Reality check: Pakistan not a milk ‘king’

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imageKARACHI: To be honest, the milk crisis that recently gripped Karachi came as news to me. The media was quick to highlight the issue as news, but I realised that it is actually a question of perception.

Dairy sector professionals have been used to the situation for years. If anything, it is a chronic issue for people associated with the sector, but not a crisis.

Back in 2005 when the feasibility of Engro Foods was completed, it was based on researched figures. A basic input was the census of livestock and related milk production numbers.

In a country where we cannot count our population – the last census occurred in 1998 – it is quite strange that we have regular census numbers on our livestock. The government churns out these numbers annually and has projected Pakistan as one of the premier milk producers. Unfortunately, these numbers are flawed and the volumes could be dramatically lower.

I encountered this fact one fateful afternoon in February 2006. Imagine the shock when our own census, after much effort, suggested much lower milk numbers. One could immediately see that the battle to become a big dairy player was going to be much more expensive and difficult to achieve. The whole plan was re-calibrated and we went on a strategy to develop dairy, through corporatised farming. The idea was to quickly enhance milk production, akin to what China has tried to do in these intervening years.

Over the next 18 months, we spent a lot of time with other large players trying to resolve this issue. Considering the difficulty in doing a livestock census of a very fragmented population – of animals who looked alike and had no identity – we turned the method on its head.

It was easier to identify milk volumes being traded in the market. Tracking all the local Baras and milk-sheds helped get a fairly accurate volume of traded milk in Pakistan. By now, these milk numbers were familiar and had lost the capacity to shock us.

We then used our knowledge and experience to add two large amounts to the traded milk volume. These were volumes consumed in-house by the milk production areas and wasted due to spoilage. Due to lack of electricity, one will be surprised at the high numbers wasted. So the Milk Tree was born in 2007 and has since been used extensively by the dairy industry. Unfortunately, all the federal and provincial governments in Pakistan continue to ignore this in their statistics.

The upshot of all this is that real per-capita milk availability and consumption are both significantly lower than discussed. Hence, my personal drive for ten years is to encourage people to go into large scale dairy farming. The demand volumes are such that I cannot see the bottom of the well here.

Pakistan may have a shortage of over 4 billion litres per annum in 2015 alone. This calculation is based on the human population numbers multiplied by a reasonable per capita consumption, versus actual supply of milk.

Shortage made worse

The above shortage is made more acute because of an inverse demand supply curve.

In the months when the supply of milk is high – February to April – milk demand is at its lowest.

This is because the changing weather causes respiratory issues and immediately dairy usage comes down. People associate lung congestion with milk usage in Pakistan.

Between May and September, supply of milk is at its lowest and dairy demand at its peak. Think Lassi and Doodh soda during hot summer months. This causes endless variation in prices in Pakistan, with a peak in July. Eid now falls during this time further accentuates pressure on the prices.

So the only answer is to steady the supply through a change in the cow lactation cycles and to increase production volumes.

Large scale farming is the only viable solution. In the short term imports of milk powder may assist, but will not solve the issue.

The government should encourage the formation of farms. But to make farming work, we also need dairy technical knowledge and a viable route to the market. Dairy farmers in Pakistan need to get together and create such a value chain.

I am not speaking of forming a cartel, but rather a method where chilled warehouses, trucks and market tools are available, so that milk can be preserved and supplied to the market for consumers.

The issue of milk shortages will get worse as the human population increases. There are already some reports of malnutrition among the young in Pakistan. This will deteriorate further and in time become a chronic issue. Milk is an easy way to solve these pains. The farmers and the government should start looking at this now, rather than convincing themselves that we are milk kings. Being an ostrich is not going to help anyone.

The writer is the former CEO of Engro Foods

Published in The Express Tribune, October 26th, 2015.

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About sarfarazar
I have been lucky! A long career with large scale organisations and some acclaim. Also, took time off to write, mentor and do some education and social development projects. I continue to mentor and help younger people in life. Inshallah, hope to write on various subjects in my blog.

4 Responses to Reality check: Pakistan not a milk ‘king’

  1. Hafiz Abdul Samad says:

    It goes without saying the indgenious production of milk to be increase through the whole diary tree… from cattle farming to end user…. still government should know that how much dry powdered milk is imported every year… and still claiming Milk king is insane….. without this dry powedered milk import… its impossible to meet the supply demand balance in peak season…..

  2. Abdul Mannan says:

    A very interesting and insightful Perspective…..
    New processors are coming in market but farm economics in Pakistan is still a big question mark due to seasonal Demand Supply impact,this is a huge gap which needs to be filled on all ends of government, dairy veteran and processors for long haul. International Prices are very competitive and discouraging for local farms regardless our claim of “Milk Kings”… Let’s See if we shall be developing our dairy sector and create a value chain or keep on relying on Outsourcing …..Fingers Crossed….

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