DAIRY SECTOR

Presented By:
Arsalan Farooq
Shoaib Khan
Syed Muahmmad ObaidUllah
Zubair Khan
Importance Of Milk
 From our very first suckling to the this morning’s
tea, milk is and has always been the most important
sources of nutrition for us.
 Milk is very important to a child’s growth and
nutrition.
 Milk even holds value in cultural and religious
festivals including weddings, Eid, Ramadan etc.
Uses of Livestock
 Energy in the form of draft and traction power for
various activities
 Food in the form of milk, milk products and meat
 Manure for crops
 Raw materials in the form of wool, hair, skins,
hides, bones, hoof and horns and a number of other
products of pharmaceutical and industrial use
Dairy Sector of Pakistan
Some Facts: (Annual figures) as per 2009 report
 33.6 billion liters produced

 27 billion liters available for human

consumption
 7.9 billion liters urban share

 19.1 billion liters rural share

Continued..
 Pakistan being an agricultural country is rich in
resources suited for the dairy sector
 In terms of volume, Pakistan is the 4th largest
milk producer in the world responsible for 6% of
the total world milk production
 Demand is expected to increase by 25 per cent by
2025
Importance and Significance
 Livestock is used as vehicle for rural development, employment
and slowing down the migration of the rural population

 Around 47 per cent of the rural households in Pakistan own livestock

and 11 per cent of their income come from livestock. Around 35-40
m people roughly

 It is a net source of foreign exchange earnings, constituting more than

8.5 % of the total exports though we have to import powdered milk
every year
 The value of milk alone exceeds the combined value of wheat,
rice, maize and sugarcane in the country by 30 percent

 Contribution of agriculture to Pakistan’s gross domestic

product (GDP) is declining over time, it still stands at 23
percent.

 Contribution of livestock to GDP is approximately 11.5%

Comparison with International Standards

 Productivity of milk animals in Pakistan is very low if

compared Internationally.
 One dairy animal in New Zealand produces milk equal to
three dairy animals in Pakistan;
 in Germany one dairy animal produces milk equal to six dairy
animals in Pakistan; and
 in U.S.A. one dairy animal produces milk equal to seven dairy
animals in Pakistan [Garcia et al. (2003)].
 one dairy animal in India produces milk equal to only 60% of
that produced by one dairy animal in Pakistan even after
improvement in Indian dairy sector
Production by Province

 Punjab – 65%
 Sind – 25%
 NWFP – 7%
 Baluchistan – 3%
Types of Milk

Milk
Type Share

Loose (Fresh) 91%

Pasteurized 3%

Packaged 6%
Loose (Fresh Milk)
 Loose milk is the one that is available to the
general public
 No processing is involved in the middle; straight
from the dairy farm to the consumer through the
middle-man and retailer
 Harmful for health due to unhygienic handling
and contamination
Pasteurized Milk

 Gentle heating of milk to about 72C and cooling it

down to 4C
 Does not kill all bacteria and renders milk safe for
consumption
 Pasteurized milk is not widely produced and
consumed in Pakistan due to lack of incentive and
awareness
Packaged (UHT) Treated Milk
 The milk is heater at ultra high temperatures of
around 140C after which it is rapidly cooled to 4C.
 This process kills all the bacteria present in the
milk
 Convenience for consumers
 Taste is altered
FACTOR CONDITIONS
BREED

Buffalo Cross
Cows s Breed
●
Red ●
Neeli ●
Jersey
Sindhi ●
Ravi ●
Holstei
●
Sahiwal ●
Kundi n
FAT CONTENT
 Buffalos`s milk by nature has higher fat content i.e.
6-7%
 Cow milk has 3-5%
LACTATION
 6-8 months for Buffalos
 9-10 months for cows
 World’s average is 3000 liters per lactation cycle
of animal but ours is only 1350 liters
 FEED
 Output of animal directly dependent on its food
 In majority rural areas livestock feeds on green pasture
 Two types of feed:-
 Processed Feeds:
 Khalli
 Chokar

 Open feed with additives:

 sunflower
 soyabean
 dal
 cottonseed
 rice polish
 wheat brown
 liquid serso
ENVIRONMENT
 Animal kept in shed known as ‘Barra’
 Poor environment
 Animals kept above capacity level
 Very close to each other and tied at one place
 Livestock most Vulnerable to FMD(Foot and
Mouth Disease)
 No proper vaccination given
LABOUR
 Illiterate and uneducated
 Have minimum awareness level
 Inefficient, no mechanization
 On average, one for every 10 animals
 Done manually
 Two times a day
TRANSPORTATION
 Mostly done by middlemen on contract basis
 Milk in Karachi reaches milk vendors within 1.5
hours, therefore very good transporting mechanism
 Generally 25% of milk is wasted due to
transportation problem all over Pakistan
 By gawallas
ADULTERATION (MIXING)
 Fertilizers
 Chemicals
 Detergents
 Water
 Ice
 Milk is sterilized when coming out of the animal’s body
 Adulteration done after milking and at various stages of
distribution
 Farmers
 Middlemen
 Shopkeeper
ISSUES
 Smuggling of animals to Afghanistan
 No government help
 Increase in feed prices
 Culling of calves
 Electricity crisis
 Lack of Veterinarian institutes
 No support prices for farmers
 No regulations on animal prices
 No issuance of license to retailers
 Shortage of livestock due to floods
DEMAND CONDITIONS
Demand-Supply Gap

• The demand of milk in Pakistan is 36.9 billion liters in 2010.

• With production of around 35 billion liters, the demand supply gap has
increased to 1.9 billion liters.
• In 2009, this gap was 1.5 liters, and it is estimated that in 2015, this figure
will rise to 3.6 billion liters.
• The daily shortage in Karachi alone has been estimated at around 4
million liters.
Demand-Supply Gap

• Countries such as Iran, UAE, Saudi Arabia and Malaysia have a huge
demand for powdered and packed milk.
• Pakistan has the potential to cover these international markets.
• Pakistan is still not self sufficient to fulfill its local demand.
• During July 2010– November 2010, dairy products worth $54.6 million
were imported.
Local Demand

• Milk and milk products represent 27% of total household expenditure on

food items in Pakistan.

Annual per capita

consumption
Nationwide 190 liters
Punjab 132 liters
Sindh 246 liters
Baluchistan 108 liters
Khyber Pakhtoonkhwa 86 liters
• Demand for open, raw milk is high compared to processed milk due to
price differences.
• Processed milk is expensive due to its processing and packaging costs.
• The government has a more favorable attitude towards other lucrative
industries.
Seasonal Fluctuations

• Seasonal fluctuation hampers both production and consumption patterns

in Pakistan.
• There is excess production of milk during the winter period, and the
demand is low.
• Alternatively, there is excess demand during the summer period, and the
supply is low.
FIRM STRATEGY,
STRUCTURE AND
RIVALRY
Firm Structure

• Firms in this sector are divided into commercial and non-commercial

sector.
• 95% of the milk sector is the unorganized sector that sells milk in the
open market.
• Only 5% is the formal sector of dairy industry.
• Absence of marketing is the major flaw that hampers its development.
• Pakistan continues to allow 97% milk to be distributed through the
traditional ‘Gawala’ system.
Supply Chain

• The farmers usually sell their milk to first stage collector known as
‘Katcha dodhis’.
• Katcha dodhis collect small marketable surpluses of fluid milk from
several small producers and transport it.
• Usually own a bicycle and carry about 100 liters of milk in each trip.
• To ensure the milk supply around the year they advance some money to
the producer.
• They usually commit to supply to a particular shop or customer. This is
known as ‘Bandhi’.
Supply Chain

• Pakka dodhi (second stage milk collector) collect the milk from more
remote areas and in large quantities.
• Mostly own a horse driven cart or van and usually carry about 1000 liters
twice a day.
• Supply their milk directly to consumers or milk shops, or to larger
establishments through contracts.
• Adulteration and decreaming of milk are common practices of these milk
collectors.
Formal Sector

• During 1970’s and 80’s, about 23 milk processing plants for pasteurizing
and sterilizing were imported.
• UHT is an inherently expensive process whose cost is further increased
with the packaging material.
• Tetra Pak is the only domestic plant producing aseptic packaging material
for UHT milk.
Organizational Structure and Rivalry

• Engro Foods purchase milk from anyone who brings between two and
fifty liters of milk to the designated centers set up by the company.
• Milk Pak has installed chiller units and collection centers in Punjab.
• Pakola is the only organization which purchases the milk from Lee
market.
RELATED AND
SUPPORTING INDUSTRIES
Food Industry

 Many of the products produced by the food

industry are dependent entirely on milk.
 Derivatives of milk include yoghurt, cheese, butter,
Ice Cream, Tea Whitener etc
 Local Halwais also form an important part of the
food sector’s demand for milk
Veterinary Sector
 This sector has a serious lack of qulified doctors
and individuals.
 Lack of infrastructure, no vet clinics in far flung
areas
 This sector must be developed in order to ensure
sound growth of the dairy sector.
 Failure to treat animals properly decreases the yield
of milk
LEE MARKET
 It is a marketplace where brokers buy milk that is
supplied from cattle colony and then sell it to
milkmen around the city
 The milk usually reaches LEE market from cattle
colony in about 3 hours.
 The transportation is carried out by independent
contractors
 The process for quality check is the ‘hand method’
Continued..
 The brokers buy a bucket of milk (40 liters) for
around Rs 1600 and then sell it at a profit of 50
paisas to 1 re/litre.
 This price jumps to around Rs 2500-3000 during
the summer season due to the seasonality factor.
White Revolution
 This is a project undertaken by the PDDC (Pakistan
Dairy Development Corporation) to completely
structure the dairy sector.
 The PDCC was founded in 2005 with the aim of
developing the dairy sector of Pakistan
 The ‘white revolution’ funded mutually by the
private sector and the government sector.
Continued..
 Aimed at improving the well being of the rural
farmers
 To serve as an engine for economic growth of the
rural sector
 To achieve its objectives, PDCC targets to
formalize more than 40% of the dairy sector.
 Focus on middlemen, hygiene issues, cold chain.
Goals of the White Revolution
 2440 farms model farms will be set up to develop
and demonstrate best practice farm management,
with the goal of raising productivity levels by up to
30%.
 6330 farm cooling tanks and 2100 mobile milk
collection units will be provided to preserve highly
perishable milk.
 A Farm Management and Dairying Research
institute will be established
Continued
 Vocational & Technical Training for adequate
numbers of farmers
 Establishment of 700 farm input stores to provide
good quality nutritional products at economical
prices to 6000 villages.
“The PDDC under its current management
neither has the capability nor the
commitment to work for the development of
livestock sector in the country,”

Concluded by the ministry of Special Initiatives, the parent ministry of

PDDC, in its report to the Prime Minister Secretariat.
Incompetencies
 Diversion of cooling tanks to large milk processors.
 Only 500 farmers have been provided training
instead of the targeted 8,000
 7 community farms established instead of the
projected 100
 Resources were used to setup dairy processing
units for a former Federal minister.
Success of White Revolution in India

 India undertook a similar project in 1970 which was

aimed at developing its dairy sector
 The project lasted for 26 years and it made India the
largest producer of milk in the world.
 Driven by the private sector organization “Amul”
 The success is down to the government’s as well as
the private sector’s monitoring and regulation of the
policies that were developed
THANK YOU