PER CAPITA CONSUMPTION TRENDS ……….

2. PER CAPITA CONSUMPTION TRENDS ………. • Diversification of diets  meats, eggs and dairy products • Population growth, urbanization and income growth • Derived Demand -- creating a veritable livestock revolution • New and expanding markets for small livestock producers •  demand for livestock products will lead to intensification of small holders’ food and feed production system and may provide an engine for sustainable livestock production • However, inappropriate policy and misallocation of investment resources could skew the distribution of benefits and opportunities

3. Supply of Dairy Products

4. Livestock Inventories, 2006 (million) Livestock Censes, 2006Figure in parenthesis are percentage

5. Livestock Population growth trends C>B in beginning of 1955; C>B reached peak in 1960; B>C in 1996 but in 2006 C>B Source: Economic Survey of Pakistan, 1955-2006, Hasnain & Khan 2007

6. DAIRY SUPPLY CHAIN Urban Dairy Markets (Demand Perspective) • Home delivery/gawalas- 68 percent urban consumer reported that they are getting milk at home through milkmen/Gawalas • Milk shops/retail shops - 16% purchased milk from local retail milk shops/milk shops • Milk sale points- 10% purchase milk from these sale points • General stores/super markets- 4% from these general stores and the super markets • Own animals- Only two percent of urban consumers get milk from their own animals in big cities, cities and towns

7. Actors of dairy supply chains • Milk producers: 8 m FHHs with herd size 50 m milch animals, - 43% with 1-2 animals, 28% 3-4 animals-Producing 80% milk. • Milk collectors (Dhodies): SSMC-200-400 kg/day from remote areas, long term contracts at predetermined price offering a share of milk price in advance. MSMC-400-800 kg/day with a similar manner, carryout door to door milk delivery and sell in some nearby market. LSMC- > 1500-3000 kg/day, purchase from SSMC & MSMC, sell to retail shops • De-creamers and khoya markers: milk men also sell milk to decreamers & Khoya makers. Some SSMC sell milk to decreamers, decreamers sell part to halwaies & confectioners • Milk processors: small share • Consumers • Government organizations: PDDC, PDDB, AHComm. (Fed), L&DDD (Prov). PSDP-Project (Milk collection processing dairy production and dev. Program)-Subsidized livestock services for milk collection and marketing, development of genetically superior animals

8. Third party collection on commission basis (Rs. 2/kg) Third party collection on commission basis Rural Dairy Producers (Rs. 16-18/kg) Rural Dairy Producers Urban Consumers (Rs. 42/kg) for different brands Urban Consumers for different brands Collection, processing, packing and distribution charges about (Rs. 19-22/kg) Collection, processing, packing and dis Self collection on the basis of fat (Rs. 5/kg) Self collection on the basis TS/ fat The Domestic Retail Processed Dairy Supply Chain

9. Constraints of Retail Processed Milk Supply Chain The product sub-system: • Consumers complaints about the taste of processed milk (unhygienic handling, storage and transport system of milk collected by third party – adulterants by third party). The Information sub-system: • The absence of effective market information flows within the milk supply chain inhibits feedback from the market apart from price information. The Value sub-system: • There is no price variation for different brands of milk The Governance sub-system: • Multinational and private companies charges too much for the collection, processing packing and distribution – high price.

10. Challenges of Dairy Pakistan • Small scale dairy farming system with limited market opportunities (80% of milk) • How participation of SF in modern value chain be guaranteed? • Limited physical farm performance: Poor genetic and reproductive efficiency, epidemics of infectious diseases, inadequate feeding and ineffective vet. Cover-- low milk yield • Poor quality of fresh milk & high price of processed milk • How quality fresh milk and cheaper processed milk can be ensured to consumers? • Weak financial farm performance: Small sale volume with Low milk prices • Underutilization of dairy industry as at present working at 50% of installed capacity processing only 3.23% of milk. • Institutional and regulatory issues: Poor investment in infrastructure, establishment and implementation of livestock legislation

11. OPPORTUNITIESMILKING POPULATION, 2006 (Million) Livestock Censes, 2006Figure in parenthesis are percentage

12. Milk Quality -Consumer Responses (%) Source: Sharif et.al., 2007

13. Conclusions DEMAND FOR DAIRY PRODUCTS • In dairy items, fresh milk in loose form, packed UHT milk and yogurt are major dairy consumption items. • The estimated urban demand for liquid milk equivalents for Pakistan is 11.35 billion liters, estimated market demand for Pakistan is 33.76 billion liters, market supply is 30.64 and SDG is 3.1 billion liters • The preference of raw milk through out of Pakistan is based on consideration of good quality, taste and affordability. These factors are unlikely to change significantly in the near future. SUPPLY OF DAIRY PRODUCTS • Small scale dairy farming system producing 80% milk • Good number of livestock resource but Farm growth is stable, increasing trend in cows but productivity is low • Quality issue in fresh milk and high prices of processed milk • Supply demand gap • Small share of processed milk

14. Policy Implications • The existence of both raw milk and processed milk markets are responses to urban consumer demand and both make significant contribution to Pakistan’s economy and public health. • Informal raw milk market provides million of poor consumers with an affordable, nutritious product of their choice. A policy balance that regulate and supports this sector would maintain this national assets. • Although the informal market driven by demand from mostly poor consumer is likely to predominate for many years, gradual growth of the formal market will probably occur as income rise in the long run. • Therefore, dairy sector polices that recognize the role played by both the informal and formal sectors in the market and support their harmonious coexistence and development are most likely to be more effective.

15. Researchable Issues (Demand Side) • The consumption frequency of fresh (raw) and the processed milk revealed that separate markets exist for these milk. The separation of these two milk markets could result fromincome distributions, marketing constraints, market interventions, or a combination thereof, and is an issue of future research in the country. • There appears to be considerable scope for increasing the quantities and diversity of dairy products consumed, particularly among middle and low income household in towns and cities. Subsequent research should therefore determine the respective influences of household income and product availability as constraints to dairy consumption. • Very little scanty information is available, however, on the process of changing food habits in the different parts of the country. Research into this process could be expected to yield information of value for future agricultural research planning, market development, human nutrition, and government policy making.

16. Researchable Issues (Supply Side) • How Efficient and Equitable Supply Chains are w.r.t: • Competitiveness: Domestically and globally • Inclusiveness: Selection process & participation benefits • Scalability: Scaling up process and retailing • Sustainability: Does it make business sustainable (F vs. E/C)? • Backward Coordination from retail to tail – farmers: • R&AP -MI-Fs; R&AP – C&I – Fs and R&AP – ID&Ext.S - Fs

17. THANX