When the history of Pakistan’s dairy revolution is written, it is likely that JK Dairies will earn a prominent mention: the subsidiary of the JDW Group is one of the largest and most efficient dairy farms in the country and is helping advance milk production efficiency in the country.
The brainchild of Jahangir Khan Tareen, chairman of the JDW Group and a former cabinet minister, JK Dairies was started in early 2007, right when the milk business in Pakistan was beginning to see more corporate players enter the market. Engro Foods had been started the year before, with a primary focus on milk and Nestle was rapidly expanding its drive to efficiently collect, package and market more milk.
Into this increasingly competitive fray stepped in JK Dairies, offering a unique proposition to the new consumer goods companies looking to source their milk. The average Pakistani dairy farmer has no more than four to five animals. “I started my farm with 1,000 animals, which were shipped in from Australia,” said Tareen, in an interview with The Express Tribune.
Economies of scale were the key to JK Dairies’ strategy, and not just in the number of animals. The company imported some of the finest milk breeds from Australia in order to improve output per animal. And it was smart in terms of the kind of cows it imported too.
Many dairy farmers have made the mistake of simply looking up which cows yield the most amount of milk per lactation and import them into their farms in Pakistan, not realising that most of those breeds are not suited to the Pakistani climate.
JK Dairies imported the Australian Friesian-Sahiwal, a breed that was created by the Australian state of Queensland in the 1960s by crossing the Sahiwal cow (named after the city in Punjab where it is from) and the Friesian breed to produce a new cross-breed that combines the sturdiness of the Sahiwal with the lactation prowess of the Friesian.
The average Sahiwal cow (still common in many parts of the Punjab), produces about 2,270 litres of milk per lactation. The Friesian Sahiwal breed produces over 3,000 litres per lactation, about 32% higher. Since then, the company has been cross-breeding the Friesian and Jersey breeds of cows that are also part of its stock with local breeds to produce better milk-giving animals that are suited to the local environment.
“We can compete with the world only by experimenting with the latest available technologies, and that’s what we are doing,” Tareen said.
JK Dairies employs a lot of foreign staff, particularly from East Asia, since Tareen feels that local universities do not have enough graduates who are familiar with global best practices in agriculture and livestock. In addition, the company does not use fodder, a common local practise and instead uses multi-cut seeds, which not only can be produced year-round but also help the cows enhance their milk production.
The company then markets its milk through various techniques, including retail outlets in Lahore as well as a home delivery service. But the bulk of JK Dairies’ sales go to Nestle Pakistan, the largest food company in the country and the owner of Milkpak, the leading brand of packaged milk.
Perhaps surprisingly for a man who has been so successful in developing a dairy business, Tareen does not seem interested in moving up the value-chain into products like cheese, yogurt and the like.
“I am in no mood to enter the dairy food manufacturing business or in the meat industry,” said Tareen. “Right now, I am focused on my existing business.”
Having said that, Tareen appears highly bullish on the livestock sector, which constitutes about 11% of Pakistan’s GDP and employs about 17% of the workforce, including most of the poorest people in the country. “The livestock sector of Pakistan can singlehandedly became a game changer for our economy.”
Others agree. “If Pakistan were to improve its overall milk yields by just 15%, it would displace New Zealand as the largest exporter of milk in the world,” said Ian Donald, the outgoing CEO of Nestle Pakistan.
Published in The Express Tribune, May 26th, 2012.
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