KARACHI  - An interview with  Syed Yawar Ali
Chairman, Pakistan Dairy
Association

THE Chairman of Pakistan Dairy Association (PDA), Syed Yawar Ali serves on the boards of various organizations including Wazir Ali Industries, and has previously served as the Managing Director of Milk Pak Ltd. Ali holds a degree in chemical engineering and a master in management from Stevens Institute of Technology. He is also Chairman of the board at Nestle Pakistan.
Q: Could you please give a brief overview of Pakistan’s dairy industry?
A: By the grace of God, Pakistan happens to be one of the top three milk producing countries in the world. We produce some 46,000 liters annually and this contributes about 11.7 per cent to the GDP. Some 35 to 40 million people are impacted by the dairy industry. The industry comprises 97% in the undocumented or loose milk economy while the remaining 3 percent represents the organized sector. About 6.5 billion liters of unprocessed milk is consumed for drinking in the country.
In my view, the dairy sector has great potential for growth and if given the right incentives, it can contribute around $4 to $6 billion annually to Pakistan’s economy. This would play a vital role in improving the life of the small farmer and our rural sector would see considerable development.
Q: Would this also attract more investment in the dairy sector?
A: Yes, certainly. Our dairy sector is ripe to attract local and foreign investment and corporate farming can be promoted on sound lines. If this happens, we could be in a position to attract investments from foreign dairy companies, as a result of which international donors  would also be encouraged to collaborate with us.
Q: How can foreign inputs help?
A: Local farmers are still not wholly aware about use of improved inputs that would increase their productivity. Some of them are so poor that they can’t even afford such inputs. The corporate dairy sector and foreign donors need to join hands to create conditions whereby these farmers can afford proper medical treatment for their dairy producing animals, be able to buy better quality feed and also spend money on milking equipment to improve yields. It is highly important for our dairy industry to increase productivity at optimal cost.  In my view the government can also play its due role here.
Q: How can our dairy farmers adopt modern methods?
A: Our dairy farmers are used to using old and worn-out methods and it is imperative that they improve and upgrade these techniques for better productivity. The government can play a role by supplying them mechanized equipment at subsidized rates. As you know, our farmers have for centuries adopted old dairy farming methods. They must change all this now if they want to compete in today’s advanced world. They must follow better animal health methods and have access to reproduction and nutrition specialists. It is the duty of both the government and the bigger companies to help the dairy farmers in this respect.
Q: What further steps can be taken in this direction?
A: You will be surprised to know that a proper census of milking animals has never taken place in the country and farmers do not have much idea about the milk yield of the animals they breed. No attention is paid to the training of farmers as well. It is only fair for the growth of any industry that the workers are properly trained.  Development of modern dairy practices involves scientific systems that must be introduced at the very basic level and this can only be done if the corporate sector is involved.
Q: How can the Dairy sector help in improving the nation’s health?
A: Our poorer classes suffer from lack of proper nourishment and milk can become one item they can afford only if the government cooperates. The industry follows a policy of selling packaged milk in quarter litre packs so that milk becomes affordable for this segment. It is all the more surprising therefore that the government wants to levy sales tax  on processed milk as this will deprive a large segment of the  population from this source of healthy nutrition . According to rough estimates, the tax would lead to a price increase of at least Rs. 15 per liter - the Rs.90 litre pack would then cost Rs.105. The cost of fresh milk would also go up by at least Rs.8 per liter. This means good quality milk would become even more out of reach of the common man. My worry is that the sale of milk and other dairy products will then decrease by some 20 per cent and there will be a reduction in government revenues rather than the expected increase. Such a tax would kill the White Revolution and reverse the conversion from processed/packaged to loose milk, which is not even taxed at any level.
Q: What are the future prospects of the dairy industry in Pakistan?
A: The dairy industry still has a long way to go. It faces a lot of problems but the small farmer has now found a reliable source of income. He can now sell the milk output he gets from his cows or buffaloes to the milk processing company and get a good price for it.
The sector is also attracting local and foreign investment. This can be further enhanced if the required support and incentives come from the government. The industry offers considerable potential for exports to countries such as Malaysia, China, Indonesia, Bangladesh and Iran. 
I must say that in the past, the then government had devised favourable policies for the dairy and livestock industry with the purpose of exploiting its potential and, as a result, revenues started to be generated by the industry. The corporate sector started supporting the industry and the quality of milk improved significantly. The demand-supply gap has reduced. Availability of better quality milk has also contributed to the overall nutrition of the impoverished class living in rural areas. We can look at India’s example where the National Dairy Plan focuses on a Minimum Pasteurization law (minimum requirement to sell milk and target minimum 70% milk as packed by 2020.
The industry in Pakistan has a long road ahead and the proposed sales tax could discourage investors from coming into the field. This, in turn, will affect small-scale dairy farmers, reduce milk consumption and damage industry growth.
Q: What do you think will be the impact of proposed sales tax on the processed milk sector?
A: I strongly believe that Pakistan’s dairy sector is ready to take a major forward leap, provided it is given the right incentives. While this requires a level playing field, of late there has been talk of  levying sales tax on the processed milk industry. In the eyes of the government, it seems, the processed milk industry can be a lucrative cash cow in terms of revenue generation. The policymakers don’t seem to realise that development in the sector would be greatly reversed through taxation and the negative impact would trickle down to the consumer.