Dairy Processing

Dairy product mostly distributed and sold in Pakistan is still fresh milk. Of the different types of processed liquid milk, pasteurized milk and UHT milk in Tetrapacks are by far the most popular products. Yogurt, butter, cheese and ice cream represent a small proportion of the processed dairy products. The informal sector produces Lassi (a drink from boiled and/or raw milk), which is very popular in the summer months. Other common indigenous milk products are boiled milk and sweetmeats produced by condensing liquid milk, which is called Khoyia (condensed milk with or without sugar).

 Only 3-4% of total milk production is processed and marketed through formal channels. For the other 97%, an extensive, multilayered distribution system of middlemen has evolved to supply milk produced for immediate consumption. Katcha Dodhies collect their milk from villages and either sell to the local market or to Pacca Dodhies. Pacca Dodhies then supply milk to distributors and retailers in urban areas, Gawallas and dairy processors. The Gawalla supplies milk directly to urban and rural households.

 Roughly 50% of the milk that is made available to the processing industry (not counting gawallas) is processed into UHT, 40% into powdered milk, and the remaining 10% into other by-products.

SUPPLY - DEMAND GAP AND PROJECTIONS FOR UHT PROCESSED MILK

The production (supply) and consumption (demand) for milk and milk products in Pakistan is characterized by conflicting seasonal fluctuations. Milk production is at its maximum during the period between January and April and at its minimum during May - August when fodder is limited. It is estimated that only 45% of the milk produced is actually available for sale. Of the milk that is sold by farmers, an additional 15-19% is wasted enroute-to-market due to spoilage from lack of proper cooling, storage, and transport systems. In total, 55-60% of current milk production is lost from potential income generation and value addition.

Research by LUMS

 According to a report prepared by Unilever Pakistan Limited, titled: Modern Dairy Technology and Prospects for Growth, The packaged milk market is estimated at 200 million liters per annum, valued at over Rs.6 billion, with a yearly growth rate of close to 20 percent over the last few years.

 Despite rigid quality testing and payment according to butterfat content, plants procure the major part of their raw milk through private milk collectors. This leads to difficulties during the lean production season when the supply gap results in price increase, which the manufacturers are not generally willing or able to pay. To improve the handling of raw milk and achieve a better quality for processing at the plant site, some dairy plants have started to equip milk collection centres with chilling units and to use insulated road tankers for bulk transport from the centres to the plant. This enables them to buy milk directly from the katcha dodhis. Some plants already collect 80% of their procurement themselves. Large-scale collectors supply the balance milk.