KARACHI: Expressing concern over lack of any federal initiative in the recent budget to support the dairy sector, the Pakistan Dairy Association (PDA) has called upon the government to immediately restore the zero (sales tax) rating facility for the sector.

Otherwise, it warned, milk processors would have no option but to close down their businesses.

“It is high time for the government to take notice of the dairy sector and make necessary decisions to support the dairy sector. If immediate supportive actions are not taken, we are afraid that the industry will collapse and leave millions of families without employment,” said chairman PDA Dr Shehzad Amin.

The association was disappointed over the budget 2020-2021 as the government didn’t consider the proposal submitted by the association, he added.

Sharing the challenges being faced by the sector, he said the industry had been declining since 2016 when the government decided to abolish the zero-rated facility.

“The industry has been in losses for two years and if this situation persists, processors will have no option but to close their doors for businesses,” he said.

The zero rated sales tax regime, he explained, would be a win-win for the government and the dairy sector as it would not only create incentives for new foreign direct investment for modernization of the industry but would also help grow its sales and profitability.

He emphasized that the government needed timely steps and to realize the potential the sector had for the country’s economic growth.

“Currently, more than 10 million families are connected with milk processing companies. Altogether, Pakistan produces 60 billion litres of milk per annum and has a potential to double the production through increasing milking yield per animal.”

Highlighting the industry’s contribution, he said the industry spent over Rs500m in the rural farmer development programme and purchased almost Rs120bn worth of milk annually from local farmers.

“It supports farmers in an efficient milk supply chain and educates them how to increase the milking yield of their animals. In addition, it invests almost Rs1.5bn to educate and create awareness about safe milk and change the negative perception about packaged milk.”

The packaged industry supported public health by producing safe quality milk and contributed to government revenues by paying taxes.

“Despite this investment and effort, only five per cent of the total milk produced in the country is processed and we have a poor and inefficient milk supply chain. Packaged milk products, however, are tested by government laboratories periodically to ensure standardized milk production.”

Published in Dawn, July 17th, 2020