EXPORT POTENTIAL OF MILK

Out of total milk production, 97% is traded as raw milk

By JAHANGIR A. RIND*, HINA SAMREEN** 
and ZEESHAN INAM***

Jan 31 - Feb 06, 2005

Pakistan has excellent wealth of livestock. The milch animal breeds have no parallel in the world. Livestock is one of the main sub-sectors of agriculture. Livestock production is an integral part of Pakistan's agricultural system and plays an important role in national economy.

At present, livestock contribute about 11.4 percent to GDP. Its share in value-added accounts for 49.1 percent. The net foreign exchange earning was to the tune of Rs39.5 billion during 1999-2000, it was about 9 percent of the total export earning of the country. The role of livestock in rural economy may be realized from the facts that 30-35 million rural populations are engaged in livestock -- raising livestock include cattle, buffaloes, sheep, goats, camels, horses, donkeys, and mules.

Milk, mutton and beef are very important food items, which we get from livestock. Out of total milk production, 97% is traded as raw milk and 50% of which is used as fresh or boiled form. The nutritional value of milk is given in table 1.

TABLE-1
THE CONTENTS OF MILK IN DIFFERENT ANIMALS

in percentage

ANIMAL

WATER

FAT

PROTEINS

SUGAR

ASH

BUFFALO

83.0

7.8

4.0

4.8

0.4

COW

86.3

4.7

4.0

4.7

0.5

GOAT

89.2

2.50

3.8

4.4

0.3

SHEEP

83.9

5.9

5.5

4.4

0.3

Source: Mawashi aur maeeshat by Dr Baz Muhammad

The milk is very important item of food, which is needed by every individual daily as essential food item. Milk prices have gone up from Rs20 per liter to Rs25, showing a 25 percent increase. At national level, contribution of buffaloes milk is about 70 percent.

A cow, on average, yields 14 litres milk a day over a lactation period of 305 days whereas the buffalo, on an average, yields 10 litres a day over a lactation period of 280 days.

When milk is compared with major crops, its value is more of wheat and cotton and twice that of sugar cane and rice. Nearly 55 million of small farmers and landless depend on income derived from milk. Pakistan is ranked 5th biggest among milk producing countries. The country has also introduced UHT technology for processing milk.

At present 17 milk plants are in operation. The plants are working below installed capacity. Against 0.65 million liters capacity only 0.43 million liters of milk is processed daily. It means that 97 percent milk is traded as raw milk. Only 3 percent of total milk is processed, thus milk-processing industry is facing an unhealthy competition with local milk traders. The bulk quantity of milk is produced in rural areas.

The demand of milk and its products is increasing year by year and in fact influenced the prices hikes. The impact of price hike hits common people and its purchase is being made out of reach of poor people. The reasons of increasing trend of prices are discussed below.

DATA

The data in respect of animal population of milch animals from 1991 to 2002-2003, and milk production and consumption animal-wise for the same period gathered and tabulated in below mentioned tables show the average trend of growth of animals, production of milk and consumption of milk.

TABLE-2
ESTIMATED MILK ANIMALS POPULATION (000-HEAD)

YEAR

COWS

3-yrs and above in milk

BUFFALOES

3-yrs and above in milk

SHEEP

3-yrs and above in milk

GOATS

3-yrs and above in milk

1990-91

4215

6501

16024

21212

1991-92

4243

6668

16423

22125

1992-93

4272

6840

16833

23078

1993-94

4301

7015

17254

24072

1994-95

4320

7197

13290

25108

1995-96

6326

7810

13360

22357

1996-97

6448

8027

13435

23161

1997-98

6564

8253

13435

23994

1998-99

6888

8488

13512

24858

1999-00

6815

8734

13595

25755

2000-01

6945

8996

13681

28686

2001-02

7080

9258

13772

27651

2002-03

7217

9537

13867

28653

Source: Casted from table of estimated livestock population of Agricultural Statistics of Pakistan, 1997 -98 to 2002-2003.

The data regarding milk production and consumption is collected and tabulated below.

TABLE-3
ESTIMATED MILK PRODUCTION AND CONSUMPTION (000 TONNES)

YEAR

COWS

BUFFALOES

SHEEP

GOATS

TOTAL

 

PROD

CONS

PROD

CONS

PROD

CONS

PROD

CONS

PROD

CONS

1990-91

3653

2922

11256

9005

40

40

532

532

15481

12499

1991-92

3788

3030

11884

9507

42

42

566

566

16280

13145

1992-93

3928

3142

12546

10037

44

44

604

604

17120

13825

1993-94

4073

3258

13246

10597

47

47

640

640

18006

14542

1994-95

4293

3378

13924

13984

49

49

680

680

18936

15294

1995-96

9333

7464

18705

14964

30

30

509

509

28577

22970

1996-97

9505

7604

19868

15419

30

30

527

527

29930

23580

1997-98

9682

7745

19868

15894

30

30

546

546

30126

24215

1998-99

9863

7896

20498

16391

30

30

565

565

30498

24877

1999-00

10049

8039

21138

16910

31

31

586

586

31804

25566

2000-01

10240

8192

21817

17454

31

31

607

607

32695

26284

2001-02

10240

8350

22527

18022

31

31

629

629

33624

27055

2002-03

10630

8511

23271

18617

31

31

652

652

34993

27811

Source: Casted from table estimated milk production, Agricultural Statistics of Pakistan, 1997-98 and 2002-2003. GoP (MINFAL) Economic Wing Islamabad.

METHODOLOGY

A forecast is a prediction of what will be occur in future. There are two general methods that reflect these factors, time series analysis and regressions. Time series methods are statistical techniques, which compute solely from historical data, accumulated over period of time. To study the trend of milk production and consumption of cows, buffaloes, sheep and goats the following equation is used.

Y= a+bX, where Y is a dependent variable.

In this study production and consumption of milk of cows, buffaloes, sheep and goats are dependent variable, a is intercept and b is slope coefficient. Where X is explanatory variable. Since the number of years in the data is odd, we can assign X=0 to the middle year, and X= 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13 to the successive years and X= -1, -2, -3, -4, -5, -6, -7, -8, -9, -10, -11, -12, -13 to the preceding years.

Where a and b can be estimated by using following two equations:

a = ( Y / n
b= ( XY /(X 2

Where n is the number of observation in the data.

We compute growth of all variables (production and consumption of milk). The formula for growth is G = [(Y-Ye)/ Y] *100

Where G is the growth,
Y = production and consumption of milk of Cows, Buffaloes, Sheep, and Goats.
Ye = trend values for production and consumption of milk of Cows, Buffaloes, Sheep and Goats

RESULTS AND DISCUSSIONS

All computation is made in E_VIEWS package. The average growth tabulated in following table.

TABLE-4

ANIMALS

AVERAGE GROWTH RATES OF ANIMAL

AVERAGE GROWTH RATE OF MILK PRODUCTION

AVERAGE GROWTH RATE OF MILK CONSUMPTION

COWS

5.19

12.25

12.41

BUFFALOES

3.26

6.54

6.41

SHEEP

-0.94

-1.22

-1.22

GOATS

2.67

2.11

2.11

TOTAL

-

7.68

7.52

The results in above table show that milk production and consumption in respect of cows, buffaloes, and goats are significant. Total milk production and consumption are growing at average rate of 7.68 and 7.52 respectively, where as animal population of cows, buffaloes, sheep and goats are growing at average rate of 5.19, 3.26, -0.94 and 2.64 respectively.

On basis of production and consumption trends fore casting upto year, 2010 has been made and mentioned in Table-5.

TABLE 5
FORE CASTE OF MILK PRODUCTION AND CONSUMPTION FROM 2004 TO 2010 (000 TONNES)

YEAR

COWS

BUFFALOES

SHEEP

GOATS

TOTAL

PROD

CONS

PROD

CONS

PROD

CONS

PROD

CONS

PROD

CONS

2003-04

12590

10118

25441

20315

26

26

615

615

38781

31080

2004-05

13298

10689

26542

21165

25

25

618

618

40606

32534

2005-06

14005

11260

27643

22014

24

24

622

622

42431

33989

2006-07

14713

11832

28744

22864

22

22

626

626

44256

35443

2007-08

15421

12403

29845

23713

21

21

630

630

46081

36898

2008-09

16128

12975

30946

24563

20

20

634

634

47906

38353

2009-10

16836

13546

32047

25412

18

18

637

637

49731

39807

The total milk production and consumption by the year 2010 will be 49,731 and 39,807 thousand tonnes respectively.

During 2001-2002 population of Pakistan was 145.96 million. The growth rate was 2.165%. Total milk requirement is estimated as:

Total Requirement= per Head requirement * Total population.
= 146.0* 145.96
=21.310 m tonnes

Total Requirement by year 2010 =Total population*per Head requirement
= 205.47*145.96
=30.195 m tonnes

Where production during 2001-2003 was 27.811 million tonnes and consumption was 27.055 million tonnes. This means that surplus of 0.781 million milk is available. The average growth rate of production is 7.68 and consumption comes to 7.52. The production consumption by the year 2010 will be 49.731 and 39.807 million tonnes. Thus there will sufficient margin of 9.924 million tonnes. The surplus is now being converted to butter, desi ghee, and yogurt. The milk products such as butter, desi ghee, yogurt is required 45.91, 0.04, and 0.55 kgs per head per annum.

According to rough estimate of 1991 from total production of 16.3 million tonnes of milk, the producers consume 43% of the total milk, and only 42% reach to the national market.

About 15% of the milk, due to a lack of hygiene and poor infrastructure cannot be consumed. If out of 43%, which is consumed by producer themselves in rural area only 25% milk properly collected processed and preserved, there may be good chances of excess milk to export either in processed form or milk products.

Institutional credit through ADBP/ZTBL and commercial banks are easily available for livestock development and establishment of Dairy industries. ADBP loans for Dairy Farming in the year 1985-86 was Rs550.0 million which has increasing trend and reached to 1082.0 million in 2002-2003. The large projects have also been advanced in last so many years. The government also stressing for promotion and development of this sector as livestock sector are contributing.

CONCLUSION

-- The Pakistani dairy industry has undergone extensive modernization measures over the last ten years, however, the maximum effectiveness has still not been reached. There are good chances of promoting dairy industry in Pakistan on modern line.

-- The milk collection, preservation and processing system are still yet to be develop.

-- The milk plants established during eighties and nineties being operated under installed capacity. Their utilization capacity may be increase by promoting a scientific milk collection system by establishing chilling centers in rural areas.

-- The dairy industry in Pakistan in absence of proper legislation can't compete the Goala-milk collection and supply system. The best way to promote dairy in industry on modern line is proper legislation for milk collection, sale and supply.

-- The increased demand need that urban population should establish small and large dairy farms around big cities.

-- The domestic industries have also reasonable scope for exports of processed milk and its products. Unfortunately concept of urban agriculture has not yet developed in Pakistan as yet. Until unless we promote and developed our urban agriculture we will not able to meet demand of urban areas for milk, meat, poultry, fish and vegetables.

* Independent Researcher
** Student of MAS/M-Phil, AERC, Karachi
*** Student of M-Phil/Ph-D AERC, Karachi