Pakistan

How to Start a Slaughterhouse in Pakistan

The demand for quality meat is continuously rising all over the world. Therefore export opportunities of meat from Pakistan are also rising as Pakistan is one of the largest producers of animals. Markets like Gulf and Middle East have great potential for Halal meat suppliers.

The pre-feasibility is about setting up a facility where farm animals are slaughtered and processed into meat products. The animals that are commonly slaughtered for food are cattle (beef & veal), sheep (lamb & mutton). This slaughterhouse will be set up on modern standards and promise to provide highly hygienic meat products for export purpose.

The proposed business venture should preferably be located in the industrial area of any of the major urban cities of Pakistan. The unit will have a installed production capacity of slaughtering 240 small animals and 96 large animals per day. However the initial capacity is assumed at 35% (84 small & 34 large animals per day) whereas maximum capacity utilization is considered as 80% (192 small & 77 large animals per day). This production capacity is estimated to be economically viable & justifies the capital as well as operational cost of the project. However, entrepreneur’s knowledge of meat industry, development of quality product, competitive pricing and strong linkages with international networks are factors for the success of this project.

The estimated total cost of the proposed slaughter house is Rs. 210.96 million out of which Rs. 196.18 million is the capital cost and Rs. 14.78 million is for working capital. The project is to be financed through 50% debt and 50% equity. The project NPV is around Rs. 277.62 million, with an IRR of 42% and Payback Period of 3.08 years. The project will provide employment opportunities to 45 people including owner manager. The legal business status of this project is proposed as ‘Sole Proprietorship’.

The meat industry of Pakistan is working mostly on unorganized pattern since its inception. The street slaughters are the major source of meat for masses, which is poor in quality and hygiene. In spite of one of the largest animal producer, meat export of Pakistan is at the lower end due to unorganized industry pattern. However the industry trend has changed in urban cities since last ten years and modern slaughterhouses have been installed both by the private and public sector.

This particular pre-feasibility provides the basic details for setting up fully automated slaughterhouse which will provide quality hygienic meat as per international standards for export purpose only. The target market for this project will be Middle East and Gulf countries. The major product line of venture includes meat of small (sheep & goat) and large (cow & buffalo) animals.

Slaughterhouses should be situated at a distance from the residential areas. This is to prevent possible inconvenience to the residents, either by way of pollution from slaughter wastes or by way of nuisance from noise or stench/smell. It is suggested to establish the project in industrial area where all required utilities are easily available like sanitation, water, electricity and transportation infrastructure.

This proposed unit with modern processing machines including slaughtering plant for goat & cattle and cold storage plant can be purchased from local machinery suppliers of different countries. However it is suggested to use Chinese machinery as they are less expensive and equally good in quality.

The proposed project will provide direct employment opportunities to 45 people initially.

Slaughterhouse Production Process

The production process starts with 12 to 18 hours rest of animal before slaughtering. This process is known as lairage. Animal should be served with water only in lairage. While in lairage, veterinary doctors use to conduct an anti mortem in which animal is thoroughly checked. Once anti mortem and lairage are completed slaughtering process starts by sending animal in cattle tunnel in front of Muslim slaughtering box. Slaughterer’s will slaughter animal one by one through cattle slaughtering box and helper hang the animal through chains on Bleeding Automatic Line. Once the blood is fully drained from animal, slaughterers start removing the skin of animals. This is known as skinning process. The next step is to cut open the animal body to dislodge the contents and produce the carcass. It is important that the carcass remains or is placed in the hanging position on railing. This process is known as evisceration. After evisceration, veterinary doctors and nutritionist conduct post mortem, in which meat quality and hygiene examination are conducted as per the required standards.

After post mortem the hanged carcasses are sent to refrigeration plant for required chilling. After the required chilling process, meat is ready for dispatch. Following is the process flow diagram for proposed slaughterhouse.

Operational Capacity

The total installed capacity of the project is assumed at 240 small and 96 large animals per day. The initial operational capacity of the project will be 35% with an annual growth of 5%. Maximum capacity utilization of the project is assumed at 80%.

Factors for Success in Slaughterhouse Business

Following are the factors critical for the success of this business venture:

  • Formation of organizational system especially for operations department in order to maintain international quality standards.
  • Develop strong linkages with animal suppliers for sourcing quality live animals on time at economical prices.
  • Time management is very important in slaughterhouse business. Delay in delivery can cost very high as the product is perishable.
  • Good relations with the buyers in targeted countries.
  • Proficient marketing campaign in order to grab new orders from abroad is crucial for this business.
  • Efficient management of stock to keep inventory cost at the minimum.
  • Knowledge about the latest market trends is critical.
  • Induction of trained human resource for the handling of business operations especially in operations and sales.
  • Increasing competitions from different countries is very critical for business in this market.

All the metropolitan cities of Pakistan who have large animal markets like Lahore, Karachi, Islamabad and Multan are suitable for this business. As this project is export oriented and the export of meat is normally done by air due to perish ability, therefore it is also important to keep in consideration that the business location should be nearby to some international airport.

Potential Target Markets 

As mentioned earlier this project is export oriented and will sell all of its major products in foreign markets. The European Countries, USA, Canada, Australia, New Zealand, Middle East and Gulf are meat lovers and consume meat on almost daily basis.

The western countries are very much focused on quality meat with all quality and hygiene standards. They also demand the trace-ability of animal, which is not being offered by the Pakistani entrepreneurs due to lack of infrastructure. It becomes a big hurdle for Pakistani exporters to sell their products in the markets like Europe, America, Canada, Australia and New Zealand. Due to this most of the Pakistani meat is being exported to Middle East and Gulf countries at the moment.

Middle East and Gulf countries are a big market for Halal meat. All these countries don’t have the culture of Agriculture & livestock due to unavailability of fertile land. Therefore they use to import all the meat from other neighboring countries like Pakistan, India and Bangladesh due to cost effectiveness. It is suggested to target Middle East and Gulf market initially. However with the passage of time, the western countries can also be targeted.

Investment Required to Setup a Slaughterhouse in Pakistan

The investment required to start a slaughterhouse in Pakistan is approximately PKR 210 million. All the figures in this financial model have been calculated for estimated sales of Rs. 909.73 million in the year one. The capacity utilization during year one is worked out at 35% with 05% increase in subsequent years up to the maximum capacity utilization of 80%. The projected Income Statement, Cash Flow Statement and Balance Sheet can studied by downloading the pre-feasibility study of a slaughterhouse business in Pakistan by SMEDA.

Tags

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Related Articles

Close