Dairy sector has a potential to employ 60 million people in dairy & livestock sector; currently more than 10 million families are connected with milk processing companies. Altogether Pakistan produces 60 billion liters of milk per annum and has a potential to double the production through increasing milking yield per animal.
Pakistan Dairy Association is however grieved on the budget 2020-2021 as no initiatives were taken to revive the dairy sector of Pakistan despite submitting three proposals to the government in the interest of economic development of dairy sector and how government can raise revenue in medium to long term time frame. It is now high time for the government to take notice of dairy sector and make necessary decision to support the dairy sector. If immediate and supportive actions are not taken by the government, we are afraid that industry will collapse leaving millions of families deprived with employment, and livelihood, said by chairman PDA and CEO, Dairyland Pvt Ltd. Likewise if industry collapse, people will be deprived of safe milk resulting in stunting, wasting and underweight death toll.
Pakistan is the 5th largest producer of milk in the world. Dairy contributes 11% to the GDP of Pakistan. In a conducive environment this has the potential to become an economic powerhouse for the country. Almost 44% of children under the age of 5 years are stunted and almost 15% are wasted. This is a national concern and shall be noticed by the government to support the dairy sector to produce quality and safe milk and make the milk available for every household of the country.
Dairy sector can play a vital role to revive rural economy, by only 1% increase in the market share of processed milk can result in additional 2 billion liters of annual milk production and over rupees 6 billion of tax revenue for the government, said by Senior vice chairman PDA and Managing Director, Friesland Campina.
Below are some facts and challenges of dairy sector in Pakistan.
1. Industry spent over 500 million rupees in the rural farmer development program and capacity development.
2. Industry support farmers in efficient milk supply chain and educate them how to increase the milking yield of their animals.
3. Industry invests almost 1.5 billion rupees to educate and create awareness about safe milk and change the negative perception of packaged milk.
1. Only 5% of the total milk produce in the country is processed.
2. Raw & loose milk may be unsafe for human consumption, because there are no quality & regulatory measurement at farm level, further we have a poor & inefficient supply chain of milk.
3. Almost 95% of milk consumed in Pakistan is unsafe, unregulated and untaxed.
4. Packaged industry is able to produce safe milk ensuring quality and nourishment. Industry also pays taxes and contribute to government revenues. All packaged milk are tested by government laboratory periodically to ensure safe milk standards.
5. Packaged industry purchase almost 120 billion rupees worth of milk annually from local farmers.
1. Dairy industry has been declining since abolishment of zero rating tax i.e. 2016. Since past two years the industry is making losses. If this continues, processors will have no option but to close their doors for business.
2. The gap between the price of loose milk and packaged milk has increased due to lack of safe & quality milk available and poor supply chain.
1. Zero rated sales tax regime is a win-win for Government and dairy sector.
a. Sales and profitability of industry will grow.
b. Creates incentives for new foreign direct investments (FDI) for modernization of the industry.
c. Government can earn upto rupees 25 billion in overall revenue through sales tax and income tax.
2. Minimum pasteurization law to be implemented in large cities like Karachi, Lahore, Faisalabad, Hyderabad, Multan and Rawalpindi/Islamabad so that raw milk is not sold without any format of packaging.