Growth Out­look of Dairy In­dus­try

Enterprise - - Dairy Industry - By Sam­ina Wahid

Pak­istan is one of the top three milk pro­duc­ing coun­tries in the world. This makes the dairy in­dus­try a sig­nif­i­cant con­trib­u­tor to the national GDP – about 11.7 per cent. If con­stant ef­forts are made to im­prove the sec­tor, it will add an es­ti­mated $4 to $6 bil­lion an­nu­ally to Pak­istan’s econ­omy.

The dairy in­dus­try cer­tainly has a great po­ten­tial for growth. All it needs is in­cen­tives and su­per­vi­sion from the govern­ment both at the fed­eral and provin­cial level. This would play a vi­tal role in en­sur­ing a means of con­stant liveli­hood for the small farmer. There is also a bright pos­si­bil­ity of lu­cra­tive lo­cal and for­eign in­vest­ment in the sec­tor through cor­po­rate farm­ing, in­vest­ments by for­eign dairy com­pa­nies and col­lab­o­ra­tion with in­ter­na­tional donors.

The lo­cal dairy farm­ers are ei­ther not aware of im­proved in­puts for in­creas­ing their pro­duc­tiv­ity or can­not af­ford to ac­quire such in­puts. They should be pro­vided cheaper and cost-ef­fec­tive medicines, feeds and feed in­gre­di­ents, fod­der seeds, equip­ment, etc. to in­crease pro­duc­tiv­ity and de­crease per unit pro­duc­tion cost. Dairy farm­ers need im­proved farm equip­ment so that they can get rid of their old and tra­di­tional meth­ods and adopt some kind of mech­a­niza­tion. The govern­ment can es­tab­lish util­ity stores for this pur­pose where the re­quired items can be pro­vided at sub­si­dized rates. Such util­ity stores can be set up in the ma­jor dairy farm­ing ar­eas for the con­ve­nience of small farm­ers.

Non-sci­en­tific dairy farm­ing prac­tices have been fol­lowed in the sub-con­ti­nent since time im­memo­rial and th­ese need to change if the dairy sec­tor must progress on mod­ern lines. Apart from con­sult­ing the lo­cal quake or fol­low­ing home-grown reme­dies, there is no tra­di­tion of con­sult­ing ex­perts in an­i­mal health, re­pro­duc­tion or nu­tri­tion and ad­dress­ing the rel­e­vant prob­lems ac­cord­ingly. The govern­ment can play an in­te­gral role in this by fur­ther ex­pand­ing its ve­teri­nary net­work.

There has never been a cen­sus of milk­ing an­i­mals in the coun­try and farm­ers have no idea as to which of their cows and buf­fa­los have high milk yield or none at all. No at­ten­tion seems to have been paid to the train­ing of farm­ers as well. It is only fair for the growth of any in­dus­try that the rel­e­vant ele­ments in the value chain are prop­erly or­ga­nized. De­vel­op­ment of mod­ern dairy prac­tices in­volves sci­en­tific sys­tems that must be in­tro­duced at the very ba­sic level and this can only be done if the cor­po­rate sec­tor is in­volved. This can be fi­nanced through lo­cal and for­eign in­vest­ment and co­op­er­a­tion can also be sought from in­ter­na­tional donor agen­cies.

In this sce­nario, when the coun­try’s dairy sec­tor is poised to take a ma­jor leap for­ward, given the req­ui­site en­cour­age­ment and in­cen­tives, there is also talk of sales tax be­ing im­posed on the pro­cessed milk in­dus­try in the forth­com­ing bud­get. Re­ports in­di­cate that the govern­ment is con­sid­er­ing this as a sig­nif­i­cant rev­enue gen­er­at­ing mea­sure though it is not re­al­ized that progress in the sec­tor would be re­versed by such a tax and the ef­fects would be felt all around.

Mal­nour­ish­ment is a huge is­sue in the lower so­cio-eco­nomic bracket and milk is per­haps one of the few nu­tri­tious food items that the poor can af­ford. That is why 80 per cent of pro­cessed milk is sold in quar­ter liter packs to make it af­ford­able for this seg­ment. In such a sce­nario, the in­ten­tion on part of the govern­ment to levy a sales tax on pro­cessed milk is wor­ry­ing. Sales tax would lead to price in­crease of pack­aged milk and would also in­crease cost of loose milk. This would mean that the lower in­come groups would no longer be able to af­ford milk on a daily ba­sis. Ex­perts pre­dict that be­cause of this trickle-down ef­fect, the over­all sales vol­ume of the dairy in­dus­try will de­crease by 20 per cent which means govern­ment rev­enue will de­crease in­stead of in­creas­ing.

The Pak­istani dairy in­dus­try still has a long way to go. De­spite all their prob­lems, the small dairy farm­ers have now found a sta­ble source of liveli­hood as their pro­duce is pur­chased by the milk pro­cess­ing com­pa­nies. It is be­cause of the lo­cal and for­eign in­vest­ment made in this sec­tor that the po­ten­tial has also be­come vis­i­ble for ex­port­ing dairy prod­ucts to coun­tries such as Malaysia, China, In­done­sia, Bangladesh and Iran. In the past, the fa­vor­able poli­cies of the govern­ment helped the dairy and live­stock in­dus­try to ex­ploit its po­ten­tial be­cause of which rev­enues started com­ing from the in­dus­try. Thanks to cor­po­rate sup­port, the qual­ity of milk has also im­proved sig­nif­i­cantly and the de­mand-sup­ply gap has re­duced. Avail­abil­ity of bet­ter qual­ity milk has also con­trib­uted to the over­all nu­tri­tion of the im­pov­er­ished class liv­ing in ru­ral ar­eas.

What the dairy sec­tor needs is an in­te­grated de­vel­op­ment plan such as In­dia’s National Dairy Plan which aims to in­crease their milk pro­duc­tion to 180 mil­lion tonnes by 2020. The plan will en­hance share of the doc­u­mented dairy sec­tor from the cur­rent 30% to 65%. Pak­istan’s dairy in­dus­try has a long road ahead and the pro­posed sales tax could dis­cour­age in­vestors from com­ing into the field. This, in turn, will af­fect small-scale dairy farm­ers, re­duce milk con­sump­tion, fuel in­fla­tion through in­crease in prices of loose and pack­aged milk and dam­age in­dus­try growth.

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