Dairy Business Potential in Pakistan Future Prospective and Possibilities

Dr. Muhammad Nasir JavedChief Executive Officer

Milko Foods0300-8432595

Presented by :

Faisalabad

Provincial Share in Milk Production

KPK

62%

12%

23%

3%

Punjab KPK Sindh Balochistan

Source : Pakistan Dairy Association Tetra Pak Pakistan internal data

4th largest milk producing nation

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Milk Production Urban - Rural Divide Milk Usage - Urban Urban Households'Consumption Split

9.25 Bio.Urban

consumption

19.65 Bio. Sold to market

7.64 Bio.Liquid Milk for

Urban household

consumption

1.5 Bio. Sold at loose Milk Shops

0.05 Bio.Pasteurized Milk Shops –

0.72 Bio. UHT in TP7.86 Bio.Wastage & calf

feeding

1.6Bio.Converted to milk products/sweets

11.8 Bio.Retained by

farmer

10.4 Bio.Rural consumption

0.17 Bio.Powder

39.3 Bio.

5.20 Bio. Gawala Milk

19.65 Bio. 9.25 Bio. 7.64 Bio.

15 % increas

e in Deman

d

3 % annual

increase in

Production

Farmer VMC

Sub Center

Gawala

Dairy Plant

Collection Point

ContractorsMini Suppliers

LooseMilk Shop

Consumer

Middleman is controlling majority of supply chain

79 %

Fragmented Farm Base

Livestock Census of Pakistan 2006

01 to 10, 74%

11 to 30, 10%

31 to 100; 13%

100 and above, 3%

10

CostQuantity Quality

Source: PDA & Market Feedback

Dairy Industry facing multiple challenges

► lowest yielding animals

► Small scattered farms

► Majority of animals owned by

poor smallholders

► Farmer has limited access to

formal markets

► Middlemen adulterate milk

► Poor storage & supply

infrastructure

► Feed prices increased by 16%

p.a. 2005-2008.

► Last 10 yrs. Milk and feed price

ratio not favorable

► Soaring inflation (current 24%)

11

010002000300040005000600070008000

NZ USA DEN PAK IND

NZ USA DEN PAK IND

Quantity Issues

Source: IFCN

0

50

100

150

200

250

NZ USA DEN PAK IND

NZ USA DEN PAK IND

► Small scattered farms

Animal Holding

80%

12%5%2%

0%10%20%30%40%50%60%70%80%90%

100%

Number of Animal per herd

0 to 5 5 to 10 10 to 20 20 & more

► 80% animals owned by poor smallholder

► Lowest Milk yield per animal

12

Quality Issues

Source: IFCN

► Limited farmers’ access to formal market

0

5

10

15

20

25

Punjab NWFP

Punjab Sindh NWFP Baluchistan

22.8B

illion

Liters

63%

► Supply demand gap is leading to adulteration

Supply deficit to be 6.6 bio lit. by 2020.

Tied up Animal ………Old Farming system

Current Progress in Dairy Sector

3000 + Commercial Farms with more than 200 animals

Top Corporate Dairy Farms in Punjab

Dairy Farms Milk Production LPD Supplying to Milk Price @ 13 % TS Rs.

Nishat Dairy 80,000 ENGRO/Haleeb 56.0/54.0Ever Fresh 18,000 ENGRO 54.0Interloop 30,000 ENGRO 54.0

Umer Dairy 24,000 Nestle 52.0Sharif Dairy 38,000 ENGRO 52.0Al- Tahure 18,000 ENGRO 54.0Dada Dairy 30,000 Nestle 54.0

Sapphire Dairy 40,000 Gourmet 56.0

ENGRO Farm 50,000 ENGRO 58.0

Total 273,000

History of Dairy Development in

Pakistan Investment in Private Dairy Sector 1982-84 ( 22 Dairy Plants)Agri-services concept by Private industry ( Halla , Nestle) in 1990Commercial dairy Farming and Private Artificial Insemination in

1994 Import of exotic dairy breeds by Private Industry ( Nestle) 1998New investors in Modern Dairy Farming Import of Exotic breeds Private dairy training centres/ Institutes 2008Extensive Development programs by Govt. and Private dairy Industry

and NGO 2005 - 2015

What is Way Forward

New Generation looking toward Policy Makers

Livelihood Through Livestock

Livestock Development Plan

Best Solution is Effective Extension Services

Support Community Development in the

area

Enable Skills Ideas, Information to be

mobilized

Promote Co-operation & collaboration

among Community

Commercial Sector

Village level CBO/

Societies

Farmers /Co-operatives

Universities or Research Institutes

NGO

Key Stakeholders for Extension Services

Impact on Pak Economy with only 500 ML milk increased by Extension services

Region Animal Population

Growth /Animal/day

Increase in Milk Production

(Annual)Value gain in PKR

45/Litre

Pakistan 54,000,000 500 ML 9,855,000,000 443,475,000,000

Milk Production impact Rs. 443 Billions

Equal to 50 years of Budget of Livestock development in Pakistan.

Nothing Is Impossible

Import of Dairy GeneticsTo fill the gap of milk shortages.Import of Friesian, Jersey and FxJ

cattle and embryos from Australia, Sweden and USA

More than 5000 cattle imported in 2011

Farm size from 50 to over 2500 cows18 Farms having environmental

control shedsChallenges of housing, summer

management, feeding and disease control

Any Question ???

UHT Product Costing

Losses (1%)

Processing Cost 4%

Sales & Marketing 4%

Distributor Margin 4%

Raw Milk 61%

Packaging 14%

Collection Cost 8%

Retailer Margin 4%