THE human diet is deficient with respect to proteins of animal origin. At present 66 per cent of the population suffers from deficiency in protein. The requirement of protein is 102.7g per person per day while only 69.61g per person per day is being consumed.
The main source of animal protein is beef, mutton, milk, poultry meat and eggs, respectively. To overcome the gaps between supply and demand of protein, poultry meat is contributing a major share. Its share can be enhanced by improving the profitability of producer and by decreasing prices at the retail level, if issues facing the industry are resolved.
The cost of distribution from producer to consumer is very high mainly due to the high share of middlemen involved at various stages. The extraction of abnormal profit by middlemen has reduced the profit of bird growers and it discourages them to expand the production process. The share of profit of the middlemen also needs to be reduced in order to lower prices at the retail level.
A study was undertaken to look at the profitability of different stakeholders involved in poultry sector and then to formulate the policy that can distribute profits among different stakeholders on rational basis.
The business of poultry farming is expensive and risky and it is operated on purely traditional lines without any modern marketing facilities. Farmers are producing broilers without foreseeing the supply and demand situation in the market. In increased supply situation, prices prevail at low levels and vice versa. Such a situation creates uncertainty in the market and as a result, the farmers are unable to plan their businesses. The farmers need an institution that can properly monitor the market and disseminate market information.
The majority of farmers claim that intermediaries do not follow business ethics and try to fetch maximum profit from business transactions. They use many tactics such as juggling with weighing scales, inaccurate counting and under- weighing to deceive the farmers. In view of this, the farmers suggest a tripartite market arrangement in the form of farmers, middlemen and the government.
The main broiler business is operated through intermediaries namely commission agents, feed dealers, and butchers who charge certain amount as commission fee for their services. Farmers complain that commission fees of these intermediaries are very high.
The producers could not develop direct linkages with the consumers. As a result producers are not getting expected prices while consumers are paying high prices and it is one of the main hindrances to improve the contribution of poultry in protein uptakes.
Reasons of non-remunerative price to producers are: a) missing direct linkages between producers and consumers which do not provide chance to producer to understand consumer’s behaviour; b) lack of investment to develop infrastructure that could enable them to reach directly to the retailers. The provision of credit to the bird growers will allow them to reach directly to the retailer.
The present study on commercial poultry industry shows that it dominates the market share in supply of poultry birds almost in all big cities. This study was restricted only to 10 miles radius of the Faisalabad city. A representative sample of commercial poultry producers, commission agents, wholesalers, retailers was taken for detailed investigation. Fifteen commercial poultry producers were interviewed to collect information on production of birds. Twenty commission agents were taken form the wholesale market. There were no wholesalers of birds in the market. Commission agents act as wholesalers. Similarly, twenty retailers were taken randomly.
For the purpose of getting information, separate questionnaire was developed for each category of respondents. The questionnaire was filled in by direct interview method with respondents. Finally the data collected were tested statistically and analysed.
There are different ways through which poultry birds are disposed off. Usually, commission agents purchase birds from producers and then distribute them to retailers. The net distributive margins of different intermediaries were calculated and are reported in Table I.
The net distributive margin are highest for commission agents compared to producer and retailer indicating that producers’ net margin are lowest while he is key player in the business.
The total marketing margins of commission agent was Rs250. Out of this. the total marketing cost was Rs15 per 40kg; the net margin was Rs235 per 40kg. The profit as a percentage of sale price and purchase price was 14.69 and 12.70 per cent, respectively. Commission agents had to pay six per cent as a cost and got net profit as 94 per cent. (Table II)
The retailer was the last functionary in the marketing system, selling the product to the ultimate consumers. On an average, net margin and marketing cost of the retailer was Rs150 and Rs10, respectively whereas the marketing margin was Rs150. The profit as a percentage of sale price and purchase price was seven and 7.57 per cent, respectively. On an average, the share of cost was 6.67 per cent and that of profit margin was 93.33 per cent in the gross margin.
The marketing margins of commission agents and retailers was higher than producers, indicating that commission agents profit was highest compared to producer and retailers. Commission agents were exploiting the producers because producers were found to have cash constraints and producers did not have any direct relation with retailers to dispose of their output.
The results of the study clearly indicate that middlemen were earning 75 per cent of the marketing margin (commission agent and retailer) and only 25 per cent of the total profit went to producers.