Market experts foresee a significant boost in Iranian poultry exports as a result of the lifting of international sanctions on Iran this year. The country’s opportunities in terms of poultry meat exports, are huge, despite various challenges. So what does the future hold for Iran's poultry industry?
“Giving the existing potential of the poultry industry, Iran currently has the ability to export 1 million tonnes of poultry meat per year. At the moment, Iran produces more than 2 million tonnes of poultry, primarily chicken, and 900,000 – 950,000 tonnes of eggs per year, while the volume of egg products this year will probably be about 1 million tonnes,” stated Habib Amini, director of the department of poultry and beekeeping at the country’s Ministry of Agricultural Jihad.
“Iran currently holds 10th place in the world in terms of poultry production. Currently we have 23,000 specialised broiler farms. In the time of the trade embargo Iran was forced to restructure its production to become fully self-sufficient and has been so, for several years now. However, today Iran lacks the contacts and the structure to venture out into the export markets for poultry meat, so government support is really important,” said head of the National Association of Poultry Farmers of Iran (NAPFI) Homayoun Darabi.
With the borders closed due to the trade embargo the local poultry farmers had several difficult years.
The preliminary estimations of the Ministry of Agricultural Jihad suggested that this year (the Persian calendar year started 20/03/2015 and will end at 21/03/2016) the country will increase poultry production by another 10% to 2.2 million tonnes. The export opportunity will grow by more than half from 60,000 tonnes to 95,000 tonnes. Import of chicken should drop by three times to the minimum amount of 6,200 tonnes.
According to Homayoun Darabi, the main importers of Iranian poultry are Saudi Arabia and Iraq. They also supply poultry to Syria, Libya and Afghanistan. The lifting of the trade embargo this year should open the way for Iranian poultry to Russia, Pakistan and the European Union markets. Also, the country is exploring possibilities for export of poultry meat to countries in the South-East Asia region. Homayoun Darabi sees potential close to home as well. “Our direct neighbours annually import about 3 million tonnes of chicken meat. Focusing on these markets which are already our clientele will give us the
opportunity to increase our total export volume with relatively low costs and efforts.”
Overcoming domestic difficulties
The face of Iranian poultry industry has been changed with the so-called ‘Chicken Crisis’ that took place in 2012. Following the introduction of Western sanctions, the country has experienced an unprecedented jump in poultry product prices on a consumer level amid deficit of meat on the grocery shelves. With the annual demand in poultry at 2 – 2.1 million tonnes, the domestic production by that time accounted to only 1.6 million tonnes, while import of 0.5 million tonnes was stopped by the closed borders.
“The cause of the Chicken Crisis was [Western] sanctions against banks, so a result Iranian poultry farmers lost the possibility to import chicken feed, as well as frozen poultry from abroad. The country was cut from the SWIFT banking network, so import of most food products became impossible, simply because there was no way to pay for it,” commented spokesperson of the country’s Ministry of Agricultural Jihad Hamid Adjanu.
Since the so called Chicken Crisis in 2012 new farms were built to become more self-sufficient.
As a result, the price of poultry in the country jumped from US$1.9 per kg to more than US$5 per kg, reaching a peak in some regions of US$7 per kg. Resulting in 20% of the least wealthy part of the population being unable to purchase poultry, and those that could still afford it having to stand in a queue for 14 hours to purchase poultry meat. This gave rise to several waves of riots in Teheran and several other major cities during May-June 2012.
Prompting the government to apply serious measures to stop the crisis. Initially they banned any advertisements of meat in the country’s TV programmes and advertisements. In addition, authorities approved large-scale support for the poultry sector which in the period 2012-2016 totalled US$25 million, and involved several programmes for overcoming dependence on the import of feed components and equipment.
Due to the drastic measures the situation finally stabilised in 2013, when poultry production started to grow. As a result of government efforts the consumption of poultry per capita in the country rose from 20 kg in 2012 to 26 kg in 2016. At the same time, the further rise of poultry consumption seems questionable, as consumers in the country today opt more often for lamb and beef. These types of meat are more traditional for Persian cuisine, so following the lifting of food embargo the rise in demand for these meats is expected as well.
Applying new feed and equipment
It is believed that over the last 4 years Iran has made a real breakthrough in terms of poultry farming efficiency. Firstly, according to the Director of the Research Institute of Livestock, Hormoz Mansouri, in 2011 the country launched the programme for the use of food wastes in poultry feed. As a result, the country has managed to get an additional 70,000 – 80,000 tonnes of protein in poultry feed each year, reducing the country’s reliance on imported feed.
“That time (in 2012) the dependence of Iran on imported corn and soybeans, which are the main ingredients of compound feed totalled 70%, so our project has managed to reduce this figure. In Iran there is a lack of area sufficient for the cultivation of feed crops, so farmers in the country face certain difficulties in this regard,” he added. At the same time, Iran still imports corn, soybeans and other crops in the amount of US$16 billion per year and some experts suggest, that in order to cut costs for farmers, Iranian government unofficially allowed the import of genetically modified corn and soybeans. According to Babak Nakhod, spokesperson of Agricultural Biotechnology Research Institute of Iran, the country is importing annually GM-crops mainly for livestock feed in the amount of US$5 million, which is almost 30% out of all crops imported in to the country.
“Officially, imports of GM products into the country is
prohibited, but due to the severity of the feed shortages the Iranian government has closed their eyes on this issue for years. Since the poultry crisis, GM feed is an important part of the efficiency of the country’s poultry industry. Imported crops are not claimed as containing GM organisms, so in fact there is nothing wrong with them,” commented a market participant who wished to remain anonymous.
One of the important points to achieve the increase of efficiency was the introduction of an Iranian-made automated system for poultry farms. The system was developed in 2007, but has only been implemented at the country’s farms since 2012. As one of the chief researchers of the project, Armin Sadek, Director of the Research Institute of Livestock, explained, the use of such a system reduced fuel and energy usage at poultry farms by 30-40%.
“This is domestic technology, exclusively developed for local needs and the domestic market and is cheaper than international competitors. Our Iranian system is about 50% cheaper compared to Dutch analogues and cuts costs by two-thirds, compared to the similar systems of US manufacturers,” he estimated.
As a result of these innovations, the Iranian poultry industry improved major production indicators, with the rise of the average daily gain from 56 grams to 72 grams, decrease of the time of growing from 42 to 39 days and the reduction of production cost per 1 kg of poultry meat by about 18%. As a result, Iranian poultry is now much more competitive on international markets than it was 4 years ago.
Over the last 4 years Iran has managed to improve poultry production efficiency.
300,000 tonnes of chicken for export
Last year the government introduced an export subsidy in the amount of US$0.55 per kg of chicken supplied to foreign markets. Next year the country may increase this figure, meanwhile according to the country’s officials within the coming year following the lifting of the food embargo Iran has the ability to boost poultry exports by nearly 250,000 – 300,000 tonnes, according to Hamid Adjanu. A substantial amount of the Iranian authorities hopes rest on the Russian market.
“Iran aims to establish poultry meat exports to Russia in the amount of 10,000 tonnes per month or 120,000 tonnes per year. This is not our maximum, and should there be a greater demand from the Russian market we can easily boost the volume of delivery,” commented the deputy Minister of Agricultural, Jihad Hasan Rouhani, adding that Iranian poultry has good quality and can be more competitive on price, compared to Brazilian products, which account for the largest share of Russian poultry imports.
“It is clear that we have to create favourable conditions for export,” stated Homayoun Darabi. “Today our poultry producers have the ability to supply a broad range of poultry products, including processed meat, canned meat, frozen meat and by-products. We believe that this fact should support our sales in foreign markets.”
According to Mohammed Usefi, head of the Country’s Union of Meat Producers the future looks bright. “Giving the current investment projects, Iran will produce a monthly surplus of 20,000 tonnes of poultry meat by this time next year, and the country’s authorities will focus on the further increase of poultry meat export as well.”
“Along with Russia, Iran may also boost the volume of deliveries to the traditional markets of Iraq and Afghanistan. They purchase 5,000 tonnes of Iranian poultry monthly and we believe, that this figure may be increased to least 8,000 tonnes,” Hamid Adjanu said. “In fact, Iran has only just started to explore its export opportunities. Previously, the country has been able to supply poultry abroad only to the ‘most friendly nations’ which agreed to conduct trade without the use of the SWIFT banking system for payment. With the lifted trade ban the geographic sales possibility is greatly expanded,” he added. Representatives of NAPFI also say that the country may establish chicken exports to South-East Asian countries. However, the market players in Iran have not, so far, determined what the potential could be. This is something that will develop in the years to come.