Pakistan dairy sector expecting $1.5 billion foreign investment: PDA chief

KARACHI: Pakistan, the world’s third largest milk producer, is expecting $1.5 billion in mainly foreign direct investment (FDI) in its dairy sector as the country ramps up marketing efforts for pasteurized milk, the chairman of the Pakistan Dairy Association (PDA) said on Saturday.
Pakistan produces more than 59 billion liters of milk annually, according to the Economic Survey of Pakistan, of which 95 percent is sold without processing by milkmen.
“The share of processed milk in the country is only 5 percent at present which shows huge investment potential especially in the processing and supply chain. In the last five years, the industry has attracted $1 billion investment. With even 1% growth, we are looking at at least $1.5 billion FDI that we can bring into Pakistan,” Sulaiman Sadiq Monnoo told Arab News.
“Due to a lack of cold supply chain in the country every year, 11 to 12 billion liters of milk goes wasted that can be preserved with supply chain management,” Monnoo said. He is also CEO of DairyLand, one of the country’s largest dairy farms located in Sindh that produces and markets pasteurized and ultra high temperature (UHT) treated milk.
At present, Monnoo said, two Turkish companies were in the process of bringing operations to Pakistan.
“A Turkish company is coming to Pakistan while another has signed a memorandum of understanding with a Punjab based dairy farm,” he said.
SÜTAS, the Turkish dairy giant signed an agreement with Pakistani multinational conglomerate, Nishat Group, to start their dairy business in Pakistan in October 2018. Nishat Dairy is expected to start production from next year.
The PDA chief also stressed on better marketing Pakistan’s dairy sector potential to Gulf countries.
“Gulf countries such as Saudi Arabia, UAE and Qatar are concerned about their food security and it depends on (Pakistan’s) government how it... offers them opportunity to invest in Pakistan,” Monnoo said.
He added that presently, the dairy market was in stress due to the government’s removal of zero rated tax on the country’s dairy sector, people’s declining purchasing power amid inflation, and due to a negative perception in general about processed milk.
“The price difference has increased between regulated and unregulated milk and people feel the pinch of it,” Monnoo said.
In April this year, Chinese dairy giant, Inner Mongolia Yili Industrial Group suddenly withdrew its intention of acquiring up to 51 percent shares in the army-owned Pakistani food company, Fauji Foods. No reason was formally cited, but the management of Fauji Foods said in a notification to the Pakistan Stock Exchange that the acquirer and sellers had been unable to reach an agreement on the proposed sale and transfer of shares.
The PDA chief however, said he believed the Chinese dairy giant withdrew due to Pakistan’s current market situation.
Still, milk processors hope that an ongoing focus on the marketing of pasteurized milk will create more opportunities and shares for processed milk, and revenue for the government.
“Legislations for pasteurizing milk are being stressed while food authorities in Punjab and Sindh are active against adulterated milk sellers. In the coming days, selling loose milk will be difficult,” Monnoo said.
But small dairy farmers fear the extra legislation could wipe them out as authorities plan on implementing minimum pasteurization laws in eastern Punjab province as early as next year.
“This act will destroy the business of thousands of small farmers especially those who own as low as only two buffalos and feed their families,” Shakir Umar Gujjar, President of Dairy and Cattle Farmers Association told Arab News.
“There is a difference between adulterated milk and organic milk,” he said.

Pakistan dairy sector expecting $1.5 billion foreign investment: PDA chief