The dairy industry and its challenges

[THe SiLenT KiLLeR]

The dairy industry and its challenges

By Faisal Siddiqui

Pakistan is one of the largest milk producers in the world. This sounds good, although it is not totally surprising, considering we are primarily an agricultural economy. The sad part is that the milk yield per animal is abysmally low. According to the International Farm Comparison Network (IFCN), we are among the top 5 milk producers in the world with about 50 million milking animals producing 35 billion liters of milk annually, whereas the United States is the worlds largest milk producer with only 3.4 million milk animals producing a whopping 94.5 billion liters per year. In other words, there is obviously room for improvement.

Fact is, if we could increase the yield from the present 1,300 liters annually to even one third of the yield per animal per day of the United States (about 9,000 liters annually), we will be able to not only meet the local demand but also have excess milk to export. In such a scenario, according to conservative estimates, the dairy industry will be contributing about US $41 billion to the national economy. Milk will be the countrys white gold.

So is this possible? Experts believe it is, if all stakeholders are willing to do what is required to be done. And we really need to do it, because the countrys milk demand is growing at 4.5 per cent per year, whereas the production is growing at only 3 per cent per year. If we take a close look, the average price of milk is Rs35 per liter, compared to the farm gate price in USA or Europe, which is the equivalent of Rs28, whereas in New Zealand it is only Rs20. This means that there are sizeable inefficiencies in the system which should be addressed immediately.

To start with, the gap between the demand and supply of milk is giving incentive to the middlemen to adulterate milk and bridge the gap. Out of the total milk production that is sold commercially, about 95 per cent is sold as loose milk by the informal sector through gawalas and only about 5 per cent is sold by the formal sector as processed and packaged milk. In order to understand the state of the dairy industry and the perils of what is called loose milk, it is imperative to understand what happens to milk when it leaves the farm till it reaches the final consumer.

On an average, milk takes about 8 to 24 hours to reach consumers from farms. Due to increasing urbanization, farms have shifted out of the city, thus making it difficult to supply milk as soon as it is obtained from the animal. Karachi, for example, gets its milk from as far away as Shikarpur which is almost a days journey, whereas milk is a perishable item and should be kept in a cold chain i.e. under 4 degrees centigrade so that it does not go sour. Most gawalas, in order to keep milk from going sour during transportation, add adulterants like ice, formaldehyde, caustic soda and urea to preserve it, or add water to increase its volume. According to a recent documentary that ran on a television channel about the hazards of loose milk, the condition under which milk is kept in cold storage is alarming. What is worse is that even when milk is boiled at home these chemicals tend to remain in the milk and cause health problems.

There are many challenges in getting good quality milk from the farms to consumers and if the government is not able to provide the right infrastructure, market access and ample quality controls, then the only thing to do is to follow in the footsteps of other countries: most developed countries like Canada, US, some EU markets and Australia have either banned loose milk or prohibited it, whereas most developing countries still have fragmented laws or are in the process of realigning laws and standards to international levels (e.g. through the Codex). Exceptions are countries like Turkey who have banned loose milk altogether.

Clich?d as it may sound; Pakistan possesses tremendous potential in milk sector but lags woefully behind compared to the developed countries because of lack of infrastructure and strict enforcement of food quality laws. The country needs to take a quantum leap forward, adopt latest technology, create infrastructure, put systems in place, build efficiencies, harness the vast potential of natural resources, and create sustainable growth in this very important sector of the economy.