THE Pakistan Standards and Quality Control Authority has initiated the process for bringing the packaged milk industry under legal discipline in order to ensure the quality and hygiene standards of its products.

Packaged milk is not a regulated item. On August 4, an MNA expressed concern in the National Assembly over the lack of adherence to hygiene standards by some companies selling packaged milk. A Senate committee had recently termed packaged milk as a ‘rich man’s milk’ and refused to support the industry’s case for relief in taxes.

Ever since tetra pack milk was introduced in 1981, producers of unprocessed milk saw a bleak future, in terms of growth, for the liquid product. From a small base, packaged milk has, however, been growing in size at 20pc, although it has captured hardly 5-10pc of the milk market. More than 80pc of the market is in the hands of milkmen or ‘gawallas’ selling fresh milk.

The per capita consumption of milk is around 170 litres per year, which is much lower than that of other Asian countries. Worldwide statistics show that a total of 145 countries produce milk and its products, measuring up to 550m tonnes a year, with the US as the top producer and consumer of milk with 83m tonnes. Pakistan ranks fifth in the world with a total production of 32m tonnes per year.

However, what also needs to be regulated is the price of processed milk which the companies increase after short intervals. Last month it was raised by Rs5 per litre which was the second increase after May.

Once the regulation is enforced, companies will have to apply for a licence from the PSQCA to produce and sell milk, and their products will be subject to periodical inspection

The reason given was a rise in taxes and duties. In the budget for 2016-17, the FBR has changed the tax structure for the dairy industry; a change that the latter believes will hurt its future expansion.

The Pakistan Standards and Quality Control Authority (PSQCA), an attached department of the ministry of science and technology, has forwarded draft rules to relevant ministries and provincial governments for their comments. The rules will then be sent to the law and justice division for vetting.

The draft has already been approved by the ministry of national food security and research. Once the regulation is enforced, companies will have to apply for a licence from the PSQCA to produce and sell milk, and their products will be subject to periodical inspection.

PSQCA director-general says the regulation of numerous food items was also on the anvil to ensure their quality. The Authority is mandated to monitor the quality of food items. It monitors 103 items under the Compulsory Certification Mark Scheme, of which 37 are food products.

The dairy industry has long been urging the government to enhance duty on the import of skimmed milk powder and whey powder which, it said, was badly hurting their business. This is because commercial buyers prefer to buy imported milk which is much cheaper than fresh milk. Both the fresh, unprocessed milk sector and the packaged milk industry are in agreement on imposing a maximum, even a 100pc, tax on the import of dry milk.

Although the farm gate price of fresh milk is higher than that of dry milk, it is still very much in demand, increasing by 10pc on an annual basis. But fresh milk has been unable to catch up with its growing demand over the years for its production does not exceed beyond 4-5pc per annum.

On June 25, the Federal Board of Revenue (FBR) raised the regulatory duty from 20-25pc on the import of dry milk. This has, in addition to its regular consumers, also irked the European Union which wants Islamabad to withdraw the duty since this imposition has hurt EU export of the product to Pakistan.

On July 30, some EU ambassadors, including those from France and Holland, met Commerce Minister Khurram Dastgir Khan to discuss the issue. The ambassadors argued that since Pakistan enjoys GSP Plus status in exporting its products to the EU, the government should avoid such curbs on EU products as well. They asked the minister to take up the matter with the relevant authorities. The minister explained that the duty was imposed to protect the local farming community.

The 25pc import duty on dry milk and whey powder actually amounts to 45pc (20pc customs and 25pc regulatory duty).

The linking of the GSP plus status to the regulatory duty increase by EU ambassadors has embarrassed the government, for at stake is concessional exports to the European states.

Published in Dawn, Business & Finance weekly, August 15th, 2016