Animal feeding has become quite challenging with the growing population of livestock and the resource-constrained feed producers looking least prepared to meet the growing domestic demand.

Unlike poultry feed industry that is moving fast into the formal sector after induction of controlled-environment sheds, animal feed making, by and large, is an informal business.

Animal feed industry is extremely underdeveloped. Goats and sheep are taken out of villages to nearby uncultivated land, an age-old practice that serves as grazing ground, regardless of the amount of grass or eatable wild plants available there. Or at best, they get vegetable and fruit skins, stale bread, gram pulse unfit for human consumption, wheat brawn, dry breads or other food leftovers from human consummption. Cows and buffalos generally get, oilseed cakes, rice husk and specially grown fodder crops. Only a very low percentage of animals are fed with proper feed prepared at the feed mills.

Officials of Ministry of National Food Security and Research say livestock population has been on the rise creating additional feed demand every year that outweigh supplies. Population of cattle including cows and calves, for example, has risen from a little less than 30 million in 2006 to an estimated 39 million in 2013. Similarly, population of buffalos has increased from 27 million to 34 million and that of goats from 54 million to more than 65 million.

“The rise in livestock population should have served as a catalyst for development in animal feed manufacturing but that has not happened,” says an official of the ministry. In recent years, hundreds of corporate dairy cattle and buffalo farms have also come up, particularly in semi urban areas. This has particularly increased the need for high quality animal feed.

Industry sources say there are more than 200 animal feed mills but just a few of them are producing compound feed for livestock. Every year, up to 40 million tonnes of crop residue is produced. The bulk of it (over 50pc) comes from rice and a little over 20pc comes from wheat. But this is not serving growth of animal feed industry which works at no more than 70pc of its installed capacity.

Some investment has trickled into livestock and dairy sector over the last few years. This has increased demand for animal feed but there has been no investment in this area. Animal feed milling is mostly in the unorganized sector and is a part of family businesses.

“This makes investment difficult because the families that own animal feed mills also own other agri-businesses and prefer to invest there,” says a senior banker.

There are hardly half a dozen top animal feed makers — mostly in Punjab — that continue to catch up with the market trends while others are content on producing decades-old animal feed products. The market leaders among them are Chakwal Feed Mills, Al-Hafiz Cattle Feed Industries and Madina Cattle Feeds, head of agricultural credit of a local bank said citing a research study.

Industry sources say lack of vision about future market trends and lack of finances are two main impediments to mobilising fresh investment in animal feed manufacturing.

Most of animal feed industries are located in Punjab. Only some of them are in Sindh. Besides, most of animal feed industries are in the SME sector. Many of them are using outdated technology, industry sources say, adding that the main obstacle in the way of automation is lack of adequate funding.

The list of the animal feed products is long. The most common ones include yellow maize, wheat straw, wheat bran, corn cobs, cotton seeds, alfalfa and Rhode grass, rice husk, minerals, natural crystal, licking salt, waste dates, compound feed, feed rice, cotton seed oilcakes, Guar seed meals.

Grain residue, oil cakes, fodder crops, crop residue and fish meat are among major ingredients of animal feed industry. Supply and prices of these items fluctuate wildly. Almost 50pc of animal feed millers (that are bigger in size) sell their products to dealers who supply them onwards to end users. The remaining 50pc of the millers make direct sales.

Many feed millers have their own farms from where they get the raw materials like fodder crops. Some of them also import seeds of fodder crops to grow good quality fodder. But this increases their cost of production and their products get out of the reach of small livestock breeders.

Animal feed millers often sell their products on one-month to three-month credit and this depends on the size of dealers or the end-users. Suppliers of raw materials also provide raw materials to the millers on short-term credit.

“But despite involvement of credit at each step, animal feed making industry, by and large, is apparently averse to availing of banking facilities,” says head of agricultural loaning at another local bank.

“Hardly one-third feed millers turn to banks even for paying wages to employees or for money transfer of any kind.” But animal feed makers say it is the banks that are reluctant to lend to them.