KARACHI, April 27: Identi-fying the factors that have greatly undermined Pakistan’s potential as a major milk-producing country, a research suggests a thorough review of the laws empowering government to regulate milk prices. It argues that milk prices in the country are determined without taking into account rates of the essential inputs for dairy production.
The study, “Improved Market Access and Smallholder Dairy Farmer Participation for Sustainable Dairy Develop-ment”, conducted by Umme Zia, a rural development and agri-marketing consultant, is part of a project aimed at developing a regional strategy for smallholder-based dairy development in the Asia-Pacific region.
Three organisations, Food and Agriculture Organisation of the United Nations, the Animal Production and Health Commission for Asia and the Pacific (APHCA) and the Common Fund for Communities (CFC), are collaborating in the project.According to the study, the share of livestock in agriculture growth in Pakistan has jumped from 25.3 per cent in 1996 to 49.6 per cent in 2006. Within the livestock sector, milk is the largest and single most important commodity.
Pakistan was one of the world’s top milk producers with an estimated annual production of 29 million tons in 2004-05, says the study, observing that the country’s production base is highly fragmented and the dairy enterprise is dominated by the private sector, with the government playing a regulatory role.
Production base
“Approximately, 80 per cent of the milk is produced in rural areas, with peri-urban and urban areas accounting for another 15 and five per cent, respectively. About 55 million landless/small landholding farmers produce bulk of milk.
Only three to five per cent of the total milk production is marketed through formal channels while the rest is produced and marketed in raw form by informal agents in the marketing chain.”
Referring to the Livestock Census, 2006, the report says that among the 8.4 million reported dairying households, only 6.72 per cent of the farms in the country come under the “large” category where more than 50 animals are kept whereas 51 per cent households own a herd of just 1-4 animals and another 28 per cent 5-10 animals.
Price control
Identifying some key factors hampering the growth of dairy sector, it says, “Various regulatory measures towards milk price control coupled with continuous increase in the prices of input affect farm profitability.”
This especially affects large farmers with considerable investments under the heads of labour, feed and veterinary inputs, marketing infrastructure, etc, it says, adding that these factors have forced many well-established large farmers to pull out, besides discouraging new farmer to make investment in dairy production and marketing.
Under these pressures, the report points out, small and subsistent farmers in rural areas, contributing the major chunk in milk production, barely survive.
They have remained deprived of economic benefits despite huge investment in dairy processing by the private corporate sector, enjoying unprecedented assistance from the government and donors.
About the problems being faced by smallholder dairy producers, the report says: “They are facing daunting challenges in the areas of infrastructure, financial insecurity, quality assurance, price regulation, untrained manpower and seasonality. A fragmented farm-base coupled with low productivity makes collection practices inefficient. Access to cold storage is limited and leads to post-harvest losses of up to 20 per cent in some areas.”
Regarding milk prices, the study says there are two laws governing the price control — the “Balochistan/NWFP/Punjab/Sindh Foodstuff Act, 1958” and the “Price Control and Prevention of Profiteering and Hoarding Act, 1977” — under which the provincial food department can declare various commodities, including milk, “foodstuff”.
Exercising powers
Interestingly, the report adds, in some instances the local government has been seen to quote the wrong law while fixing prices. Apart from that, the government exercises no powers to control or regulate the prices of inputs. It observes that the prices of some essential inputs have increased from 100 to 200 per cent in the past five-six years.
The study suggests that instead of the government, the market forces handling supply and demand should be allowed to regulate prices and where price regulation is mandatory, influencing factors such as production costs should be given thorough consideration.
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