Modernising dairy and meat sector

Published Aug 05, 2012 08:05pm

THE dairy and livestock sector is poised to emerge as a significant contributor to growth in the economy. New dairy farms are being set up. Milk processing companies are making investment in capacity enhancement and meat exports continue to grow.

Recently three prominent political-cum-business families of Punjab have set up modern commercial dairy farms. Each farm is populated by 1000-2500 imported cows. Two big textile tycoons, in the same province, have also ventured into dairy farming and the third—and the largest one—is set to follow suit.

Fresh investment in dairy farming is also being made in Sindh. Karachi-based dairy farmers say several medium-to-large dairy farms have sprung up in rural areas adjacent to Karachi and Hyderabad after two consecutive floods of 2010 and 2011.

“A number of dejected small dairy farmers sold out their livestock to big landlords or urban businessmen and switched over to crop farming. The buyers then set up new dairy farms or expanded existing ones and they also added to the local herd the imported breed of finest cows in the world.”

Milk processing companies are also coming up with newer brands of packaged milk and other by-products like tea milk and flavoured milk as indicated by ads after ads on TV channels.

And the provincial governments are trying to promote cattle breeding and modernise cattle farming. Together they also look committed in improving supply and value chains in dairy and meat industry. Engro Foods has invested Rs1.5 billion in capacity expansion in the first half of this year out its annual allocation of Rs8.7 billion. Pakistani cows and buffalos, often under- nourished, produce much less milk per head than American or Australian breed and the share of processed milk in overall domestic market is just above five per cent.

Those who are setting up dairy farms by initially procuring American and Australian breed say they hope to recover higher cost of imported animals within a few years with four to six times more milk per cow—6000-9000 litres per year against an average 1500 per litre obtained from a domestic cow and 2000-3000 per litre from a buffalo.

Meanwhile, the United States Agency for International Development and Engro Foods are busy installing new milk chillers in remote areas of Sindh and Punjab to boost milk storage capacity. In the first half of this year they have already installed 15 chillers. The number is expected to rise to 60 by the end of the year.

The governments of Punjab, Sindh and Khyber Pakhtunkhwa are working on development projects in livestock and dairy sector.

From cattle breeding to boosting milk output to ensuring growth in meat supplies form the core of these projects.

Recently a privately-owned Pakistan Ostrich Company has set up an ostrich farm in suburbs of Karachi and is busy persuading entrepreneurs to get into this business. The company promises to provide imported ostrich chicks that can be raised to be slaughtered later on for export of their meat.

At the second annual livestock, dairy farming and agriculture exhibition held in Karachi by Sindh government early this year, participants of the exhibition were able to strike Rs1 billion worth of deals.

According to Pakistan Economic Survey, milk production in the country was estimated at 48 billion litres) in the outgoing fiscal year. But industry sources say only five per cent of this huge quantity is processed and the rest is retailed or consumed by small local livestock farmers.

Small to medium and large companies are also engaged in producing a number of milk products, some under big brand names.

These include ice cream, milk packs, butter, cheese, khoya, powdered milk, canned milk, yogurt, lassi and ghee. Market leaders like Nestle, Engro Foods and Haleeb Foods (Chaudhry Dairies) also export some of these items.

Exports of meat and meat products earned $175 million in the last fiscal year, up 14 per cent from a year earlier. Meat exporters say this year the earnings would cross $200 million mark. Entry of some big meat processing companies into this business in the last few years has helped in boosting export revenue. “This year’s exports would rise further because we are getting more orders from the Middle East and East Asia,” said a leading Karachi-based exporter.

Demand is also strong in Afghanistan and Iran and some Central Asian states. In Afghanistan cattle breeding has got a jolt because of the war on terror and in Kazakhstan (in Central Asia) per capita intake of meat has gone up to the extent that the country is leasing out pastures to foreigners for cattle herding with the condition that they would supply milk and meat in the local market.

Industry sources say a couple of issues, however, continue to impede growth of dairy and livestock industry. One is the absence of a proper system to allow milk suppliers in profits of milk processing companies so that they can be encouraged to adopt modern practices for enhancing milk production.

And second is the scant government support in livestock breeding on modern lines. After devolution of agriculture as a fully provincial subject,, under a constitutional amendment made two years ago, provincial officials say they are reorienting farm policies including the one related to livestock.

They claim that field officers now visit livestock breeding farms more regularly with fattening vaccines for cattle to obtain higher amounts of meat per animal. And the dairy and livestock development companies working in Sindh and Punjab under public-private partnership offer livestock breeders and dairy farmers one-window consultancy facility for setting up new business or expanding the existing ones or even entering into export market.

Industry representatives complain that  small and medium players of livestock and dairy sector are grossly neglected by banks.—Mohiuddin Aazim

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