Govt working on laws to revive dairy sector

Published March 7, 2019
Pakistan is one of the world’s largest milk producers with an annual production of over 50 billion litres and employs over 40pc of the rural workforce.
Pakistan is one of the world’s largest milk producers with an annual production of over 50 billion litres and employs over 40pc of the rural workforce.

ISLAMABAD: The government is working to rationalise taxes on milk supply chain to incentivise the sector in order to expand collection and processing units across the country, said Advisor to Prime Minister on Commerce and Investment Razak Dawood in a meeting with the delegation of International Finance Corporation

The meeting was held to discuss policy options to revive the growth of Pakistan’s dairy sector. Dawood said the tax incentives will transform dairy farming into a formal sector.

He added that the taxation policy for dairy supply chain must be re-aligned for government’s broader socio-economic objectives with the nutritional requirements of the population.

An official statement issued after the meeting said it was discussed that processed milk, being an essential commodity, remained under the zero-rated sales tax regime from 2006 till 2016. However, the incentive was withdrawn in 2016 and sales tax was reapplied.

As demand for packaged milk is highly price elastic, the imposition of sales tax led to a decline of domestic market by 30 per cent and the formal processing units registered a drastic 80pc decline in profitability. These policies forced manufacturers to cut down costs and close milk collection points across the country as farmers starting shifting back to the informal market.

The advisor informed the meeting that unprocessed milk poses a health hazard due to a high degree of adulteration and contamination and is a major cause of malnutrition and stunted growth among children.

The delegation informed that despite huge potential in the dairy sector, only 5pc of milk sold across the country is processed and packaged while 95pc of the consumed milk is unprocessed. The delegation also highlighted issues of taxation and pointed out the need to pass pasteurisation law which would reduce the health risk from unprocessed milk sold in the market.

The advisor emphasised the need to reverse this trend and bring the dairy farmer back into the formal eco-system where the farmers can work in partnership with companies to improve yield and livestock health.

He also stressed the need for holistic approach to revive the sector by focusing on reducing the regulatory and taxation burden, improving productivity and supply chain management.

Published in Dawn, March 7th, 2019



28 May, 2022

POL price shock

THE petrol price hike announced on Thursday night was inevitable. Considering the fast-depleting government coffers...
28 May, 2022

Changed laws

THERE will be much noise made over bills passed in the last two days by parliament to amend election and National...
28 May, 2022

Causing damage

FORMER prime minister Imran Khan’s remarks that he called off his protest, not because he had reached a deal but...
27 May, 2022

After the march

FORMER prime minister Imran Khan either ‘ran away’ from Islamabad or made a temporary, strategic retreat. It...
A tough decision
Updated 27 May, 2022

A tough decision

Decision to raise fuel prices will remove a major hitch of concluding a staff-level agreement with IMF.
27 May, 2022

Xinjiang files

QUESTIONS about the status of the Muslim Uighur people in China’s Xinjiang autonomous region often arise, with...