Productivity and Business Environment Factor Conditions Related and Supporting Industries Demand Conditions Country Strategy A local context and rules that encourages investment and sustained productivity improvement – e.g., Intellectual property protection Meritocratic incentive systems across all major institutions Open and vigorous local competition
Livestock Development Project was started in 1975 as an umbrella pilot project in some districts of all four provinces with an investment of PKR 78.4 M
It helped in creating capacity to process nearly one M Liters of milk per day
Currently Nestle, occupies the largest market share of UHT milk in the country
collecting milk from 130,000 farmers in 3000 villages in Punjab Province.
The company also owns the biggest milk collection network, collecting 1 M liters of milk a day
Engro, has recently entered into the market with huge investment
Currently, there are 44 milk plants in the country with installed capacity of 5 M litres per day
Only 13 plants are operational with about 40% capacity utilization in total.
Among these, the installed milk powder processing capacity is about 100,000 T per year
plants operate at below 40% capacity due to competition with cheap milk powder dumped from European Union (EU) countries which offer export subsidies.
Imported milk powder from EU is USD 1000 per tonne compared to USD 1920 for local product.
The EU is offering an export subsidy of USD 660 per tonne for milk powder
Productivity and Business Environment Factor Conditions Related and Supporting Industries Demand Conditions Firm Strategy Presence of high quality, specialized inputs available to firms – Human resources – Capital resources – Physical infrastructure – Administrative infrastructure (e.g. business registration, rules, licensing, property rights) – Information infrastructure – Scientific and technological infrastructure – Natural resources
Productivity and Business Environment Factor Conditions Related and Supporting Industries Demand Conditions Firm Strategy Sophisticated and demanding local customer's Local customer needs that anticipate those elsewhere Unusual local demand in specialized segments that can be served nationally and globally
Gulf countries imports 90 per cent of its food requirements from the West and other countries
The Arab countries' farm import bill is of more than $200 billion (Dh734 billion)
Demand for food in Arab world grew by around four per cent between 2002 and 2006.
With reduction of subsidies in the wake of WTO, the local livestock sector should have better opportunities to compete.
Productivity and Business Environment Factor Conditions Related and Supporting Industries Demand Conditions Firm Strategy Access to capable, locally based suppliers and firms in related fields Presence of clusters instead of isolated industries
While the market for UHT milk is expected to expand, there is need to diversify the products
Setting up livestock business advisory service centers will be a good investment for professionals.
Establishment of milk collection centers in the milk pockets with chillers offer a good investment
This will result in improved quality and quantity of milk
Not necessary to establish large dairy farms , to promote commercialization of dairy.
If the necessary technologies are provided and market institutions are promoted for small-scale milk producers and market agents, overall employment and income generation can be increased.
This may create a momentum for change in dairy production and marketing structure in the country, propelled by general structural changes in the agricultural sector and the economy and most production units may gradually become larger.