DAIRY FARMING INDUSTRY IN PAKISTAN
Oct 29 - Nov 4, 2012
Agriculture is one of the most important sectors of Pakistan's economy and live stock is significant branch which includes cows, buffalos and goats providing milk, meat, hides and other raw materials for the local market. Pakistan has a herd size of around 63 million animal and about 35 million people are involved in dairy farming, deriving more than 40% of their total income from livestock. For these farmers, dairy animals provide milk for domestic consumption as well as meager income through the sale of milk. There are more than 8 million dairy farming households in the country which are engaged in the milk business in an informal economy. The animal size likewise the land holding size is also very dismal 2 to 5 animals per household. It is unfortunate that despite a massive herd size, the average animal holding size per household is less than 3 leading to an extremely fragmented dairy farming structure. This in itself poses a huge logistical issue for any organization or institution that is aiming to impact these farmers positively. The livestock sector of Pakistan alone contributes 11% of the country's GDP with an estimated 42 billion liters of milk production per annum. Currently Pakistan holds 4th position among the world's largest milk producing countries as per economic survey of Pakistan in 2011.
On the dairy farming side, Pakistan can boast of being the fourth largest producer of milk with an annual production with 35 Billion liters of milk produced annually. The potential is huge but the sector operates mostly in the informal economy and needs a consistent effort to formalize and be able to contribute better to the national economy. Out of the total milk produced, 97% is in the informal sector (i.e. loose milk consumed in the villages and or sold in the cities in unhygienic conditions and without any quality standards. Various studies by national and international organizations suggest that there is a huge untapped potential in Pakistan's dairy farming sector that needs revamping on modern lines to properly connect to the formal economy on one hand and afford the modern livestock farm techniques on the other hand . High market and infrastructure support can enhance productivity and efficiency of this sector manifold.
The major problem for small holding dairy farmers is the dismal milk productivity of Pakistani cattle and buffalos which is less than 4 liters to 5 liters per day for the whole duration of the lactation cycle of around 305 days. On average a dairy animal in Pakistan yields 6-8 times less milk than a dairy animal of the developed world; approximately 8 Pakistani milk producing animals are equal to 1 animal of the developed world. The smallholder dairy producers are also faced with daunting challenges in the areas of infrastructure, financial insecurity, quality assurance, price regulation, untrained manpower, high inflation of inputs, and seasonality. A fragmented farm base coupled with low productivity makes collection practices inefficient. Access to proper infrastructure such as cold chains is still limited and leads to post harvest losses of up to 20% in some areas.
On export front Pakistan's Dairy Sector is also unfortunately falling behind its competitors and faces significant challenges due to many reasons. The production and processing sectors in Pakistan are both highly fragmented in terms of the number of milk suppliers and processors. The industry is competing in international markets against much larger enterprises that are increasing their scale at a faster rate. There has been significant and rapid industry consolidation in recent years in the major dairy exporting countries like Denmark, Netherlands and New Zealand where dominant players have emerged (into one in Denmark, one in New Zealand and two in the Netherlands). Overall New Zealand is considered as the most significant player in international trade of milk - with 35% share of global trade. From 1961 when there were 168 dairy companies operating under the Dairy Board, the industry underwent an extensive period of consolidation throughout the 1970s, 1980s and 1990s. By 1981 there were 42 dairy companies operating in New Zealand, in 1998 there were nine, reducing to four in recent decade.
The small size and scattered nature of the farms leaves a big question mark about farm economics and how to implement better technology for the 70% of smallholding farmers in Pakistan To ensure rapid development of the country's dairy sector, it is important that critical support is provided to the promotion of smallholder producers. Key issues for promoting smallholder based dairy development would be to organize farmers, integrate production with marketing, enhance access to credit, upgrade milk marketing chains through adoption of modern technology, enhance market information, and improve farm profitability.
In Pakistan a fast two-tiered action plan is required to develop systems, which provide profitability for the smallholder and maintain quality through the supply chain, while assisting the development of larger scale commercial farms. The co-existence of both kinds of farms is the reality of dairying in Pakistan and development efforts must provide solutions for both smallholders and commercial farmers. In China, either small farmers bring their cows to the station or the cows are housed near the milking facility - to allow cows managed by households to be milked by machine and have the milk go directly to a refrigerated bulk tank. There are also a growing number of medium-sized specialized household farms with 200-1000 cows. These are often private farmers within reasonable transportation distances from major consuming areas.
Like other branches of agriculture sector the dairy farm sector holds great potential for national economic development, export growth, food security, poverty alleviation and economic engagement of women. The Dairy Sector, in recent years, has witnessed vigorous Government interest and private sector investment. Dairy farming industry needs proper attention and growth to flourish.