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INSIGHT: Restrictions Continue to Affect Afghanistan’s Feed and Poultry Sectors Two Months After Taliban Takeover

Source: Feedindo Logo Final

25 October 2021 - It has been just over two months since the Taliban seized power in Afghanistan. During this time, an interim government and an acting cabinet have been announced. However, the new Islamic state is yet to be recognised by the international community.

With conflict having ended, civilian casualties have been significantly minimised. It is viewed by some that the semi-functional interim government has cracked down on corruption and that the smuggling of goods into the country for evasion of tariffs, which was responsible for distorting the market for the industrial sector, has been significantly reduced. However, Afghanistan’s economic activity has slowed down, and a vast majority of the workforce, both public and privately employed, have not received their compensations.

Moreover, commercial banks that reopened a few weeks after the Taliban took over, have seen the transactions by their corporate and individual clients restricted by the government in an attempt to prevent cash outflow from within the economy. Each corporate client can withdraw only 5% of their available deposits in one week. This has made large portions of the private sector’s financing and operating cash inaccessible to them.

These factors, in addition to drought, price hikes, and internal displacement of people, have significantly decreased consumer purchasing power.

“The prices of essential food items have skyrocketed in the past two months,” Nangyalay Amin, Vice Chairman of the Board at Herat Chamber of Agriculture & Livestock, and Vice President of the Sadaf Dana Production Company – a leading livestock feed producer in Afghanistan – told Feedinfo.

“Documented and anecdotal price tracking done by humanitarian organisations show an average increase in prices of food items and gas by at least 40% all over the country. These price hikes are more severe in minor provinces and areas remote to hub cities,” he said.

“The last two months’ developments have adversely affected the $1 billion poultry value chain in Afghanistan, a large segment of which is the feed industry,” Nangyalay Amin added, saying that overall activity within the poultry sector has decreased by over 50% as reported by the Afghanistan National Poultry Farming and Production Association (ANPPA).

“Due to a lack of sufficient investment in poultry parent stock farms and hatcheries, Afghanistan’s poultry value chain is dependent on imports of day-old broiler chicks (DOC) and layer pullets from neighboring countries of Iran and Pakistan. During the past two months, imports of DOC have been irregular, and minimal in quantity with frequent closure of the border by Pakistan’s government, and an export ban by Iran,” he commented.

“The feed industry, which is dominated by domestic feed mills, has also been hit almost proportionately,” Nangyalay Amin went on to say. “Following a decline in broiler rearing, domestic feed production has plummeted by around 60% according to data gathered from feed mills by ANPPA.”

This follows sectorial unions estimates of August 2021. At the time, immediately after the Taliban takeover, they had estimated that domestic feed production had already been cut by nearly 40%. All manufacturing activities within the industry were halted for about a week during the fall of the government and the Taliban’s takeover, Nangyalay Amin said back then.

“In the past two months, the costs of production for feed have also increased. Soybean meal and premixes have become scarce due to the inability of the feed manufacturers to transfer money abroad for the imports of these two items. Some modes of conventional money transfers are only available to the neighbouring country of Pakistan for imports of the two ingredients, which come at high costs. Hence, the feed manufacturers have a narrow and costly window of imports of required raw materials from Pakistan only.”

According to Nangyalay Amin, feed prices in Afghanistan have increased by 15% in the last two months; these higher costs making feed unaffordable for poultry farmers.

The Afghan feed manufacturing industry sources nearly 80% of its raw materials from within domestic markets, and imports the rest from South Asian, European, and South American countries, Nangyalay Amin told us in August.

“The Afghanistan Chamber of Agriculture and Livestock Products (ACALP), and the ANPPA along with other bodies representing the private sector economy are working to bring the environment for the poultry and feed industries back to normal. However, with the government being boxed in by the international community it is expected that the worse is yet to come,” he said.

“It has been 25 days since the last consignments of DOC have arrived in Afghanistan. Hence, if the situation continues as it is, current active flocks of broilers will be harvested in around a month, and the poultry and feed industries will face a complete shutdown.”

The poultry industry is Afghanistan’s largest meat producing sector. According to figures from the Ministry of Agriculture, Irrigation and Livestock, there were about 9,247 chicken farms operating throughout the country at the start of 2021.

Prior to the Taliban takeover, annual chicken meat output was estimated at over 260,000 tonnes, and Afghanistan was close to reaching self-sufficiency in production.