MUSCAT: The Sultanate of Oman’s domestic poultry industry, which has expanded in recent years in concert with the government’s food security enhancement drive, says its bottom-line continues to be imperiled by a number of factors, notably a tide of cheap imports of frozen poultry
According to leading Salalah-based poultry firm Dhofar Poultry Co SAOG, a publicly traded company, the government is weighing a quota system to safeguard the domestic poultry sector from the effects of cheap frozen poultry imports.
“The competition has followed a strategy of low pricing to penetrate the market, especially in the frozen category, has already captured a substantial share of the total market for poultry,” said Salim Taman al Mashani, CEO – Dhofar Poultry. “However, the government is considering the implementation of a quota system to restrict / regulate cheap frozen imports,” he added in the Management Discussion & Analysis Report accompanying the company’s latest financial statements for 2022.
Some of these cheap frozen poultry imports arrive from overseas markets that benefit from low-cost feed as a “country-specific competitive advantage”, said the CEO, noting that new players, particularly from markets like Brazil and Turkey, among others, are contributing to the competitive market conditions in Oman.
Dhofar Poultry, one of Oman’s oldest poultry firms, posted revenue totaling RO 9.321 million in 2022, which was up 3.19 per cent over the previous year’s total of RO 9.033 million. The gross profit was RO 1.530 million compared to RO 0.756 million in 2021. However, it incurred a post-tax loss of RO 1.006 million in 2022, down from a loss of RO 1.385 million a year earlier.
Also contributing to the loss was the high cost of food grain prices – a key raw material in the production of feed, said the CEO. He cited in this regard the Russia-Ukraine conflict as a driving factor for this increase.
“Feed which constitutes 41.95 per cent of the total direct cost of production is another area of concern, as any increase in its procurement cost has a negative impact on the performance,” said the CEO.
Another contributory factor, he noted, was the substantial increase in the cost of hatching eggs. “Dependence on imports of hatching eggs, which is basic and critical input, is one major threat as it impacts timely and consistent availability, quality and cost. Egg prices are expected to stabilize next year around $0.345, which is lower by 7% - 8% compared to 2022,” Al Mashani explained.
Commenting on the future outlook for the company’s performance, Salim bin Abdullah al Awadi, Chairman, added: “Although frozen poultry meat demand is mainly covered through import of low-priced frozen chicken, the company is targeting local and regional fresh chilled, high-quality market to increase sales growth opportunity for the company’s products. The management is also targeting high value product consumers segments and value-added products through strategic partners to increase local and regional sale volume.”
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