Milk imports to destroy local dairy sector in Pakistan

The Federation of Pakistan Chamber of Commerce and Industry (FPCCI) said increasing import of milk and whey powders are slowly destroying the local dairy sector while contributing to rural poverty and playing havoc with people’s health.

Local dairy sector is going down since 2013 due to the import of milk powder which runs in tens of millions. The country imports two to three crore kilogram of milk powder annually while the imports jumped to 44 million Kilogram in 2015.

The dairy sector contributes 11pc of GDP, and milk and dairy products account for 22pc of kitchen expenses, compared to wheat which accounts for 12pc. The dairy industry buys milk worth Rs45bn every year from milkmen.

The Food and Agriculture Organisation (FAO) of the United Nations says Pakistan is among the three countries in Asia and Pacific region which are the world’s top dairy producing countries.

The total value of Asian dairy production exceeded $110 billion in 2013, and figured in the three top commodities in the region in terms of gross value of production. 

According to latest figures published in Pakistan Economic Survey 2016-17, milk production in the country is on the increase and during the current fiscal year the gross production of milk was estimated to be 56,080,000 tonnes.

Last December, in a move to big financial reform in dairy sector, the Royal Friesland Company acquired 51 per cent of Engro Foods Pakistan, which was one of the largest private sector foreign direct investments in Pakistan’s dairy sector, amounting to $450 million.

In a move to curb imports, the import duty on all kinds of imported milk powder in the country would surge around 60 percent from 45 percent in the wake of duty rise in fiscal budget 2017-18. The country imports are around 5,050 tonnes of milk powder a month. The international price of skimmed and fat milk powder currently stands around $1,725 metric tonne. The skimmed milk powder import stands 60 percent compared to vegetable fat milk 40 percent due to its consumption in the country.

Country’s domestic production of powder milk and skim milk (Tetra pack) is around 34,200 tonne, which meets about 35 percent of the country's demand. Country’s annual milk consumption is around 200,500 tonnes including fresh milk with a shortfall of about 30 percent.

Pakistan’s annual milk powder requirement is around 57, 300 tonnes and we are already facing shortfall of around 25 percent. 40 percent of powder milk import is from Ireland, 25 percent each from Holland and Sweden and rest of the quantity is being imported from European countries.