Pakistan is the seventh largest producer of milk in the world. Its major sources are buffaloes and cows as these contribute 66 and 31 per cent, respectively in total production.

The per capita milk availability is 82 litres per annum. Urban centres are major consumers while the bulk is produced in rural areas. Gawalas are representatives of per-urban and urban system of milk production and marketing. They keep buffaloes and cows either within or near big cities for which fodder is procured from rural areas.

Presently, 17 milk plants are in operation with the processing capacity of 0.65 million litres per day, while 0.43 million litres is consumed for producing the UHT/pasteurized milk, butter, cheese, yogurt, ghee and ice-cream. Around 97 per cent of the total is traded as raw milk and 50 per cent used as fresh or boiled milk, one sixth as yogurt and the rest is converted into indigenous milk products such as khoya, sweet meats, ice-cream, butter, rubri, kheer, cheese and other milk based products.

Milk marketing channels: Rural areas contribute 80 per cent of the total milk production, whereas the share of per-urban and urban areas is 15 and five per cent, respectively. About 90 per cent of the total entering into marketing channels is collected from the subsistence farmers and the remaining from dairy farms.

Milk producers: Milk producer is the first agent in marketing channel who supplies 21.2 per cent of the total production. The rest is either consumed fresh or processed into ghee. More than 50 per cent is sold raw or supplied to collection centres. In urban and peri-urban areas, more than 90 per cent of the produce is sold and the rest consumed fresh. Figure 1: Milk Marketing Channels in Punjab.

Milkman (Dodhi): Dodhi makes some important contributions which explain his key position in rural market. Collection of small marketable surpluses from a large number of rural producers is an important contribution of dodhi. He travels about six to eight kilometres on bicycle, carrying 80 to 100 litres of milk. Direct consumers in small cities/town, milk collection centres, tea stalls, shops, and khoya-makers are main agents.

Milkmen advance money to producers for assurance of supply. These advances also reduce the marketing risks. These credits range between Rs1,000-2,000 and are repaid, not in cash, but in the form of milk.

Milk shops/shopkeepers/retailer: Milk supplied by dodhis reach to retailers, the third stage of marketing where various intermediaries operate. The most important are shopkeepers. They sell milk, its products and other goods of daily use.

Milk pricing mechanism: There is no public intervention in fixing milk price which is mostly dependent on the interaction of market forces. Since the milkmen or dodhies dominate marketing, therefore, competition among themselves and a general change in the price level of other essential consumption items and purchasing power of the consumer collectively determines milk price. The pricing also depends upon sale area as these vary in rural, peri-urban and urban areas. Milk production is higher in winter than summer. Therefore, in rural areas, prices are lower in winter. However, the milkmen rarely pass on price benefits to consumers.

At present, pasteurized and the UHT treated milk is facing stiff competition from the produce supplied by milkmen or dodhies. The UHT milk is twice higher than the loose milk while pasteurized is almost equal to loose product.