Daily Times

Pakistan’s livestock sector, despite its potential, has remained one of the most underutilized aspects of the country’s economic landscape. The sector contributes approximately 60% toa the country’s agricultural GDP and nearly 11-12% to the national GDP. This makes it a vital part of Pakistan’s agricultural backbone, which employs around 35-40% of the national workforce. However, the informal nature of this sector has held back its true contribution to the formal economy, and most importantly, its potential for export. An estimated 8 million rural families depend on livestock for their livelihood, but much of the economic activity remains undocumented, hampering its contribution to tax revenues and international trade.

Despite Pakistan’s rich livestock resources, the sector faces significant challenges. A large portion of the country’s livestock economy operates informally, without proper documentation or regulation. This informal nature limits access to credit and formal investment opportunities, which in turn impedes modernization efforts that are necessary for the sector to become globally competitive. As a result, while neighboring countries such as India have reaped the benefits of formalizing their livestock industries, Pakistan lags behind. India, for example, has managed to generate over $4 billion in beef exports annually, despite cultural restrictions on beef consumption. Pakistan, on the other hand, has not even come close to capitalizing on its livestock resources to the same degree.

An estimated 8 million rural families depend on livestock for their livelihood, but much of the economic activity remains undocumented.

A major opportunity for Pakistan lies in the rapidly growing global demand for halal meat, a market that is estimated to be worth over $2.3 trillion. Pakistan, with its large Muslim population and halal certification systems, is ideally positioned to take advantage of this demand. However, most of Pakistan’s livestock exports still consist of live animals rather than processed products, limiting the country’s ability to add value and capture higher returns in global markets. The proximity to key markets in the Middle East, where demand for halal meat and other livestock products is especially high, should have been a natural advantage for Pakistan. Yet, outdated infrastructure, inefficient supply chains, and lack of investment in processing facilities have prevented the country from capitalizing on this potential.

One of the most glaring inefficiencies in Pakistan’s livestock sector is in milk production. Pakistan ranks as the fourth-largest milk producer in the world, with an annual production of around 61 million tons. Despite this, the country’s dairy sector remains largely untapped when it comes to exports. Most of the milk produced is consumed domestically, with very little being processed for commercial sale or export. Pakistan’s share in the global dairy export market is negligible compared to other major producers like New Zealand, which exports over $11 billion worth of dairy products annually, or the Netherlands, which generates €8 billion in dairy exports. The fragmented nature of Pakistan’s milk collection system, combined with a lack of modern infrastructure, leads to significant wastage, with estimates suggesting that 15-20% of the milk produced in Pakistan is lost due to poor handling and transportation.

Pakistan can learn valuable lessons from global dairy giants like New Zealand, the Netherlands, and Ireland, countries that have successfully built robust milk collection and processing systems. In New Zealand, for instance, dairy farmers are part of cooperatives that pool resources, modernize farming techniques, and adhere to stringent quality standards. This has allowed New Zealand to become a dominant force in global dairy exports, with highly efficient processing facilities and a strong global distribution network. Similarly, Ireland has established itself as a dairy powerhouse by focusing on value-added products such as cheese, butter, and milk powder, which not only have longer shelf lives but also command higher prices in international markets.

Closer to home, India’s dairy sector has undergone a transformation through initiatives like “Operation Flood,” launched in the 1970s, which made India the world’s largest milk producer with over 187 million tonnes of annual production. India’s dairy cooperatives, particularly Amul, serve as a model for how Pakistan could organize its dairy farmers to achieve similar success. Amul’s network of cooperatives ensures efficient milk collection, processing, and distribution, allowing India to meet domestic demand while also exporting significant quantities of value-added dairy products. Today, India’s dairy sector is not only self-sufficient but also steadily increasing its exports, despite starting from a similar position as Pakistan just a few decades ago.

The inefficiencies in Pakistan’s dairy sector stem from several factors, the most prominent being a lack of formal milk collection infrastructure. The majority of milk is produced by smallholder farmers who do not have access to cold storage facilities or proper transportation methods, leading to spoilage before the milk can even reach processing plants. Addressing this issue could dramatically increase the supply of marketable milk and reduce wastage, which currently accounts for up to 20% of production. Investment in cold storage facilities, improved transportation infrastructure, and better processing plants would allow Pakistan to capitalize on its vast milk production, not just for domestic consumption but also for export. Developing dairy cooperatives similar to India’s Amul model would enable small farmers to pool resources, negotiate better prices, and access formal banking and investment channels, thereby modernizing the sector. Pakistan’s ability to tap into the global dairy market depends on its adherence to international quality and safety standards. Countries like the Netherlands and New Zealand have set high benchmarks for dairy production, with strict quality control mechanisms that ensure their products meet the rigorous health and safety standards required by international markets such as the European Union and China. If Pakistan is to compete on a global scale, it must modernize its dairy infrastructure and implement similar quality assurance systems, including traceability and sanitary measures, to meet global expectations.

The growing demand for halal dairy products in the Middle East presents another opportunity for Pakistan. Countries such as Saudi Arabia, the UAE, and Kuwait import large quantities of dairy products due to their limited domestic production capabilities. Pakistan, with its halal certification systems and proximity to these markets, is well-positioned to become a major supplier of halal dairy products. However, without substantial investment in milk collection and processing infrastructure, it will be difficult for Pakistan to compete with established exporters like Australia, the European Union, and even India. Additionally, improved marketing and branding of Pakistani dairy products could help capture a share of the global halal dairy market, which is set to grow rapidly over the next few decades.

While the opportunities in the livestock and dairy sectors are immense, Pakistan faces several challenges that need to be addressed in order to unlock the full potential of these industries. A comprehensive SWOT analysis provides a clear picture of the sector’s strengths, weaknesses, opportunities, and threats. Strengths include Pakistan’s large livestock base and high domestic demand for halal meat and dairy products. The country’s geographic proximity to major markets like the Middle East and China also provides a logistical advantage when it comes to exporting livestock products. Pakistan’s high milk production capacity, if efficiently managed, can provide both domestic food security and export potential.

Weaknesses, however, are significant. The sector remains largely informal, limiting access to formal financing, government support, and technological advancements. Poor infrastructure, including outdated slaughterhouses, lack of cold storage, and inadequate veterinary services, further exacerbates inefficiencies. Additionally, Pakistan’s focus on exporting live animals rather than processed products significantly reduces the sector’s export value. The lack of formal milk collection systems also leads to significant wastage, preventing Pakistan from tapping into the global dairy market.

Opportunities for Pakistan lie in the growing global demand for halal meat and dairy products. By investing in infrastructure, formalizing the livestock sector, and adhering to international quality standards, Pakistan can tap into lucrative markets in the Middle East, China, and beyond. The establishment of dairy cooperatives, similar to those in India, could improve productivity and efficiency in the dairy sector, allowing Pakistan to increase its exports of value-added products such as cheese, butter, and milk powder. Moreover, leveraging the China-Pakistan Economic Corridor (CPEC) could improve transportation infrastructure, further boosting export capacity. However, Pakistan also faces threats in the form of climate change, which poses a significant risk to livestock farming due to increasing temperatures, water scarcity, and unpredictable weather patterns. International trade barriers, particularly stringent health and safety regulations in key export markets, also present challenges that Pakistan must overcome if it is to compete with global giants like Brazil, New Zealand, and Australia. Furthermore, competition from these established exporters, which have highly modernized and efficient industries, makes it crucial for Pakistan to rapidly modernize its livestock and dairy sectors.

Mr. Jawad Saleem is a financial expert and can be reached on Email: jawadsaleem.1982@gmail.com