In a country, where there are weak health regulations and flawed economics behind taxing the consumer goods, it is a great challenge to acquire pure milk. For consumers, there are two challenges associated to acquiring this, economically, basic necessity.
First, the adulteration of loose milk is so common that it is virtually impossible to buy pure and safe milk in the urban areas. Worldwide, Pakistan falls among the top five milk producing countries followed by over 90% of its milk being sold as loose milk in the market followed by only 6% being sold as packaged milk. The difference is too great when compared to Western countries.
It comes as a surprise that adulteration is not an act performed in isolation by a few individuals rather an organised practice performed at a broader scale. By the time it reaches our tables, it is more of everything unfit-for-human-consumption than milk; aflatoxins, antibiotics, chemicals, detergents, starch, caustic soda, urea, sodium carbonate, formalin, and ammonium sulphate. Leading to the absence of nutrition, the milk loses its original form and becomes a serious health hazard. The consumption of unsafe milk is strongly correlated with milk borne diseases from microbes, water borne diseases and stunting among the children.
Having substantial evidence of the public health hazards caused by loose milk, the government of Punjab, in 2017, introduced the minimum pasteurisation law, which bans loose milk sales over the next five years. The law will lose its value unless there is effective capacity building of the milk value chain to embrace this change.
Second to the unavailability of pure milk, is the taxation policy of the federal government for the dairy supply chain. Processed milk has remained ‘zero-rated’ under the sales tax regime from 2006 till 2016. However, the practice was ceased in 2016, by pushing it to the ‘exempt category’ making it almost 8% costlier than before.
Here, it is important to mention how the changes in tax regime have added to the overall cost of the packaged milk. Abolishing the zero-rated tax policy has drastically increased the cost of milk processing industry because the manufacturer, now, cannot claim the input tax paid during the manufacturing process. This practice makes the final product expensive because the cost is added to the price charged to the consumer. This, resultantly, affects the affordability of the consumers to buy packaged milk.
As part of the basic economic principles, demand for packaged milk is highly elastic (a small price hike leads to a greater decline in demand). Therefore, it is essential to bring the dairy products back to the 5th Schedule of the Sales Tax Act 1990 and continue the zero rating tax policy.
The packaged milk is currently sold at $1 in both US and Pakistan, whereas the average per capita income in Pakistan is $1,300 compared to about $ 48,150 in US. We can see the striking difference between the purchasing power parity of Pakistan and that of US. Packaged milk clearly is a luxury in Pakistan leaving us with no option than consuming the loose milk, lacking nutrients with all its chemicals and contaminants.
There are many poor health outcomes associated with consumers’ inability to acquire packaged milk; milk borne diseases, water borne diseases, stunting, malnutrition and many more. Having a background of health, I see immense potential, for the government, in promoting the dairy sector. Many of the prevailing poor health indicators can be improved by introducing small changes at the policy level. The government must realign its broad socioeconomic objectives with its legislative framework and fiscal policy. Otherwise, it will take us decades to get rid of the sale and purchase of loose milk.
Published in The Express Tribune, March 26th, 2019.