ame-1-report-economic of milk production in peri-urban areas
TRANSCRIPT
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REPORT
August 2008
Presented By
Dr. Hamid Jalil
Director Planning & Evaluation Cell
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TABLE OF CONTENTS
Sr.
#Contents Page #
01 Executive Summary 03
02 Introduction 04
03 Aim of Study 10
04 Methodology 11
05 Source of Milk Production 12
06 Average Unit Productivity 14
07 Cost of Milk Production 16
08 Milk Supply Channels; Cost and Sale 17
09 Salve Value of Milk 18
10 Management Practices 19
11 Milk By-Products 25
12 Major Findings 28
13 Recommendations 30
14 References 31
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Executive Summary
Pakistan has larger base of dairy sector allied with the agriculture. Dairy sector
generates employment and business opportunities, particularly in the rural andperi-urban areas. Numbers of people in urban areas are also involved in dairy based
business and earn revenues. The public sector departments hold primary responsibility
to guide the farmers and play their significant role in dairy sector development. The
research based decisions of policy makers will have real impact on welfare of farmers
and progress of all the stakeholders of this sector.
This research is commissioned by Planning & Evaluation Department, L&DD, and Govt.
of the Punjab. The study aims at investigating the market structure, sources of milk
production, average unit productivity, sale value of milk and cost of production in peri-
urban areas of Lahore. The research also explores sale, cost, production and quantity
of by-products of milk purchased by milk centers of urban areas of Lahore. All the data
is collected on semi-structured questionnaire through interviews of 120 farmers and 60
milk centers of Lahore.
This survey brings forward the valued findings, which may help the planning
departments, key stakeholders, policy makers and other associated to take effective
decisions in the development of dairy industry. The proportion of small milk producers
is quite high, which hinders the economies of scale and profitability in the dairy industry.
82% milk is contributed by buffaloes with averagely 18 buffaloes with one former, while
4 cows are averagely owned by one farmer with 18% share in the milk industry.
Maximum buffaloes are 85 and cows are 35 with a farmer. Average milk production of
farmer is 120 liters. Further segregation reveals that 63% farmer produce 48 liters, 21%
produce 135 liters, 11% produce 295 liters and 5% produce 592 liters on average daily.
The buffaloes and cows have insignificant difference in quantity of milk on average
daily. Large numbers of small farmers need to be given extensive training in the area of
marketing, management and supply chain. Farmers need to be taught scientific method
of feeding, fed combinations and other measure to raise milk production.
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Introduction
Agriculture accounts for 20.9% of the total GDP and employs 43.4% of the total
workforce in Pakistan. With an almost more than 50% contribution, livestock is by far
the most important sub-sector. The share of agricultural growth has jumped from 25.3
percent in 1996 to 49.6 percent in 2006(Livestock census, 2006) and it contributes
almost 52 % of Agriculture GDP (Economic Survey, 2007-2008). Within the livestock
sector milk is the largest and single most important commodity.
The country’s production base is highly fragmented and dairy enterprise is dominated
by the private sector, with the government playing a regulatory role. According to the
Livestock Census held in 2006, among the 8.4 million reported dairying households,
51% own a herd size of just 1-4 animals. Another 28% households maintain herd sizes
of 5 to 10 animals, whereas, only 14.23% of the herd sizes are composed of 11 to 50
animals. Only 6.72% of the farms in the country come under the large category where
more than 50 animals are kept. Approximately, 80% of the milk is produced in rural
areas, with peri-urban and urban areas accounting for another 15% and 5%,
respectively (Livestock census, 2006). Only 3-5% of total production in the country is
marketed through formal channels. The remaining 97% is produced and marketed inraw form by informal agents in the marketing chain portion of the milk producers.
To ensure development of the country’s dairy sector, it is important that critical support
is provided to the promotion of smallholder producers in peri-urban areas. Key issues
for promoting smallholder based dairy development would be to organize farmers,
integrate production with marketing, enhance access to credit, upgrade milk marketing
chains through adoption of modern technology, enhance market information, and
improve farm profitability.
Despite decades of oversight by the government, Pakistan is the fifth largest milk
producer in the world. According to the Pakistan Livestock Census held in 2006 overall,
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milk production increased by 35.6 percent since 1996. Buffaloes and cows are major
milk producing animals.
According to a study on Milk Marketing conducted by FAO in Pakistan in 2003, 80% of
the milk in the country is collectively produced by rural commercial and ruralsubsistence producers. The peri urban producers account for 15% of the milk
production, whereas urban producers contribute 5% to the total milk production in the
country (FAO, 2003)
Pakistan's dairy industry is plagued by a number of problems which include lack of
commercial dairy farms, low productivity due to poor nutrition, a weak infrastructure,
lack of financial facilities, and the ready availability of raw milk to a poor and uneducated
population. Although Pakistan was ranked fourth among the five leading milk producing
countries in the world, with an estimated 24 million animals having produced closely to
28 million tons of milk in year 2003 and over 31 million tons during 2005-06 as the 5th
largest producer of milk in the world, its yield per animal is only one-fifth of that of
Western Europe.
Supply and Demand of Milk
As a food item, all milk (both milk and milk equivalents) is second only to cereals in levelof per capita consumption in Pakistan. The annual per capita consumption level at the
national level is 190 liters. Province wise, per capita consumption stands at 246 Kg in
Sindh, 132 Kg in Punjab, 86 Kg in NWFP, and 108 Kg in Baluchistan.
Due to rising inflation and high poverty levels, the majority of Pakistani consumers are
price conscious. Therefore, demand for open, raw milk is high compared to processed
milk. Hence, raw milk is the primary dairy product marketed in the country. Over 90
percent of the marketed milk is collected and marketed unprocessed through the
informal market by a multi tiered layer of marketing agents. The supply of milk to meet
domestic demand has usually lagged. To meet this gap, powdered milk is imported
every year. During July 2006 to November 2007, dairy products worth Rs. 2320.42
million ($38.6 million) were imported (Economics Survey, 2005-06)
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Peri-Urban Commercial Farming and Marketing Chain:
In this system, the animal husbandrists (gowalas) who have settled in the outskirts of
the cities, they own herds numbering up to 20 milk animals and have found capacious
market for milk in urban areas.
An estimated 9 to 12 million liters of milk every year are consumed by the urban
consumers in Pakistan. To satisfy some of this urban demand, milk is produced in urban
and peri-urban areas of the country, accounting for 5% and 15% of the total milk
production, respectively. Since this milk is not sufficient to meet the entire urban
demand, the deficit is met by rural producers. These are usually owned by market
oriented farmers and, owing to the scale of their operations, can be classified into two
general groups. Most of the farmers operate on relatively small scales by keeping 10 to
50 dairy animals. On the other hand, larger farmers usually keep up to 500 livestock
heads. This later category of farm can be either owned or operated by a progressive
farmer individually or it can be a part of the peri-urban cattle colonies that have been
established on the outskirts of major cities.
In the Urban Milk Marketing Chain, the producer has relatively more control over the
supply chain as the consumer is easily accessible and is also willing to pay a high price
for milk. Hence, in many instances, farmers in the Urban. Milk Marketing Chain integrate
production and marketing functions in their operations and instead of relying on a
middleman, the milk is directly sold by the farmer. Powdered milk, butter, cream and
lassi etc. However, UHT milk is the most predominant form of product produced by
these plants.
Ali and Saifullah (2006) findings reveal that the milk production is labour-intensive.
There are a number of biological, technical and socio-economic constraints like the
shortage of feed, high mortality rate, poor genetic potential, high input cost and scarcity
of sources and inadequate marketing system. All these render this sector undeveloped
and in a miserable condition.
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Milk is transported through pick-ups, public transport and motorcycles for long distances
and bicycle and horse or donkey carts for short distances. Poor road linkages between
rural and urban areas do not allow producers to transport milk to distant markets due to
its perishable nature.
Lack of quality check is the most neglected aspect of the whole system. There is no test
at any stage along the marketing chain. For example, those who handle milk right from
the beginning till it reaches the final consumer are not conscious of hygiene. Many
shops in urban areas are exposed to dust and flies. Very few shops have refrigeration
facility; the milk is of poor quality. The containers used in transportation are unhygienic
since it is a difficult to clean them. The milk adulteration is another serious concern in
peri-urban milk supply chain.
The sale and purchase of milk is done directly. But in some cases commission agents
also negotiate the prices. They bargain with the seller to reduce the price while
negotiating with the purchaser higher rates.
Milk in urban areas is accessible to common consumers in two ways: loose,
unprocessed milk and packed, processed milk. Each has its own price regime.
The unprocessed milk passes through the middle persons before it reaches the urban
retailer. The price of milk increases by one rupee per liter at every stage of sale. The
'Dodhis (Gawalas )’ generally have undocumented contracts with farmers for regular milk
supply. Some 'dodhis' have milk storage and chilling system and transport system.
Transportation generally costs Rs.0.50 to Rs.1.0 per liter. The urban retailers deliver
milk door to door, by motorbike or sell it in a shop to consumers. (Tanvir, 2006)
Burki et al (2005) provide a preliminary assessment of the state of Pakistan’s dairy,
explore the sector’s potential in making impact on the dairy economy, and recommend
areas where more detailed research work is needed. Further research on production
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structure in dairying, according to the authors, could enable to understand the structural
changes needed in this sector.
Milk production and marketing in Pakistan is exclusively dominated by the informal
private sector, consisting of various agents, each performing a specialized role at the
relative node in the supply chain. These consist of producers, collectors, middlemen,
processors, traders, and consumers. Only 3-5% of total production in the country is
marketed through formal channels. The remaining 97% is produced and marketed in
raw form by informal agents in the marketing chain. To get a comprehensive
understanding of the opportunities and problems associated with the dairy enterprise in
Pakistan, it would be important to give here an overview of the role being played by both
the informal and formal channels.
Waynn et al (2006) Milk sales from the peri-urban sector are mostly sold direct to
households and it is un-pasteurized and is not chilled. The distribution system is based
around milk collectors operating as individuals or contracted groups distributing milk
from a major producer. There are fundamental issues of food safety that must be
addressed in this component of the marketing system: food safety regulations and
hygiene standards are major areas of government policy intervention because of public
health considerations; and reforms to existing regulations and effective compliance are
neglected areas of government intervention.
Milk sales by the commercial sector are small and mostly involve UHT milk. There is
some emergence of a market for fresh milk. The development of a commercial milk
marketing system has been constrained by limited milk supplies available for collection.
The integrity of the milk collection system in terms of hygiene and chilling a highly
perishable commodity has also limited the development of this sector. In Punjab, the
commercial sector is investing in the development of a farm to factory cold chain
distribution system.
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Milk and milk By-products processing and marketing
In Pakistan only 3-4% of the total milk is processed and marketed through formal
channels whereas the remaining 97% of the milk reaches end users for immediate
consumption through an extensive, multi-layered distribution system of middlemen.
However the processed milk consumption is growing at the rate of 20% per year.
Pasteurized and UHT milk in tetra packs are very popular products (PISDA-USAID,
2006). Most milk shops and bakeries across Pakistan manufacture and sell traditional
dairy products like Dahi (Yogurt) and Khoya (Condensed milk sweet).
Large dairy shops also produce Desi ghee and butter. Processing plants have also
introduced a number of dairy products like yogurt, drinking yogurt, flavored milk, cream,
butter, ghee, cheese, ice cream etc. The quantities sold however are small except for
yogurt & butter. Industrial processing units in addition to the traditional traders of
sweetmeats, milk, yogurt, ghee and other dairy products have been set-up. Most of
processing capacity is concentrated near larger markets and away from potential
sources of milk.
The less development of dairy sector is caused by lack of adequate planning, improper
management of distribution facilities, less trained human resource and poor medical
facilities. It is significant to study the behavior of dairy industry and investigate the
actual problems of the stakeholders. Huge investments in dairy sector projects make
invalid impact due to lack relevancy and research based decisions. This study is
commissioned by planning and evaluation department, L&DD Govt. of Punjab, to make
appropriate planning and initiate relevant and fact based decisions.
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Aim of Study:
The study aims at surveying the farmers of peri-urban areas and milk centers in urban
areas of Lahore. The study tries to investigate in the following areas:
Source of Milk Production
Average unit productivity
Cost of Milk Production
Milk Supply Channels
Management practices in peri-urban areas
By Products of Milk
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Methodology
The study attempts to investigate different variables of interest related to dairy industry.
The Lahore is selected as sample to study the research issues and collect data through
self-constructed research questionnaire. The variables are primarily extracted frommanuscript of focus group discussion, held in livestock departments. All the
stakeholders and active players of dairy industry share their observations and
experiences based on objectives set by study sponsor. The questionnaire was further
validated by pilot testing of 15 respondents and number of errors regarding language,
structure, and flow and scale options were removed.
120 owners/ managers of dairy farms and 60 milk shops/collection centre were
interviewed by professional surveyors based on system sampling. Quality of survey was
ensured through 10% back checking. All the data is analyzed on statistical software.
SPSS and results are produced for interpretation.
Target Areas:
The sample has been collected from peri-urban areas of Lahore. It includes two major
cattle colonies of Lahore including Harbanspura and Rakhchandra. Other areas where
animal population is significant includes Thokar Niaz Baig, Kamahn pind, Bund Raod,
Chungi amar sidhu and Shadara town.
The number of dairy farms visited for sample collection depends on number of animals.
There was random sampling and farms from different areas. The number of dairy farms
visited from different areas is:
Harbanspura : 30
Rakhchandra : 40
Thokar Niaz Baig : 13
Kamahn pind : 12
Bund Raod : 8
Chungi amar sidhu : 8
Shadara town : 9
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Sources of Milk Production
This section of report documents the details of various sources of milk production. It
addresses the issues like quantity of total milk production, production division by
animals and farmers, production brackets according quantity and associated variables.The analysis is produced from the views of sampled farmers, taken on self-structured
study questionnaire.
Milk Production Brackets and Farmers
Production Brackets (in liters)No of
FarmersPercent
Up to 100 76 63
100 to 200 25 21
200 to 400 13 11
400 and above 6 5Total 120 100
The classification of farmers into various brackets, based on quantity of produced milk,
gives significant insights of the dairy industry profile. The statistics show that majority of
farmers (63%) produce up to 100 liters milk daily, followed by 21% farmers, who
produce 100 to 200 liters milk daily. The larger quantity of milk production is covered by
very small proportion of dairy industry, as 11% produce 200 to 400 and 5% produce
more that 400 liters of milk daily.
Milk Production of Animals and Average Unit Productivity
Category TotalAverage
(Perfarmer )
Animalshare
Maximum
Total Milk Production 14387 120 1020
Milk from Buffaloes 11803 98 82% 1000 Milk form Cows 2587 22 18% 240
Number of Buffaloes 2132 1811.8liters
85
Number of Cows 468 411.6liters
35
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As per the sample of survey, averagely 120 liters of milk are produced by a farmer of
peri-urban areas of Lahore. The maximum limit of a farmer is 1020 liters of milk as
shown in the data of this survey. Buffaloes produce line share (98 liters averagely in a
farm), which constitutes 82% of the dairy market. Cows contribute 18% of the milk of
dairy industry; 22 liters averagely in a farm. Interestingly, population of buffaloes is quite
larger as averagely 18 buffaloes in a farm as compared to cows, which are 4 in a farm.
Maximum numbers of buffaloes in a farm are 85 and cows are 35 in the peri-urban
areas of Lahore.
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Average Unit Productivity
The average unit productivity of buffaloes stands at 11.8 liters per day. The milking
cows also got average unit productivity around 11.6 liters per day, quite similar to the
buffaloes. The productivity per unit seems negatively affected by the time period of
survey, as the season around May and June yields minimum milk of the animals.
Milk Production across the Production Brackets
ProductionBrackets
FromCows
FromBuffaloes
TotalProduction
Up to 100
litersN=76 (63%)
Average (per farmer)
9.2 38 48
Bracketproduction 700 2921 3621
Bracket share 27.10% 24.70% 25.20%
100 to 200liters
N=25 (21%)
Average(per farmer)
28 108 135
Bracketproduction
691 2688 3376
Bracket share 26.70% 22.80% 23.50%
200 to 400liters
N=13 (11%)
Average(per farmer)
53 243 295
Bracket
production
686 3154 3840
Bracket share 26.50% 26.70% 26.70%
400 and aboveN=6 (5%)
Average(per farmer)
85 507 592
Bracketproduction
510 3040 3550
Bracket share 19.70% 25.80% 24.70%
Total (allbrackets)
Average(per farmer)
22 98 120
Share in total 100% 100% 100%Total Sum 2587 11803 14387
The production of milk across the different production brackets gives very fruitful
insights. Each bracket has different statistics of production. The production bracket of
up to 100 liters covers 63% of dairy industry but contribute 25% of total milk share. The
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Cost of Milk Production
SpendingAverage
(monthly)Total
Average(Daily)
Family Labor 4204 504500 140Feed 87176 10461160 2906
Vaccination 531 62677 18Medicine/Drugs 1068 128205 36
Utility bills 1678 199650 56
Transportation 3561 423810 119Total spending in sample 16370 11780002 3274
The expenses on milk production give valued figures for the strategic planners of dairy
industry. The statistics of sampled farmers indicates that farmers spend daily average
of Rs. 140 on family labor, Rs.2906 on animal feed, Rs. 18 on vaccination and Rs.36 on
medicine/drugs and Rs.56 on utility bills.
The average cost of production per liter of milk in peri-urban areas of Lahore is Rs. 30
per litre but most of the time this cost boost up to Rs. 38 per liter due to
mismanagement of non lactating animals and poor management practices including
shortage of labor, feed, morbidity and mortality of high yield animals. It results into heftyprofit losses and results into demotivation of stakeholders especially dairy farmers. It
pushes farmers in unethical practices like adulteration of milk for compensating their
losses. Almost 23% farmers reveal insignificant expanses of medicine having less than
21 buffaloes and 06 cows. The farmers make expense of Rs. 1678 on utilities bills and
Rs. 3561 on transportation of the milk on average. Almost 29% farmers, having less
than 14 buffaloes and less than 3 cows, use their on transportation facilities, which incur
insignificant extra cost. The results report the highest spending on feed, followed by
labor, transportation, utilities and medicine. The vaccination ranked the lowest in priority
list of farmer’s spending.
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Milk Supply Channels; Cost and Sale
Milk sale across supply channels
Channels Total % of Total Halwai/collection centre
N=26 (22%)1881 13.20%
Dodhi /GawalasN=87 (72%)
11252 78.20%
OthersN=7 (6%)
1254 8.60%
Total(N=120) 14387 100.00%
The distribution of milk to different channels of supply indicate market portfolio of diary
industry. According survey statistics of sample, almost 13.20% of milk production goes
to Halwai/collection centre, 78.20% to Dodhi/Gwalas, 8.60% is soled to others sources
without any clear specification. There is large number of farmers (72%) of total sample
sale milk to Dodhi/Gawalas. It includes the farmers who sell milk by themselves and act
as Dodhi/Gawalas. Most of them reside in major cattle colonies of Peri-urban areas of
Lahore. It constitutes major percentage of total milk sold in peri-urban areas. Next to
this category, there are Halwai/milk shops that purchased milk directly from farmers. It
constitutes 22% of total sample size. Almost 6% of farmers sold milk to other sourceswhich are unknown in sample of dairy farmers. It may be assumed that this milk may be
used at home for personal use for production of milk by-products.
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SALE VALUE OF MILK
Channels Total% ofTotal
Sale Value(Rs.)
Sold to endconsumers (Rs.)
Profit perliter(Rs.)
Halwai
N=26 (22%)
1881 13.20%28 32 4
Dodhi /GawalasN=87 (72%)
11252 78.20%32 35 3
OthersN=7 (6%)
1254 8.60%- - -
Total(N=120) 14387 100.00% - - -
The analysis of cost and revenue in dairy industry gives quite alarming statistics. The
above statistics show their insignificant profitability per day as only supply expenses are
excluded from average daily revenue. If other types of cost of production are included,
the profit must go into negative. The sale value of milk by dairy farmers to
Dodhi/Gawalas is Rs.32 per liter. These prices are regulated by Government and dairy
farmers’ community in Harbanspura and Rakhchanadra cattle colonies. This milk when
sold by Dodhi/Gawalas it cost Rs.35 to end consumer. But it is not true story when we
conducted focused group with end consumers. The milk sold to civic population of
Lahore is at different tiers. The price of milk depends on the quantity of water alongwith
adulterants in it. The milk sold by same Dodhi/Gawalas to same consumer at to different
prices. If it is pure it cost Rs.40 to consumer and if consumer needed adulterated milk
with water it cost may be Rs. 28 or sometimes even less than Rs.28. The variety of milk
adulterants has been added which are changes and become worst day by day due to
resistant milk collection centre and food inspection departments. The profit margins to
different milk supply channels are very less and insignificant if milk has been sold
unadulterated.
It has been concluded that if pure milk has been sold to civic population of Lahore, it is
not possible to meet the demand of raw and unprocessed milk in Lahore. It means thatlot of malpractices are going on in Supply of milk to Lahore to create balance between
supply and demand of milk. So the the peri-urban areas of Lahore are unable to meet
the pure and hygienic supply of milk to civic population of Lahore. It does not seem
commercially viable and need huge planning and development by L&DD, Govt. of the
Punjab.
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Management Practices
Feeding:
Feeding is one of the major management practices in milk production and it contributes
much in cost of milk production. Feeding practices is quite mismanaged in peri-urbanareas of Lahore. The middlemen purchased land for fodder and grow fodder for dairy
farmers at very low cost but sell fodder on very high price to farmers. The dairy farmers
are very much dependent on middlemen as far as price of fodder is concerned.
Sometimes quality of green fodder is very poor and it is consumable for animals due to
seasonal and transportation factors. The transportation of fodder is another major
constraints and it cost much to farmers which turns into high cost of production and very
low profit margins for poor farmers.
The other feeding sources are also involved including high pretentious diet to milking
animals to increase milk yield. But unluckily it is so expensive that it cannot be
affordable to all farmers in peri-urban areas. The modern scientific feeding based on
balanced ration is not practiced due to lack of awareness and unavailability of skilled
labor in these areas.
Chuffing of fodders:
The green fodder is commonly used in peri-urban areas but if it is used as such after
harvesting, it increases the wastage by milking animals. The chuffing of fodder is
important to reduce the wastage. The fodder is chuffed with chuffing machine with
electric motors. Some farmers have their individual machine if number of animals more
than 40 at one farm. The small farmers cannot afford their individual chuffing machine
and group of small farmers purchased shared machine to reduce the cost of electricity
bills and maintenance cost of machine.
Watering:
The animals’ milk yield is very much dependent on good feeding, watering and washing
facilities. Unfortunately in peri-urban areas of Lahore are lacking with poor infrastructure
including poor and dirty water supply. The cattle colonies of Peri-urban have water
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supply system for animals and human consumption but this system become obsolete
and poorly managed. Some farmers used their own electric motors for increase of water
supply. The water consumed y animals are mixed with sewerage and causing lot of
diseases in animals some of which are of zoonotic importance. The abundant supply of
clean water is very much necessary for high milk yield and profit margins.
Washing:
Due to poor water supply system most of washing of animals is in dirty ponds which are
full of lots of disease causative agents including protozoa, helmenthesis, bacterias,
viruses etc. The disease prevalence is very high in peri-urban areas and main reason is
poor sanitation and washing areas. There are no biosecurities measures adopted in
cattle colonies. It results into great epidemics and public health losses in peri-urban
areas.
Milking Methods:
The modern dairy sector of the world shifted from traditional milking methods from hand
to modern milking methods from machine. In peri-urban areas of Lahore still farmers
milk their animals through hand. The major issues in milking from hands are low milk
ejection and variation in milking styles which increases the cases of mastitis in animals.
Due to mastitis farmers looses very expensive animals and results into low overall milk
production of farm and long term losses. Another factor which causes serious losses is
use of oxytocin for milk ejection which is only practiced in milking from hands. The
transfer of milk adulterants is also very much common due to unhygienic environment
created by farmers in this milking method.
Mechanization and infrastructure:
Most of the farms in peri-urban areas are unmachanized and farmers are totally
unaware from the concept of mechanization. According to group of farmers, there is
poor infrastructure in these areas including roads, sanitation system, transportation
facilities, and health care system for farmers as well as for animals. Without proper
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infrastructure, discussion about mechanization is useless. Mechanization is very low in
priority list of farmers and stakeholders.
Health Services:
There are small dispensaries in some peri-urban areas listed in survey and most of the
areas are neglected. Those areas having dispensaries they also have lots of issues
including unavailability of medicine, vaccines, doctors and consultation. The veterinary
assistants and peons are available to provide consultancy and write only prescription. It
results into increase in cost of milk production due to consultation charges from private
doctor, medicine cost and vaccination cost. It definitely results into low profit margins for
farmers.
Insemination Services:
The use of artificial insemination is fruitful tool to improve the breeding and genetic
potential of animals. But unfortunately it is not practicing very much in peri-urban areas.
It is little bit used in cows due to more conception rate in cows but according to farmers
it is not useful in buffaloes. They used buffaloes bull for breeding from their own farms.
It is not feasible to exploits the full potential of high milk producing animals in peri-urban
areas.
Breeds of Cows and Buffaloes;
Different breeds of buffaloes and cows are available in peri-urban areas. But there is no
exact breed record available to farmers. The common breeds of buffaloes are Nili, Ravi
and Nili Ravi. The breeds of cows are Sahiwal and cross breed cows. But very low
concentration is paid on breeding and genetics of animals to improve milk production.
Labor Management:
Labor is very important factor in dairy business in peri-urban areas. Dairy business is
family dependent labor but problem is lack of human resource management practices in
this sector which results in low performance of labor working in peri-urban areas. Labor
productivity is low due to lack of trained and skilled labor. There is no proper training
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and extension facilities for farmers. The compensation to labor is very poor and most of
people are hand to mouth and they are just killing their time. It results into lack of
interests and commitment to their business ultimately lead to poor performance of dairy
sector.
No. of Labor and No of animal Ratio:
The number of labor and animal ratio is 1:8. There is one person responsible for eight
animals at form. This ratio can be less by improving management practices and
decreasing number of animals. The areas of concerns are modern milking methods,
feeding practices and mechanization at farms.
Record keeping:
It is important to keep records of dairy farms to improve dairy economics. But it is most
ignoring areas in peri-urban areas. They don’t have any records of feed consumption,
feed cost, disease rates, vaccination schedule, Financial statements, Cost of milk
production, sale value of milk, Average unit productivity and profitability of farmers. Most
of them are unorganized and they are not interested in record keeping. It results in poor
planning of resources and their utilization in effective way to get high profit margins by
reducing cost and disease prevalence.
Management of Non lactating animals:
Some of the farmers keep non-lactating animals at their farms to increase the feeding
costs, and all others cost which disturb financial dynamics of the farms. Most of the
farmers sell their non lactating animals which sometimes results into permanent loss of
high productive breeds of animals.
Farmers Community:
The farmers keeping the milking animals in peri-urban have family businesses and them
and their families are involved in this business from so many years. The land occupied
by farmers in two major cattle colonies including Harbanspura and Rakhchandra are
donated by government for milk production. These reforms are made by government
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after evacuating animals from urban areas. Some farmers are literate and they have
some awareness regarding best management practices but most of them are under
matric and middle and don’t know to write and read material regarding their profession.
Most of the farms are working under family labor environment.
Milk Supply System:
Milk is produced from dairy farmers in variable quantity depending on number of milking
animals and better management practices. Dodhi/Gawals collects 60-70% of from dairy
farmers in peri-urban areas. Milk collected from Dodhi/Gawals is distributed by different
channels. The 70% of milk collected from them are distributed to End consumer as
home delivery because civic population of Lahore mostly consumed milk from
Dodhi/Gawals. The major issues in this milk are adulteration because transportation
facilities are very poor and there is no cold storage supply chain so far is available. As
we know milk is perishable commodity and without proper storage facilities it results into
adulteration. But from this survey it came to know that 90% of milk adulteration is
deliberately caused by Dodhi/Gawals to meet their supply targets.
The milk produced from peri-urban areas and small cities near Lahore are unable to
fulfill the demand of civic population of Lahore. It means there is adverse imbalance in
supply and demand of milk in Lahore. But we cannot quantify the exact quantity of milk
coming from peri-urban areas and areas around Lahore due to shortage of time and
resources. In future it needs further investigation to pinpoint the exact percentage and
quantity to make better policies to balance the supply-demand curve of milk in Lahore.
The milk collected from Dodhi / Gawalas is also distributed from other channels
including Whole sale milk shops and milk sale points in urban areas of Lahore. It
includes rest of 30% of milk supply by Dodhi / Gawalas. This milk collected by these
milk shops ultimately supplied to end consumer.
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The halwai and hotels are also part of milk supply channels in peri-urban areas of
Lahore. It constitutes 10-20% of milk supplied. These halwai and hotels processed this
milk into different milk by-products or milk directly consumed by consumers.
The milk in peri-urban areas are also collected by milk collectors and transported to milk
collection centres of milk companies including Nestle, Chaudary Dairy and Engro foods.
It constitutes rest of 5-10% of milk collected in peri-urban areas of Lahore.
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Milk By-Products
Milk consumption across the categories of purchasers
Categories of milk purchasers Total milk
Used for by
products
Sold to end
users
up to 100 litersN=6 (10%)
Average 68.629.6
(43%)39
(57%)Sum of thiscategory
412 178 234
Share of thiscategory
1.90%
100 to 200liters
N=24(40%)
Average 17186
(50%)84
(49%)Sum of thiscategory
4110 2075 2035
Share of thiscategory
18.50%
300 to 400litersN=15(22%)
Average 318107
(34%)211
(65%)Sum of thiscategory
4783 1610 3173
Share of thiscategory
21.50%
Above 400
litersN=15(28%)
Average 862301
(35%)560
(62%)Sum of this
category 12930 4520 8410Share of thiscategory
58.20%
TotalN=60(100%)
Average 370139
(38%)230
(62%)Sum of thiscategory
22235 8383 13852
Share of thiscategory
100.00% 100.00% 100.00%
According to conducted survey of sample milk purchasers/collection centers, almost
10% purchase up to 100 liters, 40% purchase 100 to 200 liters, 22% purchase 300 to
400 liters and 28% buy more than 400 liters milk daily. 10% milk centers buys averagely
68 liter daily, where they use 30 liters for by products and rest 38 liters sale to end users
of milk. This category of milk centers buys only 2% total centre market of Lahore. 40%
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of milk centers make purchase of 171 liters daily on average, where 86 liters are used
for making by-products and 84% liters are sold to end users. This category has 18%
share of milk purchase in dairy market. 22% milk centers purchase daily 318 liters on
average, where 107 liter consumed for developing by-products and 211 liters are sold
for general users with 21% market share. 28% milk centers hold largest market share of
58% with 12930 liters daily purchase on average. They make various dairy products
from 4520 liters and make sale of rest 8410 liters.
Yogurt production across the categories of purchasers
Categories of milk purchasers Production Daily in liter Price per liter
up to 100 literN=6 (10%)
Average 26.5
38.6
Sum of this
category 159Share of thiscategory
2.50%
100 to 200 literN=24(40%)
Average 75.3
38.6Sum of thiscategory
1732
Share of thiscategory
26.90%
300 to 400 liters
N=15(25%)
Average 95.8
38.5Sum of thiscategory
1437
Share of thiscategory
22.40%
Above 400 litersN=15(25%)
Average 238.5
39.1Sum of thiscategory
3100
Share of this 48.20%category
Total
N=60(100%)
Average 112.8
38.7Sum of thiscategory
6428
Share of thiscategory
100.00%
The yogurt is most prominent by-product in the dairy industry of Punjab. Milk centre
purchase up to 100 liter of milk, produce 26 Kgs of yogurt daily on average, with 2.5%
share of total yogurt market. The milk centre of 100 to 200 liters produce 75 Kgs yogurt
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daily on average, with 27% market share. The purchasers of about 400 liter milk, use 95
liter for yogurt production, making 22% yogurt market share. The milk centers, buy
above 400 liters milk daily, consume 238 liters daily for yogurt production. Averagely,
the milk centers produce 113 Kgs of yogurt daily and sale on the price varies from 38 to
39 rupees.
Production and sale of other by-products
Types of by productsDaily
ProductionSaleprice
Butter in Kg(10%)
Average 85 250Sum of this category 170Share of this category 9.90%
Cheese inKg
(4%)
Average 32.5 135Sum of this category 65
Share of this category 3.80%
Ghee in Kg(2%)
Average 12.5 350Sum of this category 25Share of this category 1.50%
Flavoredmilk in liter(73%)
Average 89.3 25.7Sum of this category 1250Share of this category 72.70%
Khoya in Kg(12%)
Average 105 233Sum of this category 210Share of this category 12.20%
Total
Average 78.2
Sum of all categories 1720
Along with yogurt, numbers of other dairy products are produced in urban and per-urban
areas of Lahore. Among milk centers of Lahore, 10% produce butter, 04% Cheese, 02%
Ghee, 73% flavored milk and 12% produce Khoya. 85Kg butter is averagely produced
constituting 10% of by-products market other Yogurt. Butter is sold at Rs. 250 per kg.
Cheese contribute 4% share with average production 32 kg by cheese producers.
Cheese is being sold at Rs. 135 per kg. Very few milk centers produce Ghee , whichstands almost 1.5% market share of Ghee producers, with 25kg average production,
sold at Rs. 360 per kg. Majority of milk centers produced 89 liters flavored milk daily on
average, taking 72% share of diary by-products, sold at Rs. 25 per liter. Khoya also
have significant share of 12% in dairy by-products with average daily production of 105
kgs, which is sold at Rs. 233 per kg by Khua producers.
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Major Findings
Dairy industry is a labor-intensive business with lot hygienic considerations in milk
transportation. The Pakistan is rich in dairy industry as allied to agriculture and based in
70% rural population of the country. Lack of training and dairy related education hinders
opportunity of value addition with undue cost of poor transportation, low quality and
mismanaged distribution. Lack of marketing and supply chain in dairy industry is
another bottleneck of development.
This survey brings forward the valued findings, which may help the planning
departments, key stakeholders, policy makers and other associated to take effective
decisions in the operations of dairy industry.
1. The proportion of small milk producers is quite high, which hinders the
economies of scale and profitability in the dairy industry
2. 82% milk is contributed by buffaloes with averagely 18 buffaloes with one farmer,
while 4 cows are averagely owned by one farmer with 18% share in the milk
industry. Maximum buffaloes are 85 and cows are 35 with a farmer
3. Average milk production of farmer is 120 liters. Further segregation reveals that
63% farmer produce 48 liters, 21% produce 135 liters, 11% produce 295 liters
and 5% produce 592 liters on average daily.
4. The average unit productivity of milking animals in peri-urban areas of Lahore is
11.8 liters milk per day.
5. The buffaloes and cows have insignificant difference in quantity of milk on
average daily.
6. The average spending of a farmer is 16370 per month and Rs. 3274 per day.
The farmers spend daily Rs. 140 on labor, Rs. 2906 on feed, Rs. 18 onvaccination, Rs. 36 on medicine, Rs. 56 on utility bills and Rs. 119 on
transportation of milk.
7. Averagely, 370 liters milk is purchased daily by a milk centre, where 38% is
consumed for making by products and rest 68% is sold to consumers.
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8. Almost 10% milk centers purchase averagely 68 liters of milks, using 43% for
making by products and rest 57% is sold to consumers. 40% milk centers with
18% market share, purchase 171 liters daily on average, consume 51% for by
products and sale rest 50% to end users.
9. 22% milk centers buy 318 liters milk daily on average, consuming 34% for by
products and 65% for general sale. 28% milk centers purchase in bulk like 862
liters daily on average, utilizing 37% for by-products and rest 63% sold to general
users
10.Milk centers of Lahore reported yogurt as primary by-product produce from the
milk. Rate of yogurt production varieties as: buyer of up to 100 liters milk,
produce 26 Kgs, 100-200 liters produce 75Kgs, 300-400 liters produce 95Kgs
and milk centers take above 400 liters milk daily 238 Kgs yogurt daily on
average. At aggregate, a milk centre produce 112 kgs yogurt daily on average
and sale on Rs. 38 per Kg
11.Among other types of by-products, 10% milk centers produce 85Kg butter on
average. 04% produce 32 Kgs cheese, 02% produce 12Kgs Ghee, 73% produce
89 liters flavored milk and 12% produce 105 kgs Khoya on average daily.
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Recommendations
1. Large umbers of small farmers need to be given extensive training in the area of
marketing, management and supply chain2. Farmers need to be taught scientific method of feeding, fed combinations and
other measure to raise milk production.
3. Latest sanitation procedures with technology application need to be introduced
4. New breeds and genetic combinations need to be introduced to have more
healthier and productive animals
5. Coordination between farmers and veterinary officers need to be drastically
increased
6. Environment related coaching is very much required for farmers
7. Government credit schemes should be offered for construction of sheds,
purchase of transportation and new milking animals
8. Government promote milk and other value added dairy products in the domestic
as well as international markets;
9. promote development and up-gradation of dairy supply chain in Pakistan by
supporting and facilitating the farmers, processors and other stakeholders across
the value chain;
10.initiate and support interventions across the dairy value chain to enhance sector
competitiveness through innovations and research;
11.promote technology development, transfer, assimilation, streamlining, acquiring
and/or up-gradation across dairy value chain by undertaking new initiatives;
12.Government introduce international best management practices for better
productivity and operational efficiencies;
13.Government initiate need based training and development programs of human
resource working in dairy industry.
14.The personnel development program should be designed to maximize the
interactions between discipline specialists and disciplines so that impact of the
training program is long-term. Thus it is imperative to engage local training
institutes to ensure the conduction and implementation of training program
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References
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