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Dairy industry

Significance
Pakistan was the worlds 4th largest producer of milk in 2010 45 billion litres of milk, from
155millions heads of cattle. And fifth largest milk consumer.
India - Worlds Largest producer: Annual production of 108 million tons of ECM; 65 per cent of
which is produced by buffaloes, and a national herd of 113 million head of cattle/ buffaloes. Some
75 million dairy farming households.
World Milk Production: India, USA, China, Pakistan. Pakistan produces 40-45% of the two
largest producers.
Contribution to GDP :
o Comparing to other cash crops, milk had a value about 60% higher as compared to both
wheat and cotton together. The value of milk alone exceeds the combined value of wheat,
rice, maize and sugarcane in the country.
o Agriculture contributes approx. 24% to GDP. Livestock sector contributes about 50% in the
agricultural sector as value addition and nearly 11% to total GDP.
o Growth potential: 15%
o The Sector has attracted estimated PKR 5.0 Billion (USD 65 Million+) investment and many new
projects are in pipeline.
Employment generation
o Direct Employment: 55 million people are engaged in raising 2 to 3 cattle/buffaloes and 5
to 6 sheeps/goats in their backyards and are deriving 20 to 25 percent income from it.
o Indirect Employment: 2-3 million (transporters, vendors, gawalas, retailers)
o 8 million dairy farming households
Export revenue: Its net foreign exchange earnings, in 2001-02, were Its 51.5 billion, which was
12.3 percent of the overall export earnings of the country.
o export of more than 25 tons of Halal meat to various countries by the private sector was the
proof of the potential of this sector.
o Has potential to be internationally competitive
Import expenditure:
o In spite of having a large population of LIVESTOCK, the country is spending
some $40 million annually on the import of formula milk only, which is the highest amount
spent by any country in the world on this particular commodity. Currently, there are some
160 varieties of infant formula milk available in the markets.
Nutritional Value: provides more than half of the 17.4 g of animal protein available for each
person daily and so traditional diets assign a balancing role to milk. One glass of milk provides
40% Ca, 16% protein and 40% Vit D. However, per capita availability of milk is far less than the
recommended levels (0.5 liter per person per day) of World.
Dairy has 6% weightage in CPI
So dairy development is not only needed to meet the growing demands of animal protein but for
socioeconomic reasons as dairy animals provide regular cash income, economic utilization of
family labor, create social security and supply growing markets.
Significant involvement of women, so dairy development can assist gender issues
Agro and dairy industry is making 300 per cent profit in Pakistan (PRIME MINISTER)
Chief Minister Shahbaz Sharif has said livestock and dairy industry has a great potential to eliminate
poverty and unemployment from Pakistan.

Types of Milk
o Loose milk 91% of total milk with a shelf life of 4-6 hours. 7% fat content, higher than
the rest of the world. Rs. 60/litre current. One year ago: Rs.48/litre
o Pasteurized milk (certain amount of heat is given to kill bacteria) 2-3% with a shelf life
of 3-4 days. *
o In india, 98% of milk consumed is pasteurized as dairy is a registered sector. They
are net exporters. It is organized industry- conscious govt efforts. There are legal
restrictions on selling loose milk. If the population exceeds 1 lac in any locality, they cannot
sell unprocessed milk. Majority of the dairy farmers are registered. pasteurized milk is sold in
bulk, through outlets operated mainly by Mother Dairy. They have derived methods to keep
the COP low. They sell the milk in bulk (tankers systems) and save the packaging cost, thus
reducing the prices.
o UHT milk 5-6%. 3-4 month shelf life. Most widely used in urban areas.
o Powdered milk 2-3% - net importers of this because of lack of govt support.
o Pasteurized and UHT treated are expensive options therefore loose milk is the most popular choice.
By-products:
o Leather/skin/ hair/bones/Wool
o Fat pharmaceuticals/soap/cosmetics
o Food processing
o Fertilizer
o Energy generation to turn tube wells
o Biogas
o Dairy Products: Cream/ Cheese/ Ghee/ Butter/ Yoghurt/Ice Cream/ Lassi

Factor Conditions
The LIVESTOCK, include cattle, buffaloes, sheep, goats, camels, horses, asses and mules. During the
last five years, the combined population of cattle, buffalo, sheep and goat stands at 155 million.
The population of livestock is increasing at annual estimated rates of 2.38 in Pakistan
Approximately 45 billion litres of milk is produced annually from 24. 2 million cattle and 26.3
million buffaloes. 60% is buffalo milk and 40% is from cows and other indigenous animals.
Provincial Shares of milk production: Punjab 70%
In the global context, the performance of the Pakistan dairy sector appears
impressive in terms of livestock population and total milk production but
extremely poor in terms of productivity.

Dairy animals: 3x cattle of Germany, buffaloes of India.


Milk Yields
o 1 NewZealand cow = 3 Pakistani cows. 1 American Cow = 7 Paksitani cows.
Difference in productivity is due to factors such as genetics, management and
technology.
o Per capita production: 230kg/annum. This is twice of india and 70% of USA.
o Between 2000 and 2005, production grew by 2.9 per cent per annum, due to increased
numbers of milking animals than to higher milk yields.
o Pakistan : 1500litres/lactation period (in some areas 2000 to 2500litres)
o India 3000litres/lactation period
o World average: 5000litres/ lactation period
o Brazil/Australia/USA: 9000litres/lactation period
o In regional market we are ahead of Nepal and Somalia.

Fat content:
o Cow: 4 to 5%
o Buffalo: 7 to 8 % (creamier)

Buffalo/Cattle Breeds:

Buffaloes:
1. Buffaloes are the main dairy animals in Pakistan
2. Nilli Ravi/ Kundi.
3. The Nili Ravi is most popular breed of buffalo and is liked due to its high productivity
standards in terms of high fat %age and milk production. Milk yield in Nili Ravi ranges from
1835 to 2543 kg per lactation.
4. Jersey/Holstein cross bred to have higher lactation period and higher output.
5. Lactation period: 6-8 months low potential animal by nature:
The calving season of buffaloes is concentrated during the autumn and start of
winter months so they reach their peak milk production after two months from
November to February. The abundant legume fodder available at that time resulted
in high milk production. But during summer season milk production of buffaloes
drops rapidly due to low feed availability, high environmental temperature and late
lactation
6. Preference of buffalo by farmers because of its abilities to effectively utilize poor quality
fibrous feeds and withstands high environmental temperature.

Cattle: Sahiwal, Red Sindhi and Tharparker (a dual purpose cattle) breeds of cattle are important
cattle milch breeds of Pakistan.

1. Sahiwal Punjab.
2. Red Sindhi Sindh - It is considered one of the best breeds of subtropics. It has been
exported all over the tropical world and is used for upgrading indigenous cattle, especially
for milk.
3. Tharparker (white Sindhi) breed is present in Thar Desert in south west of Sindh province.
This is one of the best dual purpose, milk and work, breeds found in Indian subcontinent.
4. It has been documented that age of first calving in Sahiwal and Red Sindhi varies between
30 and 43 months.
5. Milk production in Sahiwal ranges from 1200 to 3100 liters with maximum record of
5500 liters in a lactation
6. Lactation period: 8-10 months
Dairy cows, are more productive during summer, however, as noted earlier, most
milk produced in Pakistan is from dairy buffalos. During the summer when demand
for milk is high and supply is low, adding water and ice to fresh milk fills the gap.
This excessive milk production during winter and less milk production during
summer month causes many problems in milk marketing.
7. Length of lactation in Sahiwal and Red Sindhi varies between 270 and 490 days
8. It was concluded that selection against milk production and poor reproduction in cows was
desirable, but feeding and body condition call for greater attention if reproductive
performance is to be improved.

BREEDS:The sindhi breed is one of the best in the world. (output 26ltrs/day). It was exported to india.
Unfortunately the original breed is now difficult to find because of extensive and incorrect cross breeding.
Seasons : Gives more milk in winter. Demand is greater in summers. One way to increase production in
summers is to put them in water. Water shortage in Karachi is affecting production. The cattle colony has
installed sprinklers.

Animal Issues:
1. Unavailability of animal due to high prices which are consistently increasing - rs 25000-80000
2. Severe animal shortage because:
a. Animal are being smuggled to Afghanistan.
b. Bribing in KP, 5 years ago led to extensive smuggling (6000 per animal)
c. Culling of calves is strictly prohibited. But in government slaughter houses with bribing this
practice prevails.
3. Meat prices are rising much faster than milk prices disincentive for dairy farmers.
4. More demand for calf meat.
5. In subsistence farming, the most liquid form of money is by slaughtering or selling the animal
6. No structured quarantine system when disease breaks out diseases spread very quickly in
cattle colonies which leads to animals dying rapidly.
7. No control measures to prevent spread of diseases.
8. Animal attendants also get the viral diseases.
9. Recent floods destroyed fodder, animals, malnourishment and yield has decreased.
10. No system monitor daily per animal output to implement controls if necessary india/china
have to follow best practices.

Farming Structures
Rural Farms:
o Subsistence 5-10 animals
o Make shift shed
o Not cemented
o No sewerage system decreases animal output
o No consistent electricity - no chilling facilities, making it difficult to store twice a day output
of buffalo.
o Rural chilling facilities: ice is added in make shift chillers reduces fat content and leads
to contamination.
o Big companies have rural collectors: Nestle has its network in Punjab: milk is brought into
chilling centres within 2 hrs.
Urban Farms
o These are established cattle colonies which provide milk to big cities.
o Located in the periphery of urban areas
o Initially, animals had a lot of space. However, due to expansion of urban areas cattle
colonies are cramped for space and over crowded.
o These were made according to international standards but now over-congested. From 100
to 250 animals. Ideal is 1.2 acres per 100 animals
o Since this is a high-cost system, only high-potential animals are kept.
o Animals close to calving or in calf are purchased, the calf is allowed to suckle for a few days
and is then sold, generally for slaughter.
o Medical/feed companies directly supply to these farms
o Kept under better feeding, managemental conditions and a good veterinary cover is now
being advocated.
o Issues:
Fodder availability
Over crowding
Epidemics
Loss of animals
Low productivity
Milk collection and transportation facilities
Proper manure disposal
Rising demand has led to gradual transformation of dairy production system of rural subsistence
small holdings into rural market oriented and peri-urban commercial dairy production system.
The projected rapid economic development in the future is expected to exert more pressure on
our dairy sector to increase its output and streamline the commercial dairy production and
processing activities in the country. Currently, the dairy sector of Pakistan is in a transitional stage
and is confronting with numerous problems which are hindering its growth and development.
As the dairy herds are small and wide spread, milk collection and transport is the major
challenge facing dairy industry in the country.
Absence of integrated cold chain, leading to rampant adulteration and hampering access to
markets - Provide equipment and facilities related to cold chain.
Engro model farm in Sukkur: Nara Dairy Farm

o Each animal is kept at a 6ft distance


o Milking machines most hygienic way to extract milk
o Holstein/Jersey cow breeds cross breed (imported cows find it difficult to fend
epidemics)
o Vet services
Feed/Feeding conditions
67% price of milk is feed cost
In Pakistan dairy animals are raised under 3 different managerial feeding circumstances.
o In irrigated rural areas (Punjab & Sindh provinces) in the form of small herds where
buffaloes and cattle mainly rely on crop residues and fodder crops.
o Under peri-urban environment where dairy animals are maintained on fodder crops, agro
industrial wastes and concentrates (oil cakes).
o Large herds of cattle are raised under range and barani conditions where they are kept on
naturally grown grasses, shrubs and tree leaves.
Feed types:
1. Processed Feed
o Entirely dependent on the agricultural by products such as wheat husk, rice husk, molasses and
cotton seed.
o Very nutritious
o Mechanization has reduced agricultural wastage, by products.
o Major by products for feed: KHALLI AND CHOKAR
2. Open feed with additives
o It is a mixture of animal biscuits, green fodder, bread crust, agricultural waste and dry fodder.
3. Pure open feed
o This is green fodder in its dried form, lacks nutritious value.
o Grazing provides more than half of the feed requirement. Pakistan has 63% of its area as
rangelands that supports most of the cattle population in Balochistan, Sindh and to lesser
extent in Punjab province. Alpine pastures of northern high lands are vital for yak, which is
the only milk source in northern areas. However buffaloes in Punjab and Sindh provinces
may use the natural vegetation around anal riverbanks, along roadsides and in wastelands.
Due to mechanization of agriculture by-product is decreasing, leading to price hike of feed.
Due to natural disaster wheat/rice are imported without by-products making it costly to maintain
animal shortage of feed: The trade commission of Pakistan should import agricultural products along
with its by products to avoid milk price fluctuation
The report of working group on milk indicated that the feed/fodder deficit was variously
estimated at 15-30% of the total animal requirement in terms of total digestible nutrient.
However, the shortage will be probably larger in terms of digestible protein and energy.
An excellent meal for a single animal feed daily should comprise of three edible items that are:
o 8 kg of concentrate
o 7 kg of wheat straw
o 8 kg of green fodder
Problems:
o Poor availability of nutrients in quality and quantity for dairy animals affecting the
production potential of dairy animals
o Continuous increase in the number of dairy animals
o Fodder yields have not significantly increased and low productivity per acre has further
worsened its availability.
o The nutrient reservoir like rangelands are subjected to deterioration and still no proper
attempt has been made to sustain and improve their productivity.
o Livestock farmers hesitate to use agro-industrial byproducts or non-conventional feed
resources to improve livestock feeding because they are unaware of the usefulness of such
materials and so strictly adhered to their traditional feeding patterns
In Pakistan nutritional requirements of dairy animals mainly met through fodder crops, shrubs,
grasses and agro industrial wastes. It has been reported that livestock are getting 51, 38, 3, 6 and
2% of their required nutrients from green fodder/ crop residues, grazing/vacant lands, post
harvest grazing, cereal by products and oilcakes/meals, respectively.
It has been reported that Livestock are getting only 75% of the required amount of total digestible
nutrient (TDN) and there is also shortage of digestible crude protein (CP) up to 60% .
Improvement in quantity and quality of feeds could bring improvement of livestock production up
to 50% from existing genetic pool of animals.
Currently, 121.1 million heads of animals require about 10.92 and 90.36 million tones of CP and
TDN, respectively, annually in Pakistan. However, the respective availability of these nutrients is
only 6.7 and 69.00 million tones, which indicate a deficiency of 38.10 and 24.02% of CP and TDN,
respectively, per year. Thus the existing available feed resources can only fulfill the maintenance
requirements of animals.
There is an immediate need to explore the available feed resources and to suggest remedies to
minimize the gap between nutrients availability and nutrients requirements of animals
Recommendations : The gap between requirement and availability of nutrients could be
minimized through:
proper fodder research and extension policies in terms of better quality seed, seed rate,
improved agronomic practices and improved inputs (fertilizers, water, pesticides).
Rangelands are 60% of the total area of Pakistan and proper range management and
improvement policies like artificial reseeding, introduction of exotic species, water
conservation methods and community organization could bring improvement in the supply of
quality biomass in sufficient quantity.
Urea and poultry litter as a source of NPN could help a lot to minimize the gap between protein
availability and protein requirements of ruminants if proper coupling of nutrients at feed,
digestive and cellular level is achieved.
Agro industrial byproducts and non-conventional feed resources could be used for feeding of
livestock if farmers are trained to do so.
Situation may be further improved if year round fodder system and fodder conservation
techniques are introduced in livestock feeding systems.
Establishment of cattle feed industry is required to provide dairy mixes to the farmers at
cheaper rates.

Lack of proper livestock management practices and inaccessibility to support leads to low
animal productivity

o Educate farmers
o Mass-scale awareness campaigns on management practices and production
o Easy accessibility to financial resources
o Initiate sustainable long-term breed improvement programs

Problems: small herd, poor genetic potential of animals for milk, low quality feeds, high risks of
epidemics, improper marketing channels, lack of technical man power for dairy industry, high
environmental stresses, reproductive failure and high udder abnormalities, orthodox management
practices, poor extension services and lack of commercial rations.
Contamination of Milk
1. Mixing of hydrogen-peroxide (surf)
Surf is mixed a little to kill excess bacteria to increase shelf life, due to lack of
chillers. 3% is required as a preservative but no consistency by farmers. Excess
can lead to internal bleeding
2. Contamination during milk extraction dirty vessels
3. Mixing of ice dilutes milk. There are also claims that oil/urea are added
4. Improper medication of animals
steroid injections are given before extraction to increase milk content. These
injections require an increase in food intake. If this is not implemented animal dries
quickly. This practice has been banned in the EU and USA.
Traces of excess are found in milk bad for health.
Veterinary service: by policy free services are provided by the government. But they are not
regular and work on bribery. Now fodder companies have started providing these services
to peri farms.
5. Boiling of milk at home
Bacteria eats most protein by the time it gets to the house. Boiling further kills
protein.

Machinery
Farm chilling units
Milking machines
Machine usage is low because:
1. Not designed for indigenous breeds
2. Pakistani labour is cheap
3. Inconsistent supply of milk
4. Perception of farmers that animal will give more milk if done by hand

Labour
2001: educated people entering the industry have led to improvement in the sector.
Dairy workers: no provisions for training, education & skill.
Packaged milk entrance has had a significant impact
Labor training is still absent ( only Allama Iqbal University gives a diploma)
By entrance of nestle and engro, development of HR is taking place, aswell as labor training. They have
hired experts from abroad.
Best practices havent entered the industry because there is no restriction on entrance in the industry.
(strict control in India and china)
There is lack of consistency
Private sector has taken the responsibility of to develop the labor.
Cattle Colony gets labour from Hyderabad/Sukkur who come, get trained and go back mobile
labour
Mobility of labour also affects animal output as animal gets attached to attendant there is need
to devise retention systems.
Education

R&D

Water & Sewerage

ISSUES OF FC
Meat exports increase during crisis
Lot of potential in this sector we currently donot have any mechanism to monitor the productivity.
60 to 70% subsistence farming
Pricing crisis: pricing policy is based on the fat content
Our sector is not commercialized.
India hired consultants from New Zealand to restructure the whole industry.
Govt fixes the price of milk but not fixes the price of raw material i.e. animal.
Costly to maintain an animal, easier to sell it for meat
67% of the animals cost is its feed, and the output of animal is directly related to the feed it has.
The imported cows are having difficulties to adapt
Demand Conditions
Per capita consumption: 190litres. Province wise: Sindh 246kg; Punjab 132 kg; Baluchistan 86kg;
KPK 108kg
Rapid urbanization trend coupled with increased per capita income resulted in significant
increase in the demand for milk and its products in the urban areas.
Increased demand for milk was mainly driven by population growth (from 2.0 to 2.2 per cent per
annum).
About 80 thousand tones of dry milk was imported in Pakistan during the last year to meet local
demands of milk. $38.6 million of imports in 2007.
Dairy cattle farms are less popular in Pakistan due to consumers demand for buffalo milk
Out of the total amount of milk that Pakistan produces:
45% is sold
15 to 20% is spoiled or wasted
35 to 40% is consumed at farm level
Out of the total milk available for consumption in the country about 25% is consumed in urban
areas and about 70% in rural areas.
o Karachi: 1litre/day/ househould
o Lahore: 2litre/day/household
o The daily consumption of milk in Lahore is 2 to 3 million litres and that of Karachi is 4
million litres.
Milk and its products are important food items in diets, representing 27% of total household
expenditures on food items. As food group milk and its products are second only to cereals in
terms of per capita consumption and by weight milk makes up about one third of the food
consumed by each Pakistani.
Demand is not sophistacted 91% of milk consumption is loose milk.
About 55% of the total milk available for consumption in the country is consumed as fresh milk
and remaining is used in the form of processed milk and milk products.
o Milk is used for drinking, tea, desi ghee, yogurt and butter, cheese, ice cream, sweet meals,
confectionary, khoya
Milk processing companies use milk as a raw material to formulate different types of milk i.e.)
pasteurized milk, UHT milk, condensed milk, skimmed milk, milk powder, etc Different value
added products like yogurt, ice cream, butter and cheese are also produced from the raw milk.
The demand for processed milk has increased its share in quality conscious consumers. During the
last two decades, processed milk has achieved 4 percent share in the milk market of Lahore, which
is growing to about 4.5 percent per annum. Therefore, metropolitan cities are the major markets
for the sale of milk.
Dairy processing industry uses approx only 15% of total milk produced.

Why processed milk sector has grown:

Current economic turnaround has contributed to the growth in the PLM sector, resulting in
increased consumer purchasing power.
Another reason for growth is a growing awareness pertaining to health and hygiene; this factor,
coupled with increasing dissatisfaction with loose milk, has also contributed to growth in this
sector.
Many challenges and perceptions still have to be overcome by the PLMCs:
Traditional links between the gawaala and the household.
Lack of awareness among consumers about the hazards
Desire for cream line milk fresh milk is considered healthier.
Processed liquid milk is expensive
Fresh and packed milk prices are on the rise.
o Fresh milk: Rs. 60/litre
o Tetra Pak milk: Rs 76 per kg level, which is higher as compared to the current rates of Rs
70 for the same weight Olpers, Nurpur, GoodMilk, Haleeb, MilkPak
o Previous year in the month of January, the one kg Tetra Pak milk was available to
consumers at Rs 58 per kg at retail level, but the frequent increase in its rates during one-
year period pushed it to a higher level of Rs 70 per kg.
o The new rates would push the commodity beyond the buying capacity of a large number of
buyers specially those belonging to lower and middle segments of the population
Seasonal Demand:
o Lean period (summer april to august): production decreases 55%; demand increases
60%, due to heat.
o Flush period (winter): production increases 55%; demand decreases 60%
Diseases: Micro bacterium causes TB and Q fever in rural areas of Pakistan. These bacteria are found in
loose milk
Export potential: Iran, UAE, Saudi Arabia
Structure, Strategy & Rivalry
Milk is largely a deregulated, undocumented market,

65% Punjab
25% Sindh
7% KPK
3% Balochistan

Dairy Production Systems


Structure 1: Peri-urban/urban commercial dairy farms:
o located around all big cities
o largest is Landhi Cattle Colony, Karachi - more than 300,000 milking animals are kept.
Others: Lea colony, Kutta colony.
o High demand for fresh raw milk and easy access to the market with high milk price are
some of the factors promoting urban / peri-urban dairying.
o The aim of confining milk production to rural areas is to reduce pollution and traffic load,
mass migration to urban areas, to curtail genetic degradation of dairy stock and provision
of employment opportunities in the rural areas.
o As peri urban dairy colonies have large number of animals in specific areas so it is viable
and feasible to develop these setups in to a modern dairy enterprise with relatively more
ease.
Two parallel supply systems are running,
a. Transporters get milk from the farmers or colony to LEA market. Here milk is auctioned twice a day on
the basis of demand and supply. Retailers but milk from here. This price fluctuation only affects
retailers profit margin. Cxonsumers are not affected because there prices are fixed by the government.
20% milk supply this way.
b. BANDHI SYSTEM
It is the contractual system. The demand and supply fluctuates drastically because of lean and flush
periods. A contract is made between the retailers and suppliers for a period of one or two years fixing
the price and quantity. The retailers gain with the changing situation then. 80% milk supplied this way.

Karachi has the best milk distribution system in Pakistan. This is because milk from cattle colonies reaches the
retailers within 90 minutes.
Structure 2: Rural

Rural subsistence smallholdings: *These produce milk principally for the family at minimal cost.
*The average subsistence unit consists of three buffaloes, including one or two adults *This
traditional system makes heavy demands on family labour.
Rural, market-oriented smallholdings: *These farmers have satisfactory access to milk markets,
and produce milk in excess of family requirements for sale. *These farmers usually keep better
quality animals. A typical unit consists of fewer than six buffaloes and cattle, with two or three in
milk. *Milking animals are generally stall-fed with seasonal green fodder, straw and concentrate
and dry cows and herd followers are grazed. *This system is the main source of milk in Pakistan.
Rural commercial farms: *These are relatively large herds with more than 40 animals. These are
either mixed crop-livestock farms or specialized farms for breeding and milk production. *These
farms are well organized and keep good records, but their contribution to the total milk supply is
small. This is an emerging farming system which is gaining popularity.
- Among the avenues of food production of animal origin, smallholder dairy production systems are
potentially important. They are characterized by their rapid expansion, strong market orientation
in rural areas and the many opportunities for increasing the current level of production. Some of
the milk produced is used for home consumption, but most of it is sold directly by the farmer or to
middleman.
- More than half of the milk produced in rural areas has no access to market.

Desert cattle farming: Desert dwellers keeping cattle earn their income from sale of milk, ghee
and males. Normally the animals are milk once a day except freshly calved animals. The cattle are
let out for grazing during the night. The animals return early morning and are milked. The milk is
normally sold to the milk collector who also brings many items of household use for the family.
During the day, the cattle are taken for watering and take rest in the available shade, etc.
A total of 8.42 million families raise 26.79 million cattle and buffaloes for milk production in the
country. Most of these milch animals (65.3%) are with families who keep one to six milking
animals. These smallholders constitute 91.4 % of total families raising cattle and buffaloes. Larger
herd (> 30 milking animals per farm) constitute only 0.3 % of holdings and are 29,293 in number.
These holdings have 9.4 % of total milk producing cattle and buffaloes.
80% milk: rural commercial and rural subsistence farmers; 15%: peri urban farms; 5% urban
farms.

Most of the milk produced (approximately 70 %) in the country is consumed at home. The remaining 30
% is marketed through various marketing channels. Only 3 to 3.5 % of milk is processed in the country.
The rest is sold as raw milk or used in preparation of sweets or various other traditional products. About
15 % of the milk is wasted due to lack of proper storage facilities.

Milk Marketing
There are two different types of milk marketing systems in the country i.e. Organized dairy sector and
traditional milk marketing. Dairy industry milk collection systems are given below:

Traditional milk marketing systems include:

1. Producer Consumer
2. Producer Gowala/Dodhi Consumer
3. Producer Gowala/Dodhi Milk shop Consumer
4. Producer Dodhi Sweet shops/Others traditional processors
Organized Dairy sector:

1. Self Collection from Farmers (medium producers): Producer Processor


2. Village Milk Collection Centre (VMCC): Producer VMCC Processor
3. Dodhi: Producer Dodhi (milk collector) Processor
4. Mini Contractor: Producer Dodhi (milk collector) Mini Contractor Processor
5. Hilux Contractor: Producer Dodhi (milk collector) Mini Contractor Hilux Contractor
Processor
6. Big Contractor and Strategic milk suppliers: Dodhi (milk collector) Mini Contractor Big
Contractor / Strategic milk supplier Contractor Processor
- Collector agents/Contractors are sent by big companies
- Every village has a few doodhis, one collector agent is assigned to each village and 15 to 20 villages
are assigned to one subcontractor.

The doodhi goes to individual households (on foot or animal) in the village. The collector agents
collect milk from these doodhis, and take it to the subcontractor. The sub contractor tests the
milk quality and then delivers it to the company for pasteurization
The companies use FR (Fat Ratio) to ensure that there is no water contamination (since adding
water reduces the ratio). The milk centers pay the farmers based on this ratio rather than the
volume of milk collected.
The company has to make sure that the milk is stored properly at all points(ideal conditions are that
it is stored at a temperature lower than 4C.
The organization also has to ensure that they get the milk from the producers into the plant in less
than 4 hours because after that the process of fermentation starts on the milk, affecting its shelf life.

Rivalry & Strategy


There are 20+ milk processing plants (mainly UHT fluid milk, milk powder and yougurt) in the
country. Dairy industry in the country is dominated by private sector. Multinational as well as
national companies are in the dairy business. Nestle is the largest company in dairy business in
the country. Idara-e-Kissan (Halla brand) is the only dairy cooperative collecting and processing
milk in the country.
The main dairy product is UHT milk. The pasteurized milk has very small share in the processing
and is sold in pouches and as loose milk. The other main products are yougurt and to a lesser
extent cheese. The dairy industry is growing at a very fast speed and annual growth of 20 to 25 %
has been witnessed during past 5 years.
Other products include powder milk, butter, cream and lassi.
With the exception of Engro Foods, all dairy processing plants are located in Punjab.
Major Players: Nestle, Engro Foods, Haleeb, Nurpur, GoodMilk in order of ranking
Companies concentrate on branding and value added proposition to increase penetration,
volumes and thus profitability.
Products are highly price competitive.
Pasteurized milk, because of its low processing and packaging costs, could compete more
effectively with unprocessed milk and the future development of the dairy industry may lie in this
direction.

Milk is a highly perishable commodity so prompt collection from producer and its quick
transportation to consumer is prerequisites to market it properly without any change.
The prerequisite of successful production of high quality dairy products is that the raw milk must
be of good quality. Efficient cleaning of equipment dealing with milk handling is of paramount
importance. All possible efforts must be made to preserve its quality during storage and
transportation. The basic method to preserve a high milk quality is cooling or activation of
naturally occurring Lactoperoxidase system in milk.
In Pakistan, the landless dairy owners in remote areas either use milk for their own consumption
or sell out surplus milk, as a supplementary income source to meet their daily monetary needs.
This multi layer marketing system appears to buffer the producer from the price and purchase
signals given by the consumer. The producer appears not to receive a premium for summer milk
or for milk with higher milk fat content except for that paid by the milk collection centers that are
operated by processors. Also the producer is not known to receive a premium or penalty for solids
not fat.
The apparatus and procedures used by the collection centers are not reliable to estimate milk
fat% accurately. It is suggested that digital fat measuring instruments should be used on milk
collection centers

The investment of public and private sector in dairy industry is scarce.


Main players in the organized sector: Nestle Milkpak, Engro Foods Olpers, Haleeb, Goodmilk,
Millac,
Related & supporting industries
Transport and storage of milk
Tetra-Pak Packaging Industry
However, at present Tetra Pack Pakistan Ltd. is the only domestic plant producing aseptic
packaging material for UHT milk. This monopoly position and its implications for cost and quality
of material are of major concern to the present day and future UHT milk manufacturing industry
in the country check current
All food industries confectionary, ice cream - Milk is the raw material for various products. Some of
these products are used further to producer products further ahead in the value chain.
Pakistani flour
Oil industries
Meat: is one the most important parts of the food industry that is closely in sync with the dairy industry. The
higher the number of unproductive animals, [the higher is the output of the meat industry.
Animal Feed: there is increased pressure on the animal feed industry to produce more nutritious and
wholesome feed which contains a balanced mix between the essential nutrients needed for improved milk
yields.
Fertilizer Industry
Biogas Industry: one of the waste outputs from the dairy industry is the essential input for the biogas plants
operating. Foreign investment from Britain and the USA has resulted in the installation of various biogas fuelled
energy stations at various dairy farms across the country
Leather Industry

Government
Under the City District Government of Karachi all farms are to abide by the Price Control Act.
Under the White Revolution started by Shaukat Aziz, the Dairy Development Board was set up which would
ensure that the industry would grow
The Pakistan Dairy Association (PDA) has requested the government not to impose value added tax (VAT) on
dairy products and milk, fearing this will retard growth of the packaged dairy industry.
GOP has established two non-profit companies focused on Livestock Development
o Livestock & Dairy Development Board
o Pakistan Dairy Development Company

Pakistan Dairy Development Company


o In operation for just over one year.
o Public-Private Partnership
o Objective is to identify and implement programmes which will drive dairy development The White
Revolution

WHITE REVOLUTION
The White Revolution is targeted to achieve an annual production of 40 billion liters of milk by 2015. It aims to
create an additional 3 million jobs in the formal economy and provide an estimated 350 million rupees per day
in cash flow to farmers in the sector. (by nestle and tetra)

Policies affecting the Sector


1. Fixing of raw milk price in major cities by the local governments
2. Lack of quality control on the milk and milk products
3. Lack of government support for the milk cooperatives
4. Low credit availability for small and landless livestock farmers
5. Government extension service only provides curative and limited artificial insemination services
(actually farmer has to pay). No production extension or veterinary service in its true sense.
6. Livestock policies in Pakistan are supportive towards the meat sector.
7. Horizontal expansion of livestock rather than vertical

Problems:
Some of the important problems are given below:

1. Unavailability of superior germplasm from known source


2. Inadequate feed resources
3. Epidemics of infectious diseases
4. Poor marketing infrastructure highly fragmented production base, as small farmers produce and
market in isolation
5. Market exploitation middlemen have a monopolistic role and can exploit small farmers through
binding contracts, buying milk at low prices and not passing on price rises.
6. Low investment by government
7. Poor institutional infrastructure lack of cold storage facilities, resulting in loss of 15-20 % milk.
8. Outdated regulatory framework
9. Limited credit availability lack of financial resources to improve farm enterprises and in times of
emergency such as disease or mortality of livestock.
10. Productivity due to lack of proper mgmt practices and breeding, animal production tends to be
very low. This results in low farm profitability and lack of national productivity
11. Seasonality milk production is highest in January/ February when green fodder is easily
available, whereas milk demand is highest in May August when production is lowest.
12. Livestock sector is not commercialized
13. Congestion
14. No training institutions (India used media for training)
15. No proper milk testing devices are used, they dip the hand, check fat content by rubbing, and check how old
it is by tasting
16. Increase in the prices because of the following reasons:
17. Shortage of cattle
18. Prices of feed
19. Inflation
20. Rise in oil prices

21. The prices of fodder and other feed ingredients have risen sharply in the past few months leaving the dairy
farmers with no other option but to pass on the cost to the consumer. The fodder price across the country
has increased by 40-50 percent in the past three months and the government keeps on exporting fodder
ingredients without taking stock of the local requirements which has forced us to raise milk prices
22. What is more disturbing is the nonstop export and smuggling of livestock which has been on the rise for the
past three-four months.
23. As a rough estimate, no less than 2,200 buffaloes are smuggled every day from Quetta, in which the
government is allegedly involved in accepting bribes,
24. The cost of a buffalo has nearly doubled in a short times time as a buffalo that cost Rs80,000 last year, now
costs Rs150,000.
25. The packaged dairy sector has only a three per cent share in the market while loose milk sellers have a 97
per cent share. It says that the formal industry will not survive and ultimately Pakistan will have to import
packaged dairy products.

Recommendations
Feeding management. Superior fodders germplasm should be identified and propagated in the
field. Hybrid seeds either imported or endogenously produced should be distributed among the
farmers. With the seed provision a complete package of agronomic practices should be transferred
to the farmer. Year round fodder production systems should be devised. Legume, non-legume crop
combination could improve the feeding status of livestock. Farmer training is required so that they
can use cheaper feed resources (nonconventional feed resources) for feeding of animals. Better
feeding of livestock could be achieved if vertical expansion of livestock production is followed.
Ensiling and hay making systems should be devised and extended to the farmers according to local
livestock production system. Different rations should be formulated to achieve synchrony of
nutrient utilization in animals. Feeding should be aimed keeping in view the physiological stage of
the animals rather than feeding animals haphazardly.
Coordinating research and extension activities. There should be close collaboration amongst
different institutions (universities, livestock research stations and research institutions) so that
they can benefit from each others results and also avoid any duplication of work. The rural small
holders should be trained in the skills of efficient dairy production. Specially designed literature
and audio visual aids be used for this purpose. The small holders (maintaining about 80% of total
dairy animals) must get due attention of policy makers for support and necessary assistance in
running their day-to-day activities. There is no price motivation for the milk producers. Most of
the milk is produced on subsistence basis rather than commercial basis. It needs to be organized
on a commercial basis.
Disease control. Proper vaccination against different diseased to maximum dairy stock should be
carried out. Manufacturing of different vaccines in quantities to meet demand of livestock
population is essential. All viral vaccines being prepared by conventional methods should be
shifted to tissue culture technology. Control of internal and external parasites through efficient
and adequate drenching and dipping operations especially in crossbred is needed to avoid
morbidity and mortality. Expansion and modernization of diagnostic facilities at least at district
level can be helpful. Education of farmers regarding, mastitis, vaccination, and metabolic
nutritional and reproductive problems is required to avoid monetary losses in dairy sector.
Public sector participation. Short-term interest free loans to help small farmers may be
extended so that they could able to use optimum level of farm inputs. To attract, motivate and
encourage private sector to invest in the livestock sector, facilities like tax holidays/ rebates and
duty free import of necessary machinery pertaining to dairy should be provided.