Pakistan’s milk deficit

The Pakistan Dairy Association (PDA) has once again contacted the country’s policymakers, seeking some relief in the sales tax regime in the upcoming budget.

Talking to Adviser to Prime Minister on Commerce, Textile and Industry, Abdul Razak Dawood, the association stated that growth of the dairy industry has been on the decline since 2016, as it was the year when the industry touched a record high of around 1,400 million litres of consumption. After that, the growth took a turn for the worse. “The industry suffers a 7-8% price hit due to the end of the zero-rated regime, which further increases the price difference between packaged and loose milk,”

The livestock sector alone contributes 11% of Pakistan’s GDP, with an estimated 42 billion litres of milk produced per annum. The livestock sub-sector accounts for 52 percent of agriculture and affects the livelihoods of 30 to 35 million people in rural areas.

Pakistan’s dairy sector enjoyed the zero-rated regime from 2006 to 2016, when the sector saw a massive growth of around 130%, from around 600 million litres to around 1.4 billion litres’, he said.

However, even if the zero-rated regime was restored, prices of dairy products, especially milk, were unlikely to reverse as the ongoing scenario including rupee depreciation and petrol price hike may have their impact.

“In the last five years, FDI (foreign direct investment) in the dairy industry was recorded at $1 billion whereas, in the next five years, investments of around $1.5 billion are due in allied industries, expansions and new FDI,” a dairy expert told press. Pakistan’s dairy sector enjoyed the zero-rated regime from 2006 to 2016, when the sector saw a massive growth of around 130%, from around 600 million litres to around 1.4 billion litres’, he said.

The major problem with dairy farming in Pakistan is the low milk yields of Pakistani cattle and buffaloes. This low production potential of Pakistani animals is mainly attributable to a few clearly identifiable issues such as lack of a systematic national breed improvement program, lack of availability of good quality fodder and nutrients and poor farm management practices.

On average a dairy animal in Pakistan yields 6-8 times less milk than a dairy animal of the developed world. Hence, Pakistan needs to have a coordinated and integrated strategy/approach beginning from enhancing per animal productivity, going straight to milk procedures/procurement and minimize the wastage.