Preface
The Arab World consists of 22 independent countries spread over the south eastern part of Asia and all north Africa and most of the eastern part of Africa. Even though it covers vast areas of desert land, however it enjoys huge natural resources such as petroleum, minerals, fish and fertile land; if properly managed and efficiently used for the benefit of its peoples, it will empower the Arab World, unified and cooperating, to produce all its needs of food.
The land area of the Arab World is 1378 million hectares or 10% of the area of the globe (table 1). The arable area is 538 million hectares or 39% of total area.
This arable area represents 11% of the total arable area of the globe. Therefore it is possible to reclaim and cultivate this land and improve its productivity in order to self satisfy the Arab World’s food needs.
During 2005 the Arab World’s population reached 330 million (table 2). 23% of this number live in Egypt while 31% live in Algeria plus Morocco plus Sudan. The population of the Arab World represents 5.3% of the world population which is 6650 million people. Only 36 million people live from agriculture representing 10.4% of the total population while 20% of the world population live from agriculture.
The poultry industry in the world centers on the production of two edible products namely table eggs and poultry meat. Many complimentary industries revolve around the production of those two products: poultry breeding – grand parent and parent farming- hatching – cereal and oil plant production - processing of oil plants – feed production – poultry slaughtering and processing – table egg processing – vaccine production – vitamin and mineral production – poultry medicinal and disinfectant production – equipment manufacturing – manufacture of packaging materials - table egg and poultry meat further processing.
In order to facilitate the discussion of our subject, I shall limit the study on table eggs and poultry meat production.
Table Egg Production
Table egg production in the Arab World in 2005 reached 23.9 billion eggs (table 3) representing 2.5% of the world production. The per capita production ranged from 17 eggs in Comoros to 212 eggs in Lebanon with an average of 71 eggs . World average is 146 eggs.
I expect that by year 2015 most of the Arab Countries will reach self sufficiency with an average per capita consumption of 83 eggs. Production will increase by 50% due to a 25% increase in population and an increase in per capita consumption. At that point I expect per capita consumption to range from 22 eggs in Comoros to 333 eggs in Lebanon. The 83 eggs figure for 2015 represents only 32% of the average per capita consumption of certain industrial countries in 2005 (table 4).
Egg trade is quite limited between countries excepting between very close neighboring ones. This is because consumers require fresh eggs and not refrigerated ones. Thus we can safely conclude that egg production will continue to increase in each Arab country to meet the increased demand due to population increase and the increase in per capita consumption. Therefore, I will not delve into assumptions of exports and imports of table eggs from and to the Arab countries.
Poultry Meat Production
The issue of poultry meat production in the Arab countries drastically differs from that of table egg production. The cost of poultry meat production is generally the same in all Arab countries especially because they all import their feed ingredients, parent stocks, vaccines, medicinals and disinfectants. As such their cost of producing poultry meat is double that of countries that produce their own feed ingredients. Therefore each of the Arab countries sets its own policy as to protecting its local poultry meat industry or opening up for imports. Table 5 shows that total imports in 2005 reached 1.13 million tons representing 31% of consumption (see table 6). Most of the imports came to five countries namely Kuwait, Saudi Arabia, Iraq, Arab Emirates and Yemen where the policy facilitates imports and where frozen poultry meat is agreeable to consumers.
Since most of the Arab countries have become members of the World Trade Organization (WTO), and since the cost of production of the major exporting countries such as Brazil, USA, Argentina, Thailand and others is half of that of the Arab countries, and since most Arab countries have become accustomed to consuming frozen poultry meat, I can easily see the production of poultry meat dwindling and be replaced by imported frozen excepting the portion that is requested live or fresh. The latter will represent 10 – 50% of the annual consumption of a country depending on the pattern of consumption, the purchasing power, and the protectionist policy of each of the Arab countries.
Table 5 shows the import volume of poultry meat for each Arab country during 2005. My estimated imports for 2015 is double that of 2005 representing 42% of consumption of 2015. Per capita consumption will increase from 12.3 kgs to 14.9 kgs by 2015. This increase is a modest one compared to the average per capita of certain industrialized countries during 2005 which is 33.5 kgs (table 8).
It is worth noting in table 6 the vast difference in the per capita consumption between the Arab countries; from 0.8 kgs in Sudan to 57 kgs in Kuwait during 2005, while it was 6.8 kgs in Syria, 18 kgs in Libya and 23 kgs in Lebanon. It is equally interesting to know that the highest per capita consumption of poultry meat in the world is in Kuwait with 57 kgs followed by 54 kgs in USA.
The poultry meat production in the Arab World as shown in table 7 shows a reduction in the average per capita between 2005 and 2015 because of the reduction in production at the expense of increased imports. Such production remains low since it represents 3.37% of the World’s production while the Arab population is 5.3% of world population.
Repercussions of Avian Influenza in the Arab World Since 1997 Highly Pathogenic Avian Influenza (HPAI) H5 and H7 has been plaguing the world. It has spread to more than 60 countries, killed millions of birds and caused 160 human fatalities.
The importance of this disease and the wide noise it created lies in the possibility of its mutation to a degree which allows it to infect humans and eventually spread from human to human thus threatening to become pandemic and kill millions. However, ten years after it started spreading, several measures have been taken to limit its spread and thereby limit the possibility of the occurrence of a pandemic.
The use of inactivated AI vaccines in most countries that were exposed to the disease has proven its effectiveness in limiting its spread and in protecting the vaccinated flocks contrary to the predictions of many scientists especially human doctors. Other factors that helped were biosecurity measures and separation of poultry rearing from pig rearing.
Industrialized countries exercised stamping out policies within zones of 3 to 10 km radius from the infected farm with strict prevention of bird movement outside the zoned area. This policy worked because fair compensation was paid to farmers. Furthermore, rural poultry keeping is rare in such countries.
However, in underdeveloped or developing countries, governments could not exercise the stamping out policy because they were not able to compensate farmers. They have had to allow vaccination. Commercial poultry benefited from this permission, but rural poultry remained unvaccinated and thus at risk. The disease remained infecting rural poultry and peasants as well. Nevertheless, vaccination and biosecuruty measures have proven effective in drastically reducing the spread of HPAI.
In the Arab world low pathogenic avian influenza (LPAI) H9 spread in the Arab gulf countries, Iraq, Saudi Arabia, Yemen, Jordan, Syria and Lebanon since 2002. Governments of these countries permitted vaccination using inactivated H9 vaccines. This measure has limited its spread and economic losses of mortality and production. Luckily this LPAI stopped short of spreading to the African continent. Thus the Arab African countries remained free from this type of influenza.
However, it is unfortunate that Egypt was the only Arab country which was hit with HPAI H5N1 early 2006. The disease has wiped out 40% of the poultry population in the country. It has changed the structure of the industry and the government’s perception of its viability and thus its need to protect it. This has led the industry leaders to be reluctant to modernize it and revive it. The basic reason for the widespread of the disease in a very short period was the widespread of the rural free range keeping of chickens, ducks, turkeys and pigeons in all governerates as well as commercial poultry keeping in primitive poultry houses of all ages in very close proximities and lack of biosecurity measures in such farms and areas.
The permission to use inactivated H5 vaccines, late as it was, has saved all commercial poultry since mid 2006. However, lack of vaccinating the rural poultry has kept the disease spreading in such areas and caused fifteen human casualties amongst rural women who kept poultry in their houses and who were always used to slaughtering any bird that shows any sign of disease before it dies. Even though no single human casualty appeared in commercial poultry keepers and workers, the Egyptian government decided to prevent live poultry markets but failed in implementing this directive. It is worth nothing that 70% of poultry sales used to occur in live markets within cities or villages.
The Egyptian veterinary authority prevented movement of live birds unless samples were checked and found free from the virus. In spite of such a measure, the government kept chasing live market outlet owners. In the absence of sufficient slaughtering capacities, this measure interrupted regular production and increased prices. The government took this reason as a good excuse to open up imports with no tariffs for nine consecutive months. Thus, and after absence for 20 years, imported frozen chickens reappeared flooding the catering and retail markets.
Poultry industry leaders expressed their readiness to develop the industry by moving most poultry keeping to the desert areas, establishing modern slaughtering facilities and improving biosecurity measures. However, the Egyptian government adamantly expressed its willingness to reduce the import duty from 30% to 0% within three years. This has led the investors to shy away from investing in new facilities thus modernizing the industry. Because they are very aware of the danger of competition from countries whose cost of production is half of that in Egypt such as Brazil, USA, Argentina and Thailand who produce their feed and who have the capability to increase their production and meet the added demand from several countries in the world.
Thus we see how the largest Arab country neglected to take appropriate measures to prevent the infection and spread of HPAI inspite of all the threats coming from the far east since 1997, from the middle east since 2002, from Italy since 2001 and from Turkey in the fall of 2005. the Egyptian government hesitated for a full month after the outbreak to allow the introduction and use of the inactivated vaccine, thus inflicting the worst avian influenza catastrophe in the world so far amongst the poultry population. Such losses besides the human casualties drove the government to remove the 30% import duty and allow imports of frozen poultry. It is worth noting that the Egyptian poultry industry is valued at 2.6 billion dollars and employs half a million people directly and half of this number indirectly. It has provided sufficient eggs and poultry meat for the Egyptian population for 20 years and was capable of exporting day-old chicks and hatching eggs worth 200 million dollars annually since 2002.
The Egyptian experience ought to be a lesson to the rest of the Arab world in order to take measures to prevent occurrence of the disease such as: impose biosecurity – vaccinate against prevailing strains of AI – impose minimum distances between farms – stop free range rearing and impose housing such poultry – impose vaccination of rural poultry – extend free laboratory diagnostic services – prevent wild bird hunting – protect the local industry by appropriate import duties. Only such measures can save the poultry industries and entice investments in modern poultry farms, hatcheries and slaughter houses. Such measures will eventually create an industry capable of providing self sufficient safe quantities of fresh table eggs and fresh poultry meat to its populations. Such measures will prevent shortages of such nutritious products to its populations in case AI invaded exporting countries such as Brazil or USA or others.
Open trade vs protectionist policies
It has been an acceptable principle that an economic policy of any country must stem out of the interest of all sectors of societies. Normally, the private sector in free economies can take up the hardest tasks provided that the legislations are clear such that under normal conditions projects realize predictable profits. This principle ought to be applied on agricultural sectors as well including the poultry sectors.
USA and Europe have long realized this principle. They have not only protected their farmers from unfair competition from the imported, but they have gone extra miles to subsidies their farmers thus allowing them to keep producing sufficient safe foods for their populations. The USA and Europe have recently resorted to their farmers with lucrative incentives to produce more crops that can generate the renewable energy. The farm bill in the USA is revisited every five years to ensure fair compensation to farmers; US farm Subsidies have exceeded $180 billion annually. Europe on the other hand has the “ Common Agricultural Policy ” established 40 years ago. Its objectives are periodically reviewed. The present yearly subsidy provided to European farmers exceed 50 billion Euros.
Both USA and Europe stand firm on subsidizing their farmers with the following justifications:
Inspite of its huge size, farm subsidies in USA and Europe do not exceed 0.5% of their GDP. The problem lies in the poor, underdeveloped and developing countries where GDP is low and governments lack the capability to subsidize. It is for this reason that I can see no real interest for such countries to rush and join WTO unless with their own favorable terms. On the other hand I cannot blame the industrialized countries on subsidizing agriculture, a practice which has so far resulted in innovation, productivity and technological advancements. I can also blame the developing countries including the Arab countries for lack of protecting their farmers from unfair competition of imported products including poultry meat. Such policies have so far resulted in worsening the economies of the Arab countries, in scaring investors and in increasing emigration of qualified citizens.
Balanced economies is the moto of developed countries. The USA has become the world’s largest exporter of corn and soybeans, and is self sufficient in cotton, rice, meat and dairy products. Europe strives to keep farmers producing wheat, dairy products olive oil and meats. Canada, who is a NAFTA member, imposes high import duty on dairy and meat exceeding 200% even on such imports from its partner USA. Japan prevents imports of red meat and rice from USA even though it is a member of WTO.
It is worth mentioning that WTO trade agreement on agriculture has never been agreed upon or signed up till now and after 50 years of the inception of WTO mainly due to the insistence of the industrialized countries to continue subsidizing their farmers and to continue upgrading their food quality standards.
Therefore Arab countries must adopt trade agreements with other countries based on their own interest and not necessarily bound to WTO which might be crippling to its economies. There is a big difference between free trade and trade agreements on exchanging products with free will that serves the interests of agreeing partners. The Arab countries are generally underdeveloped with high cost of production and thus inability to export. Their only refuge to initiate and encourage investments is a protectionist policy which is fully realizable and agreeable to WTO rules.
Possibility of developing the poultry industry in the Arab World
It seems that developing table egg production in the Arab world is possible and realizable since it is required fresh inspite of the higher cost of producing it compared to certain other countries. Therefore table egg production will continue to increase to meet demand via adopting cages and environmentally controlled houses. FAO import figures for the largest 13 Arab countries during the period 2000 to 2005 ranged between 383 million and 415 million eggs. Such figures represent only 1.95% of the production of these countries.
On the other hand, meat production in the Arab countries depends on protecting this production from imports from countries whose cost of production is only 50% such as Brazil, USA, Argentina and Thailand. If we revisit tables 5 and 6 we find that during 2005 the Arab countries imported 1.126 million tons representing 31% of the total consumption. FAO import figures for the largest 13 Arab countries between 2000 and 2005 ranged from 465,000 tons to 770,000 tons or an increase of 66% in five years. This happened inspite of the fact that most of those countries impose import duties on poultry meat imports ranging between 20 and 70%. This means that the Arab countries are quite ready to increase their imports of frozen poultry meat at the expense of their local production.
This leads us to conclude that the development of the poultry meat industry in the Arab world shall depend on two options or both:
I believe that most Arab governments are not willing to adopt the protectionist policy. They will most probably reduce the import duties until fully eliminating them. This leaves us with the second option. Reduction of cost of production by 70% depends on two factors.
The cost of these two feed items remained lower than the cost of producing them in any Arab country since 1960. Only during 2006 did their prices increase dramatically after the USA has decided to encourage ethanol production from corn via extending financing of ethanol plants and subsidizing the price of ethanol. This prompted increasing the plantation of corn at the expense of soybeans and even wheat and barley. Thus prices of all these commodities sky-rocketed during 2007.
Recent studies indicate that the USA will increase its use of corn for ethanol production from 75 to 150 million tons by 2015. Feed corn will stagnate at 190 million tons. This means that prices of corn, soya, wheat and barley will not drop until other countries such as Argentina, Brazil, Australia, Canada, Ukraine and others increase their production to face the shortage. This leads us to believe that certain Arab countries may be able to produce their needs of corn and soybean at prices lower than the cost of importing them by the equivalent of their freight cost or more. This factor might bridge the gap of the cost of producing poultry meat in the Arab countries compared to the cost of importing it.
It is beneficial to mention that Sudan is the only Arab country that produces its needs of sorghum (replacing corn) and sesame plus peanuts (replacing soybeans). Their prices have recently become 50% lower than corn and soybeans. The arable area in Sudan is 135 million hectares while the cultivated is only 16 million hectares or 12%. Sudan is capable of producing and supplying the rest of the Arab world with its needs of grain and oil seeds for poultry production of eggs or meat if and when the required infra-structure is in place and investment is encouraged. This same theory applies to Syria and Iraq whose agricultural capabilities are great too.