July 27, 2007	Friday	Rajab 11, 1428

ISLAMABAD, July 26: Price of milk has risen by more than double digit during the last few months and it might increase further if the gap in consumption and production is not bridged, officials and analysts told Dawn.

Had the government not rationalised duties and taxes on dairy related machinery and raw materials in last year’s budget, the price of milk would have risen much higher in sympathy with the world milk price which rose by more than 160 per cent.

An official said the government has done a lot to facilitate more investment in the sector, besides taxation incentives, and now it was for the private sector to make the best use of these facilities.

Though Pakistan is the fifth largest milk producer in the world, the price of dairy products had been on the rise owing to many reasons, including greater consumption, low yields and wastages.

Talking to Dawn Managing Director of Nestle Pakistan Ltd Roland Decorvet said the processors control only three percent of the whole processing industry economy. “When the local fresh milk producer raises his price by 20 percent, how can the processors reduce our price mathematically and statistically?” he asked.

“If the Gawala milk price is up, the farm milk price will subsequently go up. We are importing 5 per cent to 10 per cent of our need, while the rest is met through locally produced milk,” he said.

According to him the key issue the dairy sector in Pakistan is facing is the issue of production. The demand is growing much faster than the supply which creates a huge gap. That is why the country has been importing milk powder in large quantity, around 100,000 tons per year.

Very little has changed in the business practices in the dairy sector in a century - at least not in the past 20 years, the Pakistan chief of the multinational company.

“Here you don’t have dairy farmers but just small or big farmers who keep one or several buffaloes as a side business. They know nothing how to manage their animals on modern lines,” he said.

Their animals are under-fed and under-watered. By tethering their animals they deny them free access to water which would increase their milk production capacity by more than 10 percent.

New players coming in the dairy sector like Nestle, Haleeb, Olpers and others are investing in processing factories while no investment has been made in the production side.

That was the tricky part of the dairy sector, said Mr Decorvet fearing a situation where there are too many factories and too little milk to process. The situation will go from bad to worse.

“I keep telling every person related to this sector that pleases do something about farms, about the animals,” he said.

His company, he said, will invest on average Rs2 billion every year in enhancing the production, processing and supply chains related to the milk industry.

“We are importing animals from Australia. We are doing a lot of things as leaders of the dairy market. We are initiating our own model farm where we have 80 veterinarians to look after the animals,” he added.

The bottom line is to keep and increase the milk production. It plays major role in reduction of poverty in the rural areas. The huge quantity of milk produced in the country is not processed as most of the portion has been sold to the consumer through the Gawala chains.

The majority of Gawala milk is consumed with out hygiene. Why the quality of loose milk is going from bad to worse, it is a key issue for government agencies to check and control and there shall not be any compromise on community’s health.

The Indian model is different. The good thing of the Indian model is they quality of fresh milk is very good. From production to the selling outlets, a single man in involved in the whole chain. While in Pakistan at every layer of the chain there is a man who adds something to the milk which ultimately spoils the milk. “If the control of whole chain supply is like Indian model, it many help in better quality of loose milk, the Nestle managing director said.

It is expected that Pakistan might be self-sufficient in milk in the next five years.

So within next 10 years Pakistan will among the leading milk exporting countries. If you think about export the whole Gulf States are hardly producing animals, now they import million of tons milk from Australia, and Karachi is more closer to Dubai then Islamabad,” he added.

The managing director suggested that government should move towards making the education campaign explaining to the farmers about model farming and high breed livestock. The government has done a lot but it is now the private sector to do some thing about production.