The Khyber Pakhtunkhwa Board of Investment and Trade is eyeing Afghanistan’s beef market potential, which, it believes, would create new investment opportunities and jobs in the province.

It proposes to promote export-oriented slaughter houses in the private sector as a part of the board’s strategy to boost agricultural and regional development.

“Beef exports would also help control smuggling of cattle to Afghanistan,” says Mohsin Aziz, vice chairman of the Board. Afghanistan relies heavily on cattle supplies from KP.

The provincial government also plans to spend Rs100 million — Rs50 million each in the current and the next financial year — to set up slaughter houses in some district headquarters as part of its regional development plan.

A significant portion of the demand in Afghanistan is met by KP’s animal markets, as a result of which beef prices remain high in Peshawar and urban centres of the province’s central districts.

The price situation became so acute in 2012 that the Peshawar High Court took a suo moto notice and banned the country’s cattle and poultry exports to Afghanistan for more than six months. However, the PHC relaxed the restriction in January 2013. The court ordered a significant cut in the regular export quota to the neighbouring country, from 7,000 to 3,000 animals per month.

The reduction was aimed at ensuring sufficient supplies of beef in the local markets.

The provincial authorities had also been directed to regularly submit compliance reports on export performance to the court.

While the prices of meat have remained stable in Peshawar since the court’s decision, the smuggling of cattle to Afghanistan continues unabated, according to sources in the livestock sector.

For creating an enabling environment for investment, the board’s vice chairman sounds optimistic.

“What we are looking at is different than merely establishing slaughter houses; we are talking about setting up Halal meat businesses to cater to markets in Afghanistan with an outreach, in the longer run, to the Central Asian markets,” explains Mr Aziz.

As per the Board’s plan, a private sector consultant would be hired to prepare a feasibility study and a business plan for the prospective investor(s). The Board, said Mr Aziz, would facilitate investors in setting up the slaughter houses/meat export businesses. The provincial government, said Mr Aziz, would provide market information to the prospective investors.

Officials of the Khyber Pakhtunkhwa livestock and dairy development department acknowledge the benefit of value-addition in exporting meat to Afghanistan, instead of live animals only.

“While the prospects of exporting beef to Afghanistan seem pretty bright, mutton exports might be a risky affair for businesses operating out of the province,” says an official.

He argues that cows could be arranged in sufficient numbers for exporting beef to Afghanistan, but sheep would be difficult to arrange in large numbers.

Mr Aziz points out that for exporting Halal mutton to Afghanistan, one will have to rely on supplies from Sindh and Punjab.

That would not be a cost-effective proposition. Afghanistan, according to business circles, has a large and growing beef market, but is short in cattle to fully meet local demand.

However, the Board’s intended move is not without a downside risk. The processed meat would be expensive and may not capture segments of the Afghan markets, relying heavily on the animals smuggled from Pakistan.

Nonetheless, the business model being developed for exports to Afghanistan can be replicated, on a limited scale, owing to KP’s growing consumer markets.