Friday, May 24, 2013
Syed Ovais Akhtar
Milk and milk products are nutritious food items containing numerous essential nutrients such as calcium, vitamins and iron. It is the first food that a child feeds on and is also an important kitchen item. In the average Pakistani household, milk is given more importance than let’s say flour. But despite the high levels of inflation in recent years, flour remains within the purchasing power of the common man while the same cannot be said for milk. The price of package milk in the country stands at Rs90 per litre, while the price of loose milk is around Rs65-75, depending on supply. Pakistan is a major global producer of milk and yet it remains an expensive item domestically. We are, in fact, so backward in this sector that we continue to be net importers of powdered milk.
In most developed countries, milk is subsidised as it is considered an essential food item for the family, especially children. In the EU as well as in the UK, USA and Canada, there is no tax on milk. However, there are reports circulating that in the next budget the government is thinking of imposing sales tax on packaged milk.
If the proposed tax becomes a reality, the price of milk will go up both in the packaged and loose milk sectors: an absurdity considering the importance it holds for the average Pakistani consumer.
Pakistan is traditionally an agricultural country and is blessed with a huge population of dairy animals and though we consume a good portion of these animals as meat, we are still left with enough cows and buffalos that do not only meet the nation’s needs for milk and milk products but also offer a great potential for export. It is a pity then that over the years, while we have literally ‘milked’ our animal population for our dairy needs, we have not paid attention to the upkeep and growth of these animals. For example, we could have enhanced the volume of milk obtained in a considerable manner by breeding healthier animals, which would in turn made dairy products affordable and part of our daily diet.
In the last decade, the government has attempted to reorganise the dairy sector to exploit its existing and future potential. As a result, several international players have shown interest in investing in Pakistan, while the ones that were already operating in the country were encouraged to enhance their capacity. The policy thinking then was to meet local demand through a more organised indigenous dairy sector so that its full potential could be realised and a new resource for export earnings created.
Consequently, the dairy sector began to register growth and demonstrated that it had the potential to feed people and produce huge export surpluses. Further progress largely depended on investment in the infrastructure and on health care but this did not come about on a sustained basis in the following years and pro-active policymaking regarding the dairy sector was put on the back-burner.
Furthermore, a number of projects were launched to engage farmers in the dairy sector but the need to improve the sector to benefit consumers still exists. Livestock resources available in the country need to be developed on much more scientific lines through the application of new technologies and this can only be achieved with the help of foreign assistance. If such an environment is created, it will bring a valuable change in the livelihoods of small farmers and become a link in the development of corporate farming, which will indirectly encourage further local and foreign investment and international collaborations. All that is required is a pro-business environment with a positive policy framework to generate foreign and domestic investment and spur more employment.
The role of agriculture in the country’s economy stands at approximately 23 percent, out of which the livestock sector represents approximately 49 percent. Surprisingly, this is slightly higher than the contribution made by crops. In GDP terms, Pakistan’s major crops such as wheat, cotton, sugarcane, rice and maize contribute Rs636 billion annually while livestock contributes Rs650 billion, out of which milk alone contributes Rs341 billion. Despite the significance of the dairy sector and the efforts previously made to improve it, the sector has failed to keep up with the potential for growth and, over time, policymakers seem to have become oblivious to the significance of the dairy sector in the national economy.
Only a small percentage of the entire dairy sector in Pakistan is run on organised lines while the rest remains unorganized. From the policy-making point of view, it is obvious that the focus has been more on food crop development rather than promotion of the dairy sector. It appears that this sector has been left to progress more or less on its own. Shrinkage of this vital sector through lack of growth incentives could also create shortage of milk in the country’s far-flung locations, whose populations are already milk deficient.
Lastly, a mindset has emerged at the policy and budget-making levels that the processed milk sector could make a sizeable contribution to the sales tax regime. It seems to be forgotten that such taxation would have an overall negative impact and further stifle national development as it would discourage investment in vital sectors of the economy besides depriving the population of a healthy food source. Source The NEWS
—The writer is an industry official