Virus puts a damper on Eid economy

Updated 04 Aug 2020

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EIDUL Azha, the festival of sacrifice, did not feel like the same this year. The difference was not in spirit but in the visibility of celebrations owing to mostly Covid-19–inspired reasons.

The size of the market did shrink massively for economic and health reasons but the countrywide shrinkage was perhaps less significant than what it felt like in cities like Karachi and Lahore. The slump in the volume of sacrificial activity in major cities was compensated partially by the hike in animal sacrifices in rural Pakistan this year.

The difference in the volume of business was marked in Karachi, Lahore and other big cities of Punjab but not as obvious in Quetta, Peshawar and other cities of the three smaller provinces, our telephonic survey revealed. The reasons forwarded include a higher level of awareness and better governmental oversight in the top-tier cities of Punjab and Karachi.

The sudden announcement of a smart lockdown in Punjab days before Eid to pre-empt a repeat of the hike in Covid-19 cases the country experienced after Eidul Fitr curbed whatever spending was expected in clothes, shoes and accessories for celebrations in the most prosperous province.

As observed in the reports of past years, there is understood to be a net transfer of capital on Eidul Azha from urban to rural Pakistan from where sacrificial animals are sourced. Some marginal activity around this festival is generated by retail urban investors and animal enthusiasts. But even in these arrangements, the premium is shared with rural stakeholders who enjoy the upper hand on the strength of their expertise in cattle management.

The size of related economic activities is Rs100bn-110bn this year, down by 50pc from a year ago

The scope of online activity initiated a few years back widened further this year with tech-savvy, wealthier families being inclined towards using options and tools to remotely manage the sacrifice. A number of companies have cropped up over the years offering their hassle-free services for a price often beyond the reach of the majority. The numbers have yet to pool to reveal the actual depth of this market or its share in the multi-billion-rupee Eidul Azha economy.

Assuming the last year’s projection of Rs200 billion to be credible, this year the projections based on intelligent estimates place the size of the Eidul Azha economy in the range of Rs100-110bn — a sizeable drop of 45-50 per cent. According to people associated with cattle affairs, about one-tenth of the population of cows and goats is offered for sacrifice on this occasion every year.

The trend of collective qurbani (sacrifice), currently encouraged by the state and health professionals to contain the spread of the deadly disease, was stronger as Pakistanis tried to balance their religious duty with the health risk and affordability in a lagging economy. The more cautious ones opted for the still cheaper option of donating whatever they can afford in the name of God to philanthropic institutions with their promise to use it to sacrifice and feed the poor.

This has changed the ratio of different animals in the sacrificial cattle pool with the share of bulls and cows persistently increasing.

Despite the slump in demand, the prices are reported to be 20-30pc higher than last year.

The leather industry that seeks to capitalise on the one-time hype expected a 50pc fall in the supply of hides this year. “In 2019, tanneries picked up hides worth Rs20bn on Eidul Azha but this year the collective business of hides and skins is not expected to stretch beyond Rs10bn,” Syed Shujaat Ali, former chairman of the Pakistan Leather Manufacturers and Exporters Association, told Dawn.

“The expected fall in the supply of leather failed to jack up its price that has actually crashed to an all-time low. What do we need leather for when our export orders are on hold since March as globally consumers are wary of luxury goods, holding their purse strings tight?” he said.

Sharing the news from the inner circles of leather dealers, he said that buyers have tightened their grip on the hide market since the exit of big, organised hide collectors and sellers. Their control is exhibited in falling prices since 2015. “The asking price of cow skin is Rs700-800 that fetched Rs1,000-1,200 last year and Rs4,000-4,500 in 2015. The trend is the same for other cattle. The asking price for goat skin is Rs150 and that of sheep is Rs100.

The background research indicated a shift of sacrificial activity from urban to rural Pakistan, particularly in Punjab where the government was more vigilant to implement coronavirus precautions. Besides, the population in urban Punjab generally had the option to return to their roots in pinds (villages) or ask their extended families back there to fulfil the religious obligation on their behalf.

In Karachi, however, where the majority does not enjoy the privilege of strong rural links, more families availed the services of institutions offering to carry out sacrifice in sub-developed, far off areas such as Dir and Chitral. This arrangement, called waqf, is comparatively cheaper and hassle-free. Compared with the per-share rate of Rs10,000-13,000, in collective qurbani in waqf one share is priced at Rs4,000-4,500. In waqf, the shareholder does not get to see the animal and has to surrender their claim or say in the distribution of meat after the sacrifice is made somewhere far off.

In the rest of the country, the activity was lukewarm but within the normal range, according to information collected.

Published in Dawn, The Business and Finance Weekly, August 4th, 2020