Poultry meat consumption has been increasing in all the MENA countries at an average rate of 5 % per annum. This is due partly to the increase in population and partly to the relative increase in red meat prices as compared to poultry meat. The source of this meat has been local production and imports. However, due to the lower price of the imported frozen poultry meat, the increase of consumption has mainly come from imports even in certain cases at the expense of local production.
The cost of production in all MENA countries is almost similarly high. The main reason is the importation of feed ingredients. The phenomenon of engagement of consumers to buy live chickens or freshly dressed ones has maintained a certain sizeable percentage of consumption from locally produced irrespective of price difference. The average per capita consumption in the MENA countries does not exceed 16 Kgs/annum at present, 10 Kgs of which are locally produced. In order to maintain or increase the local production, three aspects need to be addressed:
Farmers to improve efficiency of production by reducing average broiler mortality to below 5% and reducing feed conversion to below 1.65 Governments to impose protective measures on imports especially to counterbalance agricultural and export subsidies practiced by exporting nations. Governments to encourage efficient grain and oil seed production in countries like Sudan, Egypt, Turkey, Iraq, Syria, Algeria and others. Preface The Arab World which represents most of the MENA region 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. 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 2012 the Arab World’s population reached 352 million.
The population of the Arab World represents 4.91 % of the world population which is 7.162 billion people. Only 95 million people live from agriculture representing 27 % of the total population while 38 % of the world population live from agriculture.
Those that are involved in poultry production in the Arab World do not exceed 90,000 people or 0.10 % of the agricultural population. This percentage exceeds that of the world figure which is only 0.03 %. It is noted here that the poultry industry does not employ large numbers due to mechanization especially in the use of cages, hatcheries, feed plants, processing plants etc… 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 poultry meat production. Poultry Meat 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 (1) shows that total imports in 2011 reached 2.3 million tons representing 41 % of consumption (see table 2).
Most of the imports came to five countries namely Kuwait, Saudi Arabia, Iraq, Arab Emirates, Egypt 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, Ukraine 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 (1) shows the import volume of poultry meat for each Arab country during 2011. My estimated imports for 2016 are 32 % higher than that of 2011 representing 47 % of consumption of 2016. Per capita consumption will increase from 15.8 kgs to 16.6 kgs by 2016. This increase is a modest one compared to the average per capita of certain industrialized countries during 2010 which is 34.8 kgs. It is worth noting in table (2) the vast difference in the per capita consumption between the Arab countries; from 1.17 kgs in Sudan to 59 kgs in Kuwait during 2012. The poultry meat production in the Arab World as shown in table (3) shows a modest increase in the average per capita between 2012 and 2016 because of the reduction in production at the expense of increased imports. Such production remains low since it represents 3.61 % of the World’s production while the Arab population is 4.9 % of world population. 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 exceeds 55 billion Euros. Both USA and Europe stand firm on subsidizing their farmers with the following justifications: Ensuring a stable supply of affordable and safe food for their populations. Providing a reasonable standard of living for their farmers, while allowing the agricultural industry to modernize and develop. Ensuring that farming could continue in all regions. Looking after the well being of the rural societies.
Improving the quality of food. Guaranteeing food safety. Ensuring that the environment is protected for future generations. Providing better animal health and welfare conditions. In spite 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 are the motto 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, to continue upgrading their food quality standards, and continue preventing imports of the majority of agricultural and food products.
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 in spite 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 2005 to 2010 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 and Ukraine. If we revisit tables (1) and (2) we find that during 2011 the Arab countries imported 2.3 million tons representing 41 % of the total consumption. FAO import figures for the largest 13 Arab countries between 2005 and 2010 ranged from 465,000 tons to 770,000 tons or an increase of 66% in five years. This happened in spite of the fact that most of those countries impose import duties on poultry meat imports ranging between 20 and 30 %.
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: Increasing the import duties. Reduction of cost of production by 50%. 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 50% depends on two factors: Improving productivity to levels available at the exporting countries. This includes reduction of mortality in broiler flocks to a yearly average below 5%, reduction of feed efficiency to below 1.65 and improving broiler parent productivity to over 135 broiler chicks per hen housed.
Such achievements will reduce cost of broiler production by 30%. The extra 20% reduction in the cost of production can only come from producing corn and soybean in the Arab countries at slightly lower than the cost of importing them delivered to these countries.
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 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 been equal or slightly 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. Beirut, September 1, 2014