Tarin’s budget: mining the white gold

Earlier this month PM observed that the country could earn $25 billion by exporting milk and cheese


Dr Pervez Tahir May 07, 2021
The writer is a senior political economist based in Islamabad. He can be reached at [email protected]

The army deployment to assist in the war on Covid-19 has an unintended benefit. On the city outskirts, jawans have been seen telling milkmen to wear masks while milking and sell or distribute milk in polythene bags, even if they have to charge more. Cheaper, unhygienic loose milk is a significant contributor to the national burden of disease. Less than 10% safe-packaging of the fourth largest supply in the world results in a price gap that works against the health of the people and livelihoods of the milkmen. Earlier this month, while inaugurating the distribution of Kisan Cards in Multan, the milk capital of the country, the prime minister observed that the country could earn $25 billion by exporting milk and cheese. Now this is equivalent to Pakistan’s total exports in a whole year. As things are, our imports of milk and its products in the first nine months of the current were $146 million, an increase of 17% over the corresponding period last year. Exports were next to nothing. Some measures in the agriculture package announced on the occasion related to livestock development. Animal productivity is abysmally low by international standards. An amount of Rs40 billion was earmarked to import semen to improve livestock breeds. This is expected to increase production three-fold, besides reducing prices. In a recent meeting with the representatives of Pakistan Dairy Association, President Arif Alvi also expressed support for the subsector to turn it into an economic powerhouse. Officials keep mentioning the opening of the CPEC window to export “white gold”.

There is no premium on dreaming, but the billions in exports require a concrete set of actions. First, the product that might satisfy the international sanitary and phytosanitary standards uses only a small portion of the total production of milk that is produced currently. Indeed, the few packaged milk units that exist are working well below their capacity. The huge difference between the price of loose milk and packaged milk keeps the domestic demand low. Hence the unutilised capacity. Another reason is that the industry does not enjoy a level-playing field due to anomalous duties and taxes. The coming budget will have to review the decision to discontinue its zero rating for GST. More packaging enhances longevity of the perishable item and makes it safer.

Just as SMEs and small farmers either do not figure in policy prescriptions or merely receive lip service, the small milk producers are also ignored, despite large numbers. As much as 80% of the milk is supplied by owners of one to four animals. An intelligently devised dairy policy mix can also help the government achieve its poverty reduction and employment objectives. By incentivising the packaged milk units to locate amid large concentrations of small producers, it can reduce transport cost and wastage. By encouraging industry-community linkages through tested participatory approaches, the health of the cattle farmer and the animals can be improved, as also their productivity. A country with ample supply of milk need not suffer the level of malnutrition and stunting that has become a characteristic feature of Pakistan. The consequent improvement in the milk quality will give a boost to the health of the nation, in particular, children and women. All this presumes the existence of a facilitative regulatory framework to protect environment, farmers and their flock. Also, minimum standards of pasteurisation and packaging have to be enforced. The often-ignored research and development should drive, not drag.

The new finance minister looking for growth should know that a zero-rating dairy sector will likely yield more than the usual suspects.

Published in The Express Tribune, May 7th, 2021.

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