More in­cen­tives for dairy sec­tor

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The dairy sec­tor t has the po­ten­tial to con­trib­ute around USD 4-6 bil­lion an­nu­ally to Pak­istan’s econ­omy, given favourable con­di­tions and in­cen­tives that en­cour­age in­vest­ment.

Chair­man, Pak­istan Dairy As­so­ci­a­tion (PDA), An­jum M.Saleem has said that Pak­istan is the world’s third largest milk pro­duc­ing coun­try, with an an­nual out­put of ap­prox­i­mately 37 bil­lion liters. Ac­cord­ing to the Economic Sur­vey of Pak­istan 2012-13, the con­tri­bu­tion of the dairy sec­tor to our na­tional GDP is 11.7 per cent. The dairy sec­tor also pro­vides em­ploy­ment to mil­lions and live­stock is raised by more than 8.5 mil­lion small and land­less farm­ers in ru­ral ar­eas, most of which is also used as a dairy source.

He said that the de­mand and sup­ply gap is a mas­sive chal­lenge fac­ing the dairy sec­tor which calls for long-term strate­gies and small-scale pro­grammes to achieve long last­ing suc­cess. Less than 5 per cent of the milk pro­duced in the coun­try is pro­cessed and reaches con­sumers through for­mal mar­kets. The re­main­ing is ‘loose’ with no qual­ity checks, pric­ing, brand­ing or iden­tity.

He said that or­gan­ised dairy in­dus­try in Pak­istan is fully cog­nizant of the chal­lenges it faces in terms of help­ing farm­ers adopt bet­ter farm prac­tices to in­crease milk pro­duc­tion and im­prove qual­ity. For in­stance, Pak­istan Dairy As­so­ci­a­tion’s mem­ber in­dus­tries con­duct train­ing pro­grammes and help farm­ers in­crease yield per an­i­mal, tak­ing care of their an­i­mals, fo­cus­ing on their hy­giene and adopt­ing mod­ern farm­ing prac­tices.

The ma­jor­ity of dairy farm­ers are small-scale cat­tle breed­ers. It is es­sen­tial that they know the mod­ern meth­ods and tech­niques by which they can in­crease their an­i­mals’ yield. To train th­ese farm­ers, lead­ing in­dus­try play­ers have es­tab­lished cen­ters that train around 5,000 small dairy farm­ers an­nu­ally.

An­jum M. Saleem, on the ques­tion whether Pak­istan’s large milk sec­tor of­fers enough po­ten­tial for for­eign in­vestors, he said the po­ten­tial is enor­mous be­cause of the huge vac­uum that ex­ists. We re­main a coun­try with one of the high­est farm-gate prices. This is be­cause there are no sub­si­dies avail­able to the farmer when it comes to buy­ing or sell­ing of an­i­mals, rais­ing them or feed­ing them. Also, the in­for­mal sec­tor is lit­er­ally call­ing out for­eign in­vestors as it lacks proper cold stor­age and con­ser­va­tion mech­a­nisms. Peo­ple look­ing to in­vest will do so but only if they see good re­turns and for that, the gov­ern­ment needs to adopt a busi­ness­friendly ap­proach.

The chair­man PDA said Pak­istan could learn a lot from other milk pro­duc­ing coun­tries to in­crease its milk yield. An en­cour­ag­ing sign is that Pak­istani au­thor­i­ties are tak­ing note of the suc­cesses which Tur­key has en­joyed in the last 10 years. They are look­ing to em­u­late this in Pak­istan. In Tur­key, the th gov­ern­ment t pro­vided id d nec­es­sary sup­port and as­sis­tance to the dairy sec­tor in the form of sub­si­dies and also an en­abling tax­a­tion regime which cov­ered such sub-sec­tors as: breed­ing, feed­ing, qual­ity test­ing, pro­cess­ing and oth­ers. As a re­sult, pack­aged milk con­sump­tion in­creased from 30% in 2002 to 70% in 2012. In ad­di­tion, the com­pet­i­tive­ness of the sec­tor im­proved greatly as did the coun­try’s health fig­ures.

An­other model for our dairy in­dus­try could be In­dia where the growth of the dairy sec­tor dur­ing the last three decades has been im­pres­sive be­cause the gov­ern­ment in­tro­duced poli­cies for a suit­able en­vi­ron­ment for milk pro­duc­tion. “We can also learn valu­able lessons from Iran and China who have in­creased their milk pro­duc­tion by adopt­ing mod­ern dairy farm­ing tech­niques, im­port­ing pro­duc­tive an­i­mals and mak­ing the sup­ply-chain mech­a­nism ef­fi­cient,” he said.

Apart from zero-rat­ing and sub­si­dies, the gov­ern­ment could sup­port the pro­cessed milk sec­tor by con­tin­u­ing the cur­rent pol­icy that en­ables dairy in­dus­try to claim in­put costs. This will give the in­vestors’ con­fi­dence be­cause they will see that the gov­ern­ment has a con­sis­tent pol­icy. In ad­di­tion, it could also reg­u­late the in­for­mal dairy sec­tor that hardly pays any taxes but sells milk at a slightly lower price than pack­aged milk. At present, loose milk is avail­able at around Rs80-90/kg in some ar­eas of the coun­try while the price of pack­aged milk is Rs95-100/litre. The gov­ern­ment ought to ex­pand the tax net to cover the un­pro­cessed dairy in­dus­try (more than 90%) which is un­taxed.

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