Pakistan Export Competitiveness

Dairy and Livestock

Rehan A KhanRehan A Hashmi

Imran RafiqShafqat SahiWaqar Abbas

Export Potential From 1960-2000 agricultural GDP grew by 3 per

annum The contribution of the livestock sub-sector to

agricultural GDP has increased from 26 to 522 (now 11 of total GDP)

The share of agriculture in the GDP has declined from 30 in 1980 to 24 in 2002

The livestock sector output grew by 3 until 1980 and over 5 thereafter

Within livestock subsector Dairy (milk) accounts for 66 of the value of output Meat accounts for 13 Poultry meat and eggs 8 and other products 13

Export Potential Livestock contributes significantly

towards national exports 85 - 90 per cent of total exports belong to

this sector 85-90 of milk consumption in both rural

and urban areas of Pakistan remains in the form of raw unprocessed milk and traditional processed milk products such as yoghurt gheebutter oil and butter

Consumer demand for processed (UHT) milk has been increasing slowly since the mid 1990s

Export Potential

Export Potential

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Export Potential From 1960-2000 agricultural GDP grew by 3 per

annum The contribution of the livestock sub-sector to

agricultural GDP has increased from 26 to 522 (now 11 of total GDP)

The share of agriculture in the GDP has declined from 30 in 1980 to 24 in 2002

The livestock sector output grew by 3 until 1980 and over 5 thereafter

Within livestock subsector Dairy (milk) accounts for 66 of the value of output Meat accounts for 13 Poultry meat and eggs 8 and other products 13

Export Potential Livestock contributes significantly

towards national exports 85 - 90 per cent of total exports belong to

this sector 85-90 of milk consumption in both rural

and urban areas of Pakistan remains in the form of raw unprocessed milk and traditional processed milk products such as yoghurt gheebutter oil and butter

Consumer demand for processed (UHT) milk has been increasing slowly since the mid 1990s

Export Potential

Export Potential

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Export Potential Livestock contributes significantly

towards national exports 85 - 90 per cent of total exports belong to

this sector 85-90 of milk consumption in both rural

and urban areas of Pakistan remains in the form of raw unprocessed milk and traditional processed milk products such as yoghurt gheebutter oil and butter

Consumer demand for processed (UHT) milk has been increasing slowly since the mid 1990s

Export Potential

Export Potential

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Export Potential

Export Potential

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Export Potential

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Country Strategy

A local context and rules thatencourages investment andsustained productivityimprovementndasheg Intellectual propertyprotection1048698 Meritocratic incentive systems across all major institutions1048698 Open and vigorous localcompetition

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Country Strategy Public investment in livestock extension and services Promotion of dairy co-operatives Targeted dairy development projects Public sector investment in milk processing and marketing Facilitating private sector investment in dairy processing Import tariffs on milk powder and income tax exemption to

dairy farmers Other policies indirectly affecting the dairy sector

Promotion of Green Revolution technologies Exchange rate policies Tax policy for processed milk products and agricultural inputs Regulations banning animals in metropolitan city areas Regulations to control milk quality

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Public investment

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Promotion of Co-Operatives Idara-endashKissan (IK) 19000 farmer members of the co-

operative own the enterprise Daily collection is about 200000 L through 576 milk

collection centers 1992 to 2000 average annual sales increased from 4

M to 39 M Liters Currently daily processing and sales through 450

retail shops are roughly 70000 L unpacked pasteurized (open pasteurized) 20000 L pouch-packed pasteurized 30000 L UHT 80000 L converted to powder and other products

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Targeted Dairy Development Punjab Smallholder Dairy Development

Project (UNDP) funded at a total cost $14 M Targeted 27000 poor rural households in 720

villages in six Tehsils in Gujranwala Division Milk production has increased by 265 among

the targeted households and sales per household increased by up to 69

The results of the project were so encouraging the project was incorporated into the Provincial Livestock Department

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Investment in Milk Processing and Marketing Livestock Development Project was started in 1975 as an umbrella pilot

project in some districts of all four provinces with an investment of PKR 784 M It helped in creating capacity to process nearly one M Liters of milk per day

Currently Nestle occupies the largest market share of UHT milk in the country collecting milk from 130000 farmers in 3000 villages in Punjab Province The company also owns the biggest milk collection network collecting 1 M liters of

milk a day Engro has recently entered into the market with huge investment Currently there are 44 milk plants in the country with installed capacity of 5

M litres per day Only 13 plants are operational with about 40 capacity utilization in total Among these the installed milk powder processing capacity is about

100000 T per year plants operate at below 40 capacity due to competition with cheap milk powder

dumped from European Union (EU) countries which offer export subsidies Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for

local product The EU is offering an export subsidy of USD 660 per tonne for milk powder

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

Presence of high qualityspecialized inputs availableto firmsndash Human resourcesndash Capital resourcesndash Physical infrastructurendash Administrative infrastructure(eg business registration ruleslicensing property rights)ndash Information infrastructurendash Scientific and technologicalinfrastructurendash Natural resources

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Factor Conditions-Physical Pakistan is the 5th largest producer of milk having the world 3rd

largest animal herd (appr 50M) employing approximately 44 of the workforce

Milk prices range from a low of 10 US$ per 100kg in Pakistan 29 US$ per 100 kg in the USA over 23 US$ per 100kg in Bangladesh

This high price seems to stem from a high demand for milk as opposed to relatively low volumes of production and limited availability

Globally milk yields per cow range from 960 to 10000 kgyear Within South Asia interesting trends and opportunities for

development appear to exist Small farms in Pakistan yield around 40 percent more than those

in India and Bangladesh Only the larger Indian farms which are very well managed and

rely on European dairy genetics reach milk yields around the 4000 kg mark

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Factor Conditions-Capital ZTBL will disburse Rs 23M to dairy farmers

under a micro finance scheme The Government initiated projects to the

tune of Rs 71 B for strengthening livestock services improving disease control milk and meat production breed improvement animal husbandry management practices

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Factor Conditions-Cost of Production Pakistan is ranked among the countries with lowest

cost of production in the world In all small farms the main cost component are the

opportunity costs of family labor The Pakistani milk producers are more competitive

than those of Europe and US The cost difference is more than 10 US $ per 100 kg

milk Large dairy farms in Pakistan have lower costs than

rest of the world farms and can be competitive milk producers in the future

Farms in Bangladesh will have difficulties to compete against imports from the world market and also from Pakistan

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Factor Conditions-Foreign Real competition stems from producers in Oceania

and Latin America that have very low production costs Qatar Livestock Company is investing $1B in

corporate farms in Pakistan DFID of UK has granted a pound 25M project for dairy and

agriculture infrastructure investment Engro Chemicals will be investing $16B in agriculture

during next three years 5-10 major UAE groups will explore Pakistans

agriculture sector in corporate farming livestock and dairy sectors

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Factor Conditions

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Sophisticated and demanding local customers1048698 Local customer needs that anticipate those elsewhere1048698 Unusual local demand in specialized segments that can be served nationally and globally

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Demand Conditions - Domestic

Demand levels are closely associated with income growth and urbanization and linked to increased demand for quality food

safety and standardization changes in consumption habits and

lifestyles demand for convenience

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Demand Conditions - Foreign Gulf countries imports 90 per cent of its

food requirements from the West and other countries

The Arab countries farm import bill is of more than $200 billion (Dh734 billion)

Demand for food in Arab world grew by around four per cent between 2002 and 2006

With reduction of subsidies in the wake of WTO the local livestock sector should have better opportunities to compete

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Productivity and Business Environment

Factor Conditions

Related and Supporting Industries

Demand Conditions

Firm Strategy

1048698 Access to capable locally based suppliers and firms in related fields1048698 Presence of clusters instead of isolated industries

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Supporting Industry

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Supporting Industry This sector provides raw material for the industry and livestock

creates market and capital Pakistan has well-developed poultry feed industry However the

cattle feed industry is now emerging There are now about 22 cattle feed production units which cater for

less than 5 per cent of the required concentrate needs Livestock also provides security against crop failure particularly in

Barani areas These animals produce

29472 M tons of milk 1115 M tons of beef 0740 M tons of mutton 0416 M tons of poultry meat 8528 B eggs 402 T tons of wool 215 T tons of hair 512 T skins and hides

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Recommendations There is a strong rationale for Pakistan to promote

small-scale dairy production and if need be protect dairy markets from unfair and harmful competition

Pakistani government should resort to applying the safeguards provided in the WTO legislation to protect their dairy markets against subsidized imports from the EU or US

Use of exotic cattle genes for sustainable path to higher productivity

National and local breeding strategies need to address the realities of climate and disease risk

Services of artificial insemination should be extended Superior fodder should be identified and propagated

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Recommendations Farmer organization has to be strengthened to ensure

that their interests are better represented on a national scale

Promote co-operatives and farmer groups for collection bulking and marketing milk Irrespective of whether targeted to the processing

industry or informal raw milk market Introduce licensing to informal traders and provide

them with simple appropriate technologies to extend shelf-life of raw milk This will dissuade traders from using harmful additives Will encourage consumers to pay a price premium for

assured quality Public policy should discourage concentration and

scaling-up of peri-urban dairy and encourage rural dairy for more equitable development

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger

Recommendations While the market for UHT milk is expected to expand there is

need to diversify the products Setting up livestock business advisory service centers will be a

good investment for professionals Establishment of milk collection centers in the milk pockets

with chillers offer a good investment This will result in improved quality and quantity of milk

Not necessary to establish large dairy farms to promote commercialization of dairy If the necessary technologies are provided and market

institutions are promoted for small-scale milk producers and market agents overall employment and income generation can be increased

This may create a momentum for change in dairy production and marketing structure in the country propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger