API ASSIGNMENT

DAIRY INDUSTRY

Submitted by: Misbah Usman

ERP: 17257
Significance
Agriculture plays a vital role in Pakistan’s economy contributing 19.6% to the GDP and
employing around 42.4% of the workforce. Livestock plays an important role in the
economy and accounts for 11.4% of the GDP which is even higher than the crop sector.
Within this sector, milk is the largest commodity. Our dairy industry has huge potential
and considerable attention from the government could increase our GDP and dairy
exports.

Pakistan is currently the third largest milk producer in the world, with an annual production
of approximately 56 million tons in 2017. The dairy industry contributes 9.4% to the GDP
and 34.6% to the agricultural GDP of Pakistan. 12.3% of foreign earnings are generated
from dairy however, we are still net importers of milk.

Buffalos and cows are the major milk-producing animals. According to a FAO study on
milk marketing in Pakistan in 2003, 80% of the milk in the country was produced by rural
subsistence and rural commercial producers, 15 % by the peri-urban farmers and 5% by
urban producers. Around 40 million people are engaged in the dairy industry and it is a
very important form of financial and nutritional needs for people in rural areas.

According to World Health Organisation, majority of children in rural area would have
been malnourished, had it not been for the dairy industry. In the rural sector, livestock is
the quickest form of liquidity for the poor people. The yardstick of their wealth is based on
the number of animals they own. It is an important source of income generation and
financial security for them. The livestock sector also provides important resources for
other related and supporting industries. Animal hides and skins are used in the leather
industry, cow dung is used as organic fertiliser in the fertilizer sector. The bio-gas
generated by cow dung is also used to fulfil energy requirements in the rural side.
In Pakistan, milk is divided into unprocessed (74%) and processed (8%) sectors. In the
processed sector, UHT milk contributes 5%, powdered milk contributes 2% and 18% of
the milk is used in sweets. 95% of milk consumed in Pakistan is loose milk. Our product
mix and consumption pattern is different from international practices where 80% of the
milk consumed is in the pasteurized form. Hence, local demand is not anticipatory of
foreign demand.

The healthiest form of milk is pasteurized milk which has a 5-6 days shelf life, however
in Pakistan it has a very negligible market share. Recently, the government took the
initiative to phase out the use of loose milk. In Punjab, it has been made mandatory that
by 2025 the milk consumed should be in the pasteurized form.

Issues

Despite being the 3rd largest milk producer in the world, our local demand is not met due
to lower yield and wastage of milk. Out of 38 billion litres of milk, only 20 billion litres is
tradeable. Improper management practices and unstructured breeding prevails in the
industry due to which there is low animal production and farm profitability In comparison
with Germany, there are three times as many dairy animals in Pakistan but the milk yield
is only one-fifth.

Our herd mainly consists of buffaloes which are low potential animals. Buffalo lactation
period is 6-8 months while cow is 8-10 months. In comparison, India has doubled their
yield because they made a conscious effort to shift their heard towards cows.

Secondly, we have insufficient resources and improper cold chain network to preserve
milk. Milk is a perishable item and needs to be processed within a few hours. It has to be
collected from small households in the rural area which proves to be a difficulty for
companies. Animal gives milk twice a day and collector isn’t always there hence
adulteration is done to preserve it since no proper chilling units are available there.
Hydrogen peroxide, detergent, vegetable oil and ice are added to the milk to avoid it from
getting spoiled. There is also wastage of milk in making yoghurt, ghee, butter which could
have been lesser if technology was used.

Thirdly, our Peri-urban farms are in deplorable condition. These farms were made
originally on the outskirts of Karachi but when Karachi expanded it became part of the
city. These farms have become congested and there is no availability of green fodder.
Environmental concerns which spread diseases. The capacity of animals have increased
over the years and they are deprived of space hence they produce less milk. Most of the
animals are brought from up-country and there are no proper quarantine facilitites and
vaccination available. This leads to spread of diseases such as FMD (Foot and Mouth
disease causing environmental degradation.

Another issue is the cost of feed being high. The government regulates the price of milk
but doesn’t regulate price of animal and feed. Animal feed is expensive because of
increasing petrol prices, floods and pest attacks. In these conditions, even though we
import wheat and pulses, we don’t import by-products which form the feed of the animals.
Furthermore, because of the use of improving technology, the quantity of by-products is
also decreasing. Green fodder is brought from interior Sindh, hence the feed is expensive.

Government also doesn’t provide security to the farmers and they often get robbed. There
is also widespread us of Oxytocin injection even though it is banned in the world. This
injection is painful for the animal and not suitable for consumption. However, it is still used
to make the milk extraction process faster especially when the middlemen comes to
collect the milk.

Our government has ignored the dairy industry. People don’t talk about dairy and livestock
while it plays such an important role. The pricing is done on 3.5% fat content and price of
milk is ceiled which is an. The government doesn’t see the industry holistically and
regulate the price of livestock and feed. There is less focus on the dairy industry because
majority of the policy makers are focused towards textile industry. India developed its
industry through Operation Flood and Mother Dairy Program. In 15-20 years they focused
and developed the industry and now have become exporters of milk.
References
 https://www.thenews.com.pk/print/422709-dairy-dilemmas
 https://www.brecorder.com/2019/08/19/518187/pakistan-at-risk-of-facing-milk-shortfall/
 https://www.intechopen.com/books/milk-production-processing-and-marketing/current-
standing-and-future-challenges-of-dairying-in-pakistan-a-status-update