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Poultry Industry: Aggressive foreign expansion affecting domestic market

  • Published at 10:31 pm June 6th, 2018
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The loss is estimated to reach Tk1200 crore by April 9 Mehedi Hasan

In the second part of a three-part series, the Dhaka Tribune explores the challenges small poultry farmers face in Bangladesh. Due to several issues, including lack of support from the government and banks, once thriving small poultry farms are now being shut down after being unable to cope with financial losses

The poultry industry of Bangladesh, which initially had shown much economic potential and began a silent revolution in the country, has fallen into disarray due to the aggressive takeover of foreign entrepreneurs.

Commenting on the issue, Bangladesh Poultry Industries Central Council (BPICC) President Moshiur Rahman said: “Around 40% of the domestic poultry industry is presently being controlled by foreign companies.

“These companies are raking up large profits by establishing monopolies, which in turn are forcing local entrepreneurs to shut down their businesses. In 2007, more than 150,000 poultry farms were in business, but the number of farms went down to around 70,000 in 2017.”

Speaking with the Dhaka Tribune, several native poultry businessmen pointed out that a total of seven foreign companies are currently doing business in Bangladesh with permission from the government. 

However, there are no specific provisions in place to dictate the maximum amount of investment these foreign companies are allowed to make, and how much profit they are allowed from the domestic market.

Of the seven foreign poultry companies, five are from neighbouring India, and two from Thailand and China respectively.

Some of the abovementioned companies are only permitted to breed poultry, while others have permission for only poultry farming or egg production.

According to sources from the poultry industry, these foreign companies are violating regulations by engaging in businesses not allowed in their permits.  

Several poultry businessmen stated that these foreign investors are receiving bank loans from their own countries with an interest rate of 2-3%, while the domestic entrepreneurs are paying 10-12% interest on their loans.

According to these businessmen, the differences in loan interest rates is a major reason behind the decline of the local poultry industry, as the foreign companies have an economic advantage over small and medium entrepreneurs of Bangladesh.

The Bangladesh poultry industry is one of the biggest economic sectors in the country, and unless the situation improves in this sector, it would make it harder for Bangladesh to achieve its investment goal by 2021.

Local farms on the decline

Speaking to the Dhaka Tribune, members of the BPICC alleged that they had repeatedly asked the government to closely monitor the activities of foreign poultry companies operating in Bangladesh, but the government just gave these companies some instructions, without any follow-ups. 

Department of Livestock Services Director General Dr Md Ainul Haque however firmly denied the allegation.

“This department is acting as a regulator in the poultry industry. We are working with the stakeholders and government organizations to support entrepreneurs for developing this sector,” he said.

Mosarraf Hossain, a root-level poultry farmer in Lakshmipur, told the Dhaka Tribune: “I had to close down my farm, which I had established back in 2010. High price of poultry feed, medicines, electricity, water and others expenses were cutting down my profits.

He continued: “I had made some hefty profits in the early years of my poultry business. But I borrowed money from local co-operative societies with high interest rates, after I failed to get a loan from local banks. 

“I could no longer stay in business after demand for the poultry produced by foreign farms skyrocketed.”

Mustafa, another poultry farmer hailing from Tangail, echoed the same story, adding that many local farmers closed down their once profitable business after failing to keep up with increasing costs of poultry farming and the aggressive expansion of foreign companies.

Addressing the matter, Bangladesh Poultry Industries Association Secretary General Monjur Morshed Khan said: “It is difficult for the small and medium entrepreneurs of the poultry industry to get loans from bank, while it is easier for the larger companies to do so.

“On paper, the loan facilities are same for everyone, but in reality, discrimination does exist. Loan facilities for the grassroots sector are not being implemented properly. 

Monjur continued: “As a result, the larger companies take over market share from the small and medium entrepreneurs. These larger companies also have control over the market, and they increase or decrease the prices of poultry feed, egg, and chickens as they see fit.

“This market manipulation is causing severe losses to the native poultry farmers.”

What can be done?

A poultry industry leader, on condition of anonymity, told the Dhaka Tribune: “The foreign companies do not pay any attention to government instructions, while the authorities do not keep surveillance on these issues.”

At a recent roundtable organized by the World’s Poultry Science Association-Bangladesh Branch (WPSA-BB), Fisheries and Livestock Minister Narayon Chandra Chanda said: “The lion’s share of chicken meat and eggs are being produced by our domestic poultry industry. 

“Legal action will be taken against the companies that are violating laws in this sector.”

Meanwhile, Bangladesh Livestock Research Institute Director General Dr Nathu Ram Sarker proposed that the existing Poultry Policy of Bangladesh be updated to meet the demand of the present situation.

Dr. Nitish Chandra Debnath, from the Food and Agriculture Organization said: “The Department of Livestock Services should concentrate on risk management, along with regulating the poultry industry.”

Sounding a note of caution, BPICC President Moshiur pointed out that steps should be taken to better facilitate small and medium native poultry farmers, and to ensure proper monitoring of foreign companies, otherwise they might take over the entire poultry industry of Bangladesh.