: OECD FAO

2012

2013

2014

2015

Global Meat Industry: Demand & Supply Forecast (Sheep)

Global Sheep Meat Demand Forecast Global Sheep Meat demand is forecasted to be on the higher side with a CAGR of 2.03%
000MT

Global Sheep Meat Demand Forecast 2011 - 2015

14,500 14,000 13,500 13,000 12,500

Demand is Forecasted to grow from the base of ~12,802 KT to 14,155 KT.

The growth in Sheep Meat Demand can be primarily attributed to the following factors: Increase in Global Human Population Increase in GDP per Capita

2011
Source: OECD FAO

2012

2013

2014

2015

Global Sheep Meat Supply Forecast Global Sheep Meat Supply growth is expected to outperform Demand growth by a margin of 7 bps for the period under consideration In addition to higher growth rate as compared to Demand, Supply also outperforms demand in terms of absolute numbers, thanks to higher base effect i.e. 12,819 KT, however the Global Demand Supply gap remains at a minimal level with the surplus Supply of 67 KT
000MT

Global Sheep Meat Supply Forecast 2011 - 2015

14,500
14,000 13,500 13,000 12,500 2011
Source: OECD FAO

2012

2013

2014

2015

Global Meat Industry: Consumption Wise Top 5 Countries

Uruguay leads the beef and veal consumption per capita with 62.1 KG/person per annum while Argentina is ranked number at number two with per capita consumption of 55.8kg/person per year. Graph shows that developing countries consume Beef and Veal more than developed countries Kuwait consumes the most poultry meat in terms of per capita i.e. 59.9kg/person per year followed closely by UAE with almost similar consumption of 59.1kg/person per year Iran has the highest Sheep Meat Per Capita Consumption with ~16 Kg Per Person consumption Per annum followed by Australia with ~11 Kg Per Person consumption

Beef and Veal Per Capita Consumption 2010

70 60 50 40 30 20 10 0 Uruguay Argentina United States Brazil Paraguay KG / Person

Source: OECD FAO

Sheep Meat per Capita Consumption 2010

20
KG / Person 11 6 3 3 KG / Person 16 12 8 4 16

Poultry Meat Per Capita Consumption 2010

70 60 50 40 30 20 10 0
Kuwait United Arab Emirates Brazil United States Hong Kong

Iran
Source: OECD FAO

Australia

Saudi Arabia

China

South Africa

Source: OECD FAO

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

Global Halal Food Industry

Current Global Muslim population is estimated to be 1.9 Billion Global Halal products market was estimated at US$2.3 trillion excluding Islamic banking in 2010 Food and Beverages covers a significant share of the overall Halal Products Market The volume of trade in Halal food business is enormous with an estimated annual value of USD 644 Billion globally
USD Billion 500 406 400

Statistics
Continent
Africa Asia Europe North America South America Oceania Total
Source: www.islamicpopulation.com

2008
Muslim Population (Million)
462.4 1,130.8 51.5 7.1 2.4 0.5 1,654.6

2009
Muslim Population (Million)
514.50 1,258.26 57.26 7.93 2.68 0.56 1,841.2

Global Halal Food Market Size 2010

Major Halal Meat Importing Muslim Countries include GCC Countries, Iran and Malaysia, while

300 200 100 Africa Asia Europe Australia American

Source: WHF Secretariat

153 67 2 16

major

Meat

Exporting

countries

include

Brazil, Australia and India

10

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

11

Pakistan Supply Analysis: Overview of Pakistan

Agricultural sector plays a pivotal role in Pakistans economy, as second largest sector with contribution of over 22% to the GDP and employing ~45% of total labor force Livestock has a Lions share of 50% in the Agricultural sector Livestock is further subdivided into: Milk Meat Milk having larger share due to lack of attention towards meat processing industry

Historic GDP in PKR Billion

16,000 12,000 8,000 4,000 0

FY06

FY07

FY08

FY09

FY10

Source: SBP Website

Sector Contribution to GDP

Subsectors Contribution to Agriculture

55%

FY 2010 - 11

24%

50%
22%

50%

0%
Services

20% Industry

40% Agriculture

60%
Crops Livestock
Source: Economic Survey 2010 2011

Source: Economic Survey 2010 2011

12

Pakistan Animal Supply Analysis: Province Wise

Province Name

Cattle

Buffaloes

Sheep

Goats

Poultry

Punjab

16,711,848

19,990,672

6,666,615

22,069,396

27,616,195

Sindh

8,029,928

8,267,924

4,148,195

13,991,265

15,068,745

Balouchistan

2,613,146

360,282

13,417,779

13,114,868

6,301,559

KPK

6,920,078

2,171,121

3,524,412

10,682,471

29,523,502

Total

34,275,000

30,790,000

27,757,000

59,858,000

78,510,000
13

Source: Economic Survey 2010 2011

Pakistan Animal Supply Analysis: District Wise (Punjab No. of Heads)

Administrative Unit (Punjab)
Islamabad District Rawalpindi District Attock District Jehlum District Chakwal District Gujran Wala District Hafiza Bad District Gujrat District Mandi Bahawul Din District Sialkot District Narowal District Lahore District Kasor District

Cattle
59,349 398,497 447,810 193,391 504,725 260,739 212,315 168,698

Buffalo
95,095 279,062 136,720 164,191 163,888 707,522 563,835 465,848

Sheep
854 17,849 189,618 62,088 165,703 90,368 24,415 37,315

Goats
85,594 544,361 699,598 337,396 646,001 192,589 119,703 231,575

Poultry
192,426 1,136,360 1,015,310 351,547 873,017 748,632 487,026 293,516

261,808
317,292 181,221 156,864 452,322

640,308
688,186 350,141 454,082 1,221,581

17,270
91,161 20,131 42,645 103,461

203,692
178,692 196,768 130,796 407,079

601,692
394,962 267,019 297,481 680,444

14

Pakistan Animal Pakistan District Wise ( Punjab ) Supply Analysis: Supply Analysis: District Wise (Punjab No. of Heads)
Administrative Unit (Punjab)
Okara District Sheikhupora District Nankana Sahib District Faisala Bad District Toba Tek Singh District

Cattle
381,995 327,946

Buffaloe
991,651 598,141

Sheep
95,116 78,964

Goats
396,616 204,929

Poultry
568,249 599,070

Province Wise Ranking Jhang District has the largest population of Buffaloes while second largest Population of Cattle in Punjab, Located at the center of Punjab Country Wise Ranking Jhang District has the largest population of Buffaloes while second largest population of Cattle in Pakistan.

151,551
534,127 316,943

451,709
1,292,636 494,382

41,023
57,377 49,356

284,449
1,007,057 560,518

460,996
942,807 427,283

Jhang District
Sargodha District Khushab District Mian Wali District Bhakkar District Multan District Loodhran District Vihari District

1,012,080
666,612 400,012 529,658 624,162 578,093 424,393 401,215

1,323,706
774,605 189,668 216,018 293,750 469,137 262,815 690,737

403,501
140,800 175,277 240,760 481,561 84,594 38,453 105,600

1,120,653
653,977 588,905 560,716 729,792 661,378 476,705 707,169

1,519,329
954,156 619,812 814,447 1,087,533 778,090 532,319

Source: Pakistan Census Survey 2006 figures 715,852 adjusted for Economic Survey 2010 2011 figures

15

Pakistan Animal Supply Analysis: District Wise (Punjab No. of Heads)

Administrative Unit (Punjab)
Sahiwal District Pakpattan District Khanewal District D G khan District De Ex Area of D.G.Khan District Rajanpur District De Ex Area of Rajanpur District Layyah District Muzafargarh District Bahawalpur District Bahawalnager District Rahim Yar Khan District Cholistan District Grand Total

Cattle
276,480 222,180 491,692 571,328 176,082 431,700 15,368 674,679 1,359,470 638,306 630,259 602,431 658,058 16,711,848

Buffalo
755,309 654,466 637,786 246,402 904 225,599 339,349 676,647 686,261 853,876 923,480 11,177 19,990,672

Sheep
52,907 61,281 163,105 675,944 496,319 410,696 168,829 529,500 362,894 167,695 205,193 143,904 373,084

Goats
531,710 353,111 792,622 955,330 749,263 705,031 71,613 635,946 1,177,505 1,162,641 1,065,308 1,656,285 286,325

Poultry
613,042 434,778 867,580 1,117,878 430,062 704,242 26,632 974,872 1,708,315 1,059,971 1,041,534 1,186,309 91,608

Province Wise Ranking Muzafargarh District has the largest population of Cattle and Poultry in Punjab. It is located in the Southern Belt of Pakistan near Rahim Yar Khan Country Wise Ranking Muzafargarh District has the largest population of Cattle while second largest population of Poultry in Pakistan. Strategically located near Sindh Province
Source: Pakistan Census Survey 2006 figures adjusted for

6,666,615 22,069,396

27,616,195 Economic Survey 2010 2011 figures

16

Pakistan Animal Supply Analysis: District Wise (Sindh No. of Heads)

Administrative Unit (Sindh)
Hyderabad District Badin District Thatta District Dadu District Jamshoro District Tando Allah Yar District Matiari District Tando Muhammad Khan District Mirpur Khas District Umer Kot District Ghotki District Sanghar District Sukkur District

Cattle
88,687 365,687 476,129 543,601 189,856 67,427 309,492 66,577 233,688 228,789 326,643 429,307 245,388

Buffalo
348,240 561,230 413,519 434,769 133,748 156,821 264,346 177,896 263,968 110,209 277,995 364,437 221,342

Sheep
30,530 233,761 169,900 297,325 179,978 17,945 54,350 25,394 71,177 156,146 77,025 87,584 49,747

Goats
329,368 643,572 391,025 890,368 460,941 236,633 367,251 151,647 741,186 596,930 417,224 775,208 277,760

Poultry
336,233 651,934 1,037,522 853,422 300,423 255,036 227,924 255,302 389,343 191,825 466,114 466,216 463,754

17

Pakistan Animal Supply Analysis: District Wise (Sindh No. of Heads)

Administrative Unit (Sindh)
Tharparkar District

Cattle
872,291

Buffalo
52,184

Sheep
1,241,346

Goats
2,468,211

Poultry
280,822

Province Wise Ranking Tharparkar has the largest population of Cattle, Sheep & Goat in Sindh, while Shikarpur & Khair Pur have the largest population of Buffaloes & Poultry respectively Country Wise Ranking Tharparkar has the largest population of Goats while third largest population of Cattle & Sheep . Khair Pur has the fourth largest population of Poultry.
18

Khair Pur District

NawabShah District Naushero Feroz District Larkana District Shahdad Kot District Shikar Pur District Jaccoba Bad District Kashmore District Karachi District Grand Total

572,155
393,306 388,170 250,694 266,253 592,578 588,173 221,326 313,714 8,029,928

594,596
439,586 597,587 598,487 422,547 619,102 528,484 220,440 466,391 8,267,924

114,971
106,689 54,035 54,740 167,602 307,531 387,408 144,973 118,038

1,002,100
976,555 913,024 276,056 391,077 380,662 583,585 164,729 556,152

1,544,768
920,131 993,535 948,556 1,201,241 1,136,063 1,131,266 553,891 463,423 15,068,745

4,148,195 13,991,265

Pakistan Animal Supply Analysis: District Wise (Balochistan No. of

Heads)
Administrative Unit (Balochistan)
Quetta District Pishin District
Killa Abdullah District Chagai District Sibi Distrcit Kohlu District Dera Bugti District Ziarat District Loralai District Musa Khel District

Cattle
13,038 106,021
61,585 7,625 63,438 201,956 167,973 2,237 152,836 228,801

Buffalo
28,776 1,120
540 23 6,908

Sheep
171,648 877,352
340,595 215,583 210,575

Goats
133,972 561,455
128,431 333,153 231,625 905,404 862,877 154,066 369,181 516,513

Poultry
136,803 566,856
310,968 99,066 271,413 183,848 197,671 53,726 269,599 242,807

1,648 1,369,351 7,654 14 5,213 530,346 125,807 822,575

1,859 1,024,600

Barkhan District
Killa Saifullah District

135,999
80,428

2,258

433,671

173,142
872,073

166,210
292,423

170 1,117,804

Pakistan Animal Supply Analysis: District Wise (Balochistan No. of

Heads)
Administrative Unit (Balochistan) Cattle Buffalo Sheep Goats Poultry Province Wise Ranking Jafarabad District has the largest population of Cattle, and buffaloes while Kohlu and khuzdar District have the largest population of Sheep and Goat Country Wise Ranking
Bolan District 175,946 4,676 130,538 852,581 375,857

Zhob District

207,163

6,222

1,231,027

974,789

244,952

Jafara Bad District

311,596

176,199

253,014

315,969

540,764

Naseera Bad District

192,213

94,872

155,617

237,369

311,500

Jhal Magsi District

90,786

4,815

64,232

332,400

168,177

Lasbella District

117,212

8,989

384,861

883,949

241,677

Zhob District has the 11th largest population of Goats while third largest population of Sheep in Pakistan.

Mastung District

10,005

514

489,267

372,707

233,119

20

Pakistan Animal Supply Analysis: District Wise (Balochistan No. of

Heads)
Administrative Unit (Balochistan)
Kalat Distrct

Cattle
36,985

Buffalo
667

Sheep
1,298,894

Goats
898,764

Poultry
353,898

Province Wise Ranking Khuzdar District has the 5th largest population of poultry in Balochistan, while Kalat District has the 2nd largest population of Sheep and 4th largest population of goats Country Wise Ranking

Khuzdar District

119,869

6,513

1,158,380

1,152,939

358,626

Awaran District

21,434

45

131,799

383,182

118,846

Kharan District

17,224

133

697,812

707,487

215,581

Kech (Turbat) District

50,363

345

67,793

506,792

222,527

Gawadar District

14,314

57

19,243

98,935

56,385

Panjur District

26,099

55

95,394

155,115

68,259

Kalat District has the 2nd largest population of Sheep in Pakistan. Khuzdar District has the fifth largest population of Goats
21

Grand Total

2,613,146

360,282

13,417,779 13,114,868

6,301,559

Pakistan Animal Supply Analysis: District Wise (KPK No. of Heads)

Administrative Unit (KPK)
Peshawar District Nowshera District Charsadda District Mardan District Sowabi District Kohat District Hangu District Karak District D I Khan District Tank District Bannu District Laki Marwat District Abbotta Bad District

Cattle
258,754 221,091 278,176 286,926 235,477 202,109 81,692 246,400 477,077 77,811 195,880 114,274 129,192

Buffalo
161,616 120,403 124,689 130,483 116,656 30,725 10,724 2,314 231,625 20,247 63,282 4,311 117,801

Sheep
70,429 73,403 49,560 54,067 15,578 114,265 8,734 35,153 260,398 81,687 96,580 51,030 13,737

Goats
295,214 219,728 192,762 224,058 182,177 326,465 100,906 324,207 649,831 134,288 246,971 324,637 272,720

Poultry
2,064,431 956,248 1,234,015 1,674,656 1,234,545 758,499 442,934 695,826 1,364,588 223,617 1,531,907 731,354 824,133

Pakistan Animal Supply Analysis: District Wise (KPK No. of Heads)

Administrative Unit (KPK)
Nari Pur District Mansehra District Battagram District Kohistan District Siwat District Shanglapar District District Chitral District Upper Dir District Lower Dir District F R Peshawar F R Kohat F R D.I.Khan

Cattle
150,991 211,007 138,797 290,943 294,283 237,646 153,044 202,739 269,031 288,737 26,441 18,978 121,184

Buffalo
120,424 215,214 88,121 57,630 131,902 145,351 89,711 333 5,591 18,313 389 294 420

Sheep
7,130 90,885 16,012 205,927 83,884 62,278 33,438 189,826 95,601 50,244 25,650 7,304 175,881

Goats
239,933 352,512 136,509 747,130 262,892 266,898 145,728 387,254 392,274 325,558 128,913 58,378 221,567

Poultry
729,031 1,080,502 721,301 563,438 1,217,050 955,183 786,468 451,724 760,604 1,118,882 229,296 118,030 70,825

Province Wise Ranking Kohistan District has the 2nd largest population of Goats in KPK, and 3th largest population of cattle in KPK. Siwat has the 2nd largest population of cattle in KPK Country Wise Ranking Seven out of top ten Districts in terms of largest population of Poultry are from KPK including Peshawar, Mardan, Bannu, Khyber Agency and D.I.Khan
23

Pakistan Animal Supply Analysis: District Wise (KPK No. of Heads)

Administrative Unit (KPK)
F R bannu F R Mansehra F R Kurrum F R Tank F R Laki Marwat Malakand Agency Bajour Agency Khyber Agency Mohmand Agency Kurrum Agency Aurakzai Agency North Waziristan Agency South Waziristan Agency

Cattle
112,974 37,945 120,976 59,051 75,279 85,882 153,379 180,678 269,647 140,836 74,601 244,063 156,089

Buffalo
12,978 36,627 1,577 964 22,027 17,129 11,573 3,874 3,572 14,619 21,082 16,532

Sheep
134,603 16,222 145,011 112,592 41,310 6,212 55,566 199,605 140,303 80,373 50,512 244,753 328,668

Goats
711,778 84,223 227,749 122,646 117,496 71,848 192,925 588,873 420,938 126,409 120,114 293,775 444,188

Poultry
503,274 104,260 542,316 154,755 153,919 269,795 743,400 1,404,877 1,099,653 565,652 373,890 538,895 529,730

Province Wise Ranking F.R.Bannu has the 2nd largest population of Goats in KPK, while Mansehra District has the 2nd largest population of Buffaloes in the KPK province Country Wise Ranking F.R. Bannu is ranked 57th in the country in terms of sheep population, while it has the 27th largest population of Goats in the country

Grand Total

6,920,078

2,171,121

3,524,412 10,682,471

29,523,502 24

Pakistan Animal Supply Analysis: Freight Cost

Southern Punjab Highest Animal Concentration

Source: Primary Research

25

Pakistan Animal Supply Analysis: Forecast (Regime change causing Supply

Shock)
Supply of Cattle grew at CAGR of 3.99% , while Supply of Buffaloes grew at CAGR of 3.16% for the period FY 2006 2010 Supply of Sheep grew at CAGR of 1.2%, while Supply of Goats grew at CAGR of 2.82% for the period FY 2006 2010 Supply of Poultry grew at CAGR of 1.65% , while Total Meat Supply grew at CAGR of 2.56% for the period FY 2006 2010

Although for the period FY 2006 2010 animal CAGR is recorded at 2.56%, however going forward we assume that it will be lower in comparison with the historic number due to the regime change
Regime change is caused by the current hype in meat prices that occurred due to the start of meat export, the regime change is explained in the following diagram

Regime Change
Historical Trend
Historically majority of animal used for Meat consumption were only taken from Male animals or Dairy or Breeding animals that were old were used

Male Animals

Female Dairy Animals

Regime Change
However due to current hike in prices what happened was that animal stockholders not only sell male animals but also Breeding animals and Dairy animals , which will cause a Supply Shock in the future period

Female Breeding Animals

26

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

27

Pakistan Meat Demand Analysis: Historic

Beef and Veal meat demand in Pakistan remained stable between 2005 and 2010. On an average Pakistan has consumed 1,333 KT of Beef and Veal per year. Sheep meat demand has decreased in 2010 because of unexpected increase in price during that period. In 2010 consumption of Sheep meat in Pakistan was 392 KT Poultry demand in Pakistan have had an increasing trend from 2005 to 2010 . Demand declined in 2010 because of artificial increase in prices of Poultry meat. Bird flu in Chicken is also negatively impacting demand of poultry meat

Beef and Veal Demand 2005 - 2010

1,600 1,400 1,200 "000"MT 1,000 800 600 400 200 -

2005

2006

2007

2008

2009

2010

Source: OECD FAO

Sheep Meat Demand 2005 - 2010

600 500 "000"MT "000"MT 400 300 200 100 2005
Source: OECD FAO

Poultry Meat Demand 2005 - 2010

800 700 600

500
400 300 200

100
2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010
Source: OECD FAO

28

Pakistan Meat Demand Analysis: Regression for Demand Forecast

Regression Analysis is the methodology adopted by SFA to determine future demand forecast In order to predict future Demand, historic Demand was regressed against various variables that were expected to effect Meat Demand such GDP Per Capita, Historic Meat Prices, Population Growth Rate etc Regression results indicate that Meat Demand is highly sensitive to GDP Per Capita and Average Price of Meat For unit change in GDP Per Capita and Average Price Meat Demand increases by 0.83 and -0.0015 units respectively Meat Demand = 365.1407-0.00151 * (Average Price)+0.83246 * (GDP Per Capita) R Square = 0.91
200,000 150,000 100,000 50,000 2004 2005 2006 2007 2008 2009 2010 Average Price
Source: OECD FAO

Demand Vs Average Price

3,000 2,500 2,000 1,500 1,000 500 -

Demand

Meat Demand Vs GDP per Capita

3,000 2,500 2,000 1,500 1,000 500 2004 2005 2006 2007 2008 2009 2010 "000" MT

Predicted Demand Vs Actual Demand

3,000 2,500 2,000 1,500 1,000

500
2004 2005 2006 2007 2008 2009 2010

Source: OECD FAO, Economics Survey of Pakistan

Demand

Gdp per Capita

Predicted Demand
Source: OECD FAO

Actual Demand

29

Pakistan Meat Demand Analysis: Meat Demand Forecast

Beef and Veal Meat Demand, Sheep Meat Demand and Poultry Meat Demand in Pakistan is expected to rise with a CAGR of ~2.8% assuming the
"000"MT

Beef and Veal Meat Demand Forecast 2011 2015

1,700 1,650 1,600 1,550 1,500 1,450 1,400

relationship discovered through regression holds and assuming Per Capita Growth Rate of 4.19% per annum and Meat Price inflation of 10% per annum for the period 2011 2010 Sheep Meat Demand Forecast 2011 2015
480 470 460 450 440 430 420 410 400 390
2011 2012 2013 2014 2015

2011

2012

2013

2014

2015

Poultry Meat Demand Forecast 2011 2015

640
620 "000"MT 600 580 560 540 520 2011 2012 2013 2014 2015

"000"MT

30

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

31

Regional Analysis: Top Exporting Countries

Top 4 Beef exporting countries that export to the Mena region are depicted in the graph, currently Brazil has the highest Market share in Beef exports to the region
"000"MT

Top 4 Beef Exporting Countries

2,000 1,600 1,200 800 400 20 700 1,860 1,472

In Sheep Meat exporting countries, Australia is at the top with the figures of 412, 559 MT in 2010 Top 4 Poultry meat exporting countries are Brazil, Australia, India and Pakistan. Pakistan is at the 4 spot with 149 MT of Poultry meat exported by Pakistan in 2010 Top 4 Sheep Exporting Countries
500 412.6 400 "000"MT

Brazil
Source: OECD FAO

Australia

India

Pakistan

Top 4 Poultry Exporting Countries

4,000 3,000 "000"MT 2,000 1,000 3,678.8

300
200 100 0 23.6 Australia India

8.0 Pakistan

0.0 0 Brazil
Source: OECD FAO

32.3 Brazil Australia

4.7 India

0.1 Pakistan

Source: OECD FAO

32

Regional Analysis: Major Exporters Brazil (Cost Analysis)

Beef and Veal meat live cost has historically shown an upward trend. Prices rose from 668 USD/MT to 1,132 USD/MT from 2004 to 2008 Similar trend can be seen in Sheep meat prices. In 2008 cost for producers was 1,307 USD/MT Brazil is the top Poultry meat exporter with the live cost of 1,247 USD/MT in 2008
Sheep Meat Historic Live Cost
1,400 1,200 1,000 USD / MT 800 USD / MT 1,400 1,200 1,000 800

Beef and Veal Historic Live Cost

1,200 1,000 USD / MT 800 600 400 200 -

2004
Source: OECD FAO

2005

2006

2007

2008

Poultry Historic Live Cost

600
400 200 2004
Source: OECD FAO

600
400 200 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

33

Regional Analysis: Major Exporters Brazil (Price Analysis)

Price of Beef and Veal meat was at its peak in 2008 with the figure of 2,310 USD/MT
USD / MT 2,500 2,000 1,500 1,000 500 -

Beef and Veal Meat Historic Price

Price of Sheep meat also rose gradually from 1470 USD/MT in 2004 to 2467 USD/MT, in 2008 Poultry meat prices were 522, 649, 1,096, 1,384 and 1,619 USD/MT from 2004 to 2008 respectively

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Prices

3,000 2,500 USD / MT USD / MT 2,000 1,500 1,000 500 2004
Source: OECD FAO

Poultry Meat Historic Prices

2,000 1,600 1,200 800 400 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

34

Regional Analysis: Major Exporters Brazil (Exports Forecast)

For brazil, future of Beef and Veal meat export looks optimistic. In 2011, Beef and Veal meat export quantity is forecasted to be 1,883 KT. Major
000MT

Beef and Veal Meat Export Forecasted

2,000 1,960 1,920 1,880 1,840 1,800

jump in Brazilian Beef and Veal meat is expected to come in 2015 when brazil is expected to export 1,990 KT. CAGR is forecasted to be almost 2% for Brazilian Beef and Veal meat export

2011
Source: OECD FAO

2012

2013

2014

2015

Poultry meat export figures are forecasted to be

3,426, 3,346, 3,464, 3,509 and 3,740 thousand MT from 2011 to 2015 respectively. Except for year
000MT 3,800 3,600 3,400 3,200 3,000

Poultry Meat Export Forecast

2011, where the exports are expected to decline, Brazilian Poultry meet growth is forecasted to be positive

2011
Source: OECD FAO

2012

2013

2014

2015

35

Regional Analysis: Major Exporters Australia (Cost Analysis)

In Australia cost of producing Beef and Veal meat was 1,131 USD/MT in 2004, while in 2008 live cost was 1,323 USD/MT
USD / MT

Beef and Veal Historic Live Cost

1,500 1,200 900 600 300 -

Sheep meat price had a downward trend from 2004 to 2007, but price rose considerably in 2008 with the figure of 1,136 USD/MT Poultry meat live cost rose gradually from 996 USD/MT in 2004 to 1,319 USD/MT in 2008

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Live Cost

1,170 1,140 USD / MT 1,110 1,080 1,050 1,020 2004
Source: OECD FAO

Poultry Historic Live Cost

1,500 1,200 USD / MT 900 600 300 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

36

Regional Analysis: Major Exporters Australia (Price Analysis)

Beef and Veal meat prices showed mixed trend historically. Prices were highest in 2007 and lowest in 2004.
USD / MT

Beef and Veal Meat Historic Price

3,000 2,400 1,800 1,200 600 -

Sheep meat prices rose steadily from 4,843 to 5,823 USD/MT from 2004 to 2008
Poultry meat prices were highest in 2008 and lowest in 2006. In 2008 prices were 1,709 USD/MT
Sheep Meat Historic Prices
7,200 6,000 USD / MT

2004
Source: OECD FAO

2005

2006

2007

2008

Poultry Meat Historic Prices

1,800 1,500 USD / MT 1,200 900 600 300 -

4,800 3,600 2,400 1,200 2004

Source: OECD FAO

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

37

Regional Analysis: Major Exporters Australia (Exports Forecast)

Australian Beef and Veal meat export quantity is expected to have a positive growth rate. Forecasted export quantity of Beef and Veal meat
000MT

Beef and Veal Meat Export Forecasted

1,530 1,500 1,470 1,440 1,410 1,380

shows an upward trend from 2011 to 2015. It is expected that in 2015 export quantity will reach 1,516 thousand MT Forecast for Sheep meat export also shows the

2011
Source: OECD FAO

2012

2013

2014

2015

same trend for Australia. The forecasted Australian

Sheep meat export is 423 thousand MT, whereas in 2015 it is expected that exports will increase to
000MT 460 450 440 430 420 410 400

Sheep Meat Export Forecasted

approximately 455 thousand MT, as show in the graph

2011
Source: OECD FAO

2012

2013

2014

2015

38

Regional Analysis: Major Exporters India (Price Analysis)

Sheep Meat Historic Live Cost
2,000 1,500 USD / MT 1,000 500 USD / MT 1,600 1,200 800 400 -

Poultry Historic Live Cost

2004
Source: OECD FAO

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Prices

4,000 3,000 USD / MT USD / MT 2,000 1,000 2004
Source: OECD FAO

Poultry Meat Historic Prices

2,500 2,000 1,500 1,000 500 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

39

Regional Analysis: Major Exporters India (Exports Forecasted)

India is expected to increase its share of Beef and Veal meat in global market, forecasted results show an upward trend. Growth rate is positive
"000"MT

Beef and Veal Meat Export Forecasted

800 780 760 740 720 700

from 2011 to 2014. However, due to religious factors, the exports are expected to be

volatile, since, Hindu activists are protesting to cease Cattle slaughtering through legislation. If this happens, there will be a big gap created in supply and demand of beef in global market In 2011 Sheep meat export is expected to be 23
"000"MT

2011

2012

2013

2014

2015

Source: OECD FAO

Sheep Meat Exports Forecasted

35 30 25 20

KT. it will rise gradually and by 2015 it is expected that India will export 31 KT of Sheep meat. However, Cumulative average growth is likely to be at the lower side

15
10 5 2011
Source: OECD FAO

2012

2013

2014

2015

40

Regional Analysis: Major Exporters Pakistan (Cost Analysis)

Cost of Beef and veal meat have increased gradually for Pakistani producers. Prices were 736 USD/ MT in 2005 and then steadily climbed to 875USD/ MT in 2008 Sheep Meat cost for producers remained relatively at the same level from 2004 to 2008, except for 2007, when it was at 1125 USD/MT Poultry meat cost in 2007 was 790 USD/MT whereas in 2008 it increased to 852 USD/MT
USD / MT

Beef and Veal Historic Live Cost

900 850 800 750 700 650

2004

2005

2006

2007

2008

Source: OECD FAO

Sheep Meat Historic Live Cost

1,200 900 USD / MT USD / MT 600 300 2004
Source: OECD FAO

Poultry Historic Live Cost

1,000 800 600 400 200 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

41

Regional Analysis: Major Exporters Pakistan (Price Analysis)

Prices of Beef and Veal meat remained stable from 2004 to 2006. In 2007 however, it jumped up to 1,750 USD/ MT whereas in 2008 price rose to 1,890 USD/MT In 2007 price was 2,249 USD/MT for Sheep meat but in 2008 , it dropped to 1,957 USD/MT Poultry meat prices showed a gradual increase in its price from 915 USD/MT in 2004 to 1,151 USD/MT in 2008.
USD / MT

Beef and Veal Meat Historic Price

2,000 1,500 1,000 500 -

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Prices

2,500 2,000 USD / MT 1,500 1,000 500 2004
Source: OECD FAO

Poultry Meat Historic Prices

1,400 1,200 1,000 USD / MT 800

600
400 200 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

42

Regional Analysis: Major Exporters Pakistan (Exports Forecast)

In 2010, Pakistan exported 20 KT of Beef and Veal meat. Forecasted figures for 2011 is 27 thousands MT, which means a growth rate of almost 35%. After 2012, it is expected that Pakistani Beef and Veal meat exports will decrease in the global market. In 2015 it is expected that Pakistan will export 26 thousand MT of Beef and Veal meat.
"000"MT

Beef and Veal Meat Export Forecasted

40 30 20 10

2011

2012

2013

2014

2015

Forecasted figure for 2011 is 8 thousand MT for

Sheep meat export which is same as what Pakistan exported in 2010. Major export surge in Sheep
"000"MT 9 8 7 6 5 4

Source: OECD FAO

Sheep Meat Exports Forecasted

meat is likely to come in 2014, when Pakistan will export approximately 8.5 KT of Sheep meat across the globe

2011
Source: OECD FAO

2012

2013

2014

2015

43

Regional Analysis: Comparative Analysis Exporters (Cost

Analysis)
In 2008 Pakistan had a comparative advantage of being a low cost producer of Beef and Veal meat. Results also show that Brazil and Australia were suffering from high cost of producing Beef and Veal meet India has the highest cost of Sheep meat whereas Pakistan has lowest cost of 978 USD/MT Poultry meat stats for 2008 also showed the same trend, India cost of Poultry meat was highest whereas Pakistan cost was lowest in top four Exporting countries Sheep Meat Historic Live Cost Comparison 2008
2,000
1,500 USD / MT 1,000 500 Pakistan
Source: OECD FAO

Beef and Veal Historic Live Cost Comparison 2008

1,500 1,200 USD / MT 900 600

300
-

N /A

Pakistan
Source: OECD FAO

India

Brazil

Australia

Poultry Historic Live Cost Comparison 2008

1,600
1,200 USD / MT 800 400 -

India

Brazil

Australia

Pakistan
Source: OECD FAO

India

Brazil

Australia

44

Regional Analysis: Comparative Analysis Exporters (Price

Analysis)
Australia was charging the highest price of 2,646 in 2008 whereas Pakistan was charging the lowest price of 1,890 USD/ MT
USD / MT

Beef and Veal Meat Historic Price Comparison 2008

3,000 2,250 1,500 750 N /A

Australias Sheep meat price was 5,828 USD/MT whereas Pakistani Sheep meat price was 1,957 USD/MT In 2008, Indian Poultry meat price was highest amongst the top 4 exporting countries whereas Pakistani poultry meat prices ware lowest. Because of their low cost they were able to sell Poultry at lower prices Sheep Meat Historic Prices Comparison 2008
7,500
6,000 4,500 3,000 1,500 Pakistan
Source: OECD FAO

Pakistan
Source: OECD FAO

India

Brazil

Australia

Poultry Meat Historic Prices Comparison 2008

2,500
2,000 1,500 1,000 500 -

India

Brazil

Australia

Pakistan
Source: OECD FAO

India

Brazil

Australia

45

Regional Analysis: Comparative Analysis Exporters (Local

Markets Margins Analysis)
Following Margins were calculated by subtracting live animal cost from local retail prices:
Australia was enjoying the highest margins in 2008, whereas Pakistani Beef and veal meat margins were at the lower side, shown by the figure of 1,015 USD/MT Australian Sheep meat had the highest margins in 2008 whereas Pakistani Sheep meat had the lowest margins for the same year. In poultry meat India had the highest margins whereas Australia held the 2nd spot in 2008 with the margins of 396USD/MT
USD / MT 1,400 1,200 1,000 800

Beef and Veel Meat Margins Analysis 2008

600
400 200 Pakistan
Source: OECD FAO

N /A

India

Brazil

Australia

Sheep Meat Margins Analysis 2008

5,000
4,000 USD / MT 3,000 2,000 1,000 Pakistan
Source: OECD FAO

Poultry Meat Margins Analysis 2008

600
500 USD / MT 400 300 200 100 -

India

Brazil

Australia

Pakistan
Source: OECD FAO

India

Brazil

Australia

46

Regional Analysis: Major Importers KSA (Price Analysis)

Beef and Veal Meat prices increased steadily during the period of 2004-2008 in the kingdom of Saudi Arabia by almost 27%
USD / MT

Beef and Veal Meat Historic Prices

7,000 6,000 5,000 4,000 3,000

Sheep meat prices were highest in 2008 in KSA. In 2008 price of Sheep meat was 7,687 USD/MT Poultry meat prices went on a roller coaster ride rising from 1,513 in 2004 to 1,907 in 2008, showing higher demand and acute supply of poultry meat

2,000
1,000 -

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Prices

9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 2004
Source: OECD FAO

Poultry Meat Historic Prices

3,000 2,500 USD / MT 2,000 1,500 1,000 500 -

USD / MT

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

47

Regional Analysis: Major Importers KSA (Imports Forecasted)

Consumption of Beef and Veal is expected to increase in KSA which will lead to the increase in import quantity of Beef and Veal meat. Forecasted import quantity for 2011 is 110 KT. Sheep meat imports will increase during 2011 to 2015. Market analysis shows that there will be a significant surge expected to come in 2014, when KSA will import almost 116 KT of Sheep meat It is expected that poultry meat imports will rise gradually in KSA and Cumulative average growth rate will be almost 2% during 2011 to 2015 Sheep Meat Imports Forecated
120 "000"MT

Beef and Veal Meat Imports Forecasted

120

115

110

105

2011

2012

2013

2014

2015

Source: OECD FAO

Poultry Meat Imports Forecasted

800 750

"000"MT

"000"MT 2011 2012 2013 2014 2015

110

700 650

100

90
Source: OECD FAO

600 2011
Source: OECD FAO

2012

2013

2014

2015

48

Regional Analysis: Major Importers Malaysia (Price Analysis)

Price of Beef and Veal meat in Malaysia was 3,641 USD/MT in 2004. After that price swelled gradually in Malaysia and in 2008 price of Beef and Veal meet was 5,059 USD/MT, an increment of 39% from 2004 prices
USD / MT

Beef and Veal Meat Historic Prices

6,000 4,500 3,000 1,500 -

Sheep meat price was less than Beef and Veal price in 2004, 2005, 2006 and 2007, but in 2008 Sheep meat price of 5,211 USD/MT was greater than Beef price
Poultry meat prices were highest in 2008 and lowest in 2004. Overall Poultry meat prices has witnessed a price lift of 43% during the period of 4 years

2004
Source: OECD FAO

2005

2006

2007

2008

Sheep Meat Historic Prices

6,000 4,500 USD / MT 3,000 1,500 2004
Source: OECD FAO

Poultry Meat Historic Prices

2,000 1,500 USD / MT 1,000 500 -

2005

2006

2007

2008

2004
Source: OECD FAO

2005

2006

2007

2008

49

Regional Analysis: Major Importers Malaysia (Imports Forecasted)

It is expected that Beef and Veal meat consumption will increase in Malaysia in near future. To meet demand, it is forecasted that Malaysia will import almost 164 thousand MT of Beef and Veal meet

Beef and Veal Meat Imports Forecasted

182 175 "000"MT 168 161 154

Same trend is forecasted for Sheep meat imports. Import quantity will gradually increase during 2011 to 2015.In 2011 it is expected that Malaysia will import almost 23 thousand MT of Sheep meat (Check graph)
From 2011 to 2015, it is forecasted that Malaysia will import 56, 55, 58, 56 and 58 thousand MT of poultry meat respectively

2011

2012

2013

2014

2015

Source: OECD FAO

Sheep Meat Imports Forecated

24 23 "000"MT 58 57 "000"MT 56 55 54 2011
Source: OECD FAO

Poultry Meat Imports Forecasted

22
21 20 19 2012 2013 2014 2015

2011
Source: OECD FAO

2012

2013

2014

2015

50

Regional Analysis: Freight Cost Regional Analysis: Freight Cost

Lahore Jeddah Karachi Dubai

Lahore to Dubai and Jeddah ,Air Freight PKR 56,000 / MT and PKR 57,000 / MT respectively Karachi to Dubai and Jeddah ,Air Freight PKR 54,000 / MT and PKR 55,000 / MT respectively Lahore to Karachi, Refer Container, 16,000 / MT and Karachi to Lahore, Refer Container, 17,000 / MT Karachi to Dubai and Jeddah, Sea Freight, PKR 8,000 / MT and PKR 8,500 / MT
Source: Primary Research

51

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan Animal Supply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

52

Meat Shop in Lahore A Case Study: Market Need Assessment

Young Population Range ( Below 30 Years) ~70%

Time Constraints Higher Working Class Population Population Health Issues

Lahore Need Assessment

Total Population ~10 Million

Lower Medical Restrictions Consumption Pattern More On hand Disposable Income Available

Increased Demand For Processed Meat

Total Middle & Upper Class Population ~1.5 Million (Source: Global Health Facts)

Dinning Out Trend

Higher trend of dinning out
53

Branch in Lahore A Case Study: Pros & Cons

No brand recognition High operating cost New competitors entering the Lahore market Hyper Markets selling each and every grocery including fresh meat Increase in Population High margins still enjoyed by established competitors in Lahore Meat industry Increase in population of migrants

Meat Shop in Lahore

Established Competitors:
Zenith Meat Shop Neat Meat Lahore Meat company

Recommendation
In light of Pros & Cons discussed, we recommend to open a Meat Shop in Lahore

Increase in average household income of Lahore Life style changes Favorable Demographics (Large % of young population)

54

Table of Content

1. Global Meat Industry

2. Global Halal Food Industry 3. Pakistan AnimalSupply Analysis 4. Pakistan Meat Demand Analysis 5. Regional Analysis

6. Meat Shop in Lahore A Case Study

7. Investment Highlights

55

Key Investment Highlights

Key Risks
Low barriers of entry in Local Market
Standardize product Threat of Substitute Products is also high. They have to keep their prices competitive with that of ordinary butcher shops Quality control standards

Key Rewards
Still few Competitors, not engaged in price war with each other
Favorable demographics in the local market. Room is available in global market, industry can increase its export to meet the demand of Middle East Suppliers are not well organized so they do not have much bargaining power Export Quota approval required by GoP for exporting meat Target Countys government approval also mandatory for exporting meat in some target markets making it difficult for new exporters to enter the market Setting up a distribution channel Dubai, allowing for exporting Meat sea, there by lowering freight cost in via

Export Quota Contraction by GoP

Threat of Import Ban imposition by target market governments, in case any exporter from Pakistan exports substandard meat Local Supply shock of live animal might hurt International Margins currently enjoyed by Pakistani exporters

56