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Three Challenges Identified for Bangladeshi Poultry Industry

14 June 2013

BANGLADESH - The poultry industry is challenged by a lack of access to credit, competition from imports and outbreaks of diseases, including avian flu.

The country's poultry sector with an estimated investment of Tk 200 billion is fraught with problems that need immediate attention, according to Wasi Ahmed in Financial Express (FE) of Bangladesh. Lack of access to finance in terms of affordable bank credit, anomalies in duty structure of imported materials - particularly feeds, 'unfair' competition from foreign farms and the frequent outbreaks of avian flu are some of the known maladies threatening existence of this highly prospective sector.

That the country's poultry industry would grow to such prominence was not at all anticipated when around three decades back small entrepreneurs began to tread on this uncharted territory with no clear vision of the promise it held for them in the years to come, according to the report. There were no special facilitating measures in place to cater to the needs of the new sector except what the government's veterinary department had to offer, understandably with limited resources and expertise. Despite the initial constraints, the sector saw a boom with more and more entrepreneurs rushing into it. In less than a decade poultry became the bread earner of a sizable population. In the years following, the sector grew steadily, despite occasional hiccups, to demonstrate a visibly commendable role in the economy. A look at the contribution of the sector to the country's economy will, among others, reveal the highly laudable employment it generates, that too in rural and semi-rural areas. No wonder, this sector is the second highest employment provider in the private capacity, next only to the readymade garment industry. Endowed with its unique distinction of rural employment, mass migration of labour  - common to most other sectors - has not happened to add to the population burden in urban areas. From small and apparently insignificant strides this sector emerged in its own right to satisfy the most valued protein requirement of the country's 160 million people.

Financial Express reports that, although the country's poultry industry rose to prominence within a short time, the shocks that came its way were too daunting for the infant industry to fight against and absence of adequate sustenance from the government made it more and more vulnerable to such shocks - mainly in the form of annihilating epidemics. Industry insiders observe that there has been a steady decline in meat and egg production since the frequent avain flue epidemics in 2007 and 2009 shook the entire industry almost to its extinction. It has been reported that the number of poultry farms which stood at around 115,000 in 2007 has drastically come down to as low as around 55,000. Between 2011 and 2012 alone, nearly 25,000 farms were shut down mainly due to the outbreak of the epidemic.

Those concerned are of the opinion that unless the government comes up with a proactive poultry policy and an effective plan of action, things are going to further deteriorate in the days to come, according to the newspaper. The report says that there is a critical need for the much desired harmony between consumer demand for eggs and broiler meat and planned production. This in the first place may necessitate substantial input of resources by way of doubling the parent stock, hatcheries, broiler and layer farms, feed meal plants, among others. The government's farm credit policy, which excludes poultry sector from its eligible credit-worthy sub-sectors, should also be forthcoming to find ways to extend a helping hand to this susceptible but highly prospective sector.

Industry leaders complain that following the severe setback suffered by the sector due to intermittent attacks of avian flu, particularly in the year 2007 and after, the government should have been more forthcoming in providing the required nourishment that the sector badly needed to overcome the difficulties. Such nourishment, they hold, could come by way of fiscal incentives such as exemption of poultry materials from import duties and VAT for a certain period of time, particularly in respect of import of bio-security kits which are used to prevent the outbreak of avian flue. It has been reported that currently importers pay 78 per cent duty and VAT to import such kits.

To the prevailing situation a new threat from foreign competitors now appears to be no less challenging, according to Financial Express. It is being alleged that the foreign farms operating in the country are far more competitive because of the low-cost loans they avail from their banks at home, compared to the unaffordable loan terms in Bangladesh's commercial banks. Beside low-cost fund, they are better equipped with high-tech machinery and composite feed.

Speaking of lack of protection or a level playing-field for the domestic entrepreunrs, the president of the Breeders Association of Bangladesh told the FE recently that these foreign companies procure funds from their respective countries at a landing rate of only 5.0 per cent as against that of more than 17 per cent available in Bangladesh.

"On this uneven turf, local companies cannot survive in the industry in the long run," he added.

There is a growing fear that the local breeding farms would find it extremely difficult to compete with the foreign companies if the present situation persists. In the face of uneven competition a good number of them might perish soon, according to industry insiders. There are questions too on the legality of the operation of some of these foreign farms. If this allegation contains even a trace of truth, the authorities must sit up to examine the matter.

Under the circumstances, a proactive poultry policy not only to address the problems facing the sector but also to revitalise its potential with required facilitation is the need of the hour, concludes the newspaper report.

Further Reading

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