Abstract
Milk production in Pakistan is dominated by smallholders. More than 8.5 million families raise cattle and buffaloes
and a vast majority (>83%) have less than 6 animals (all ages) per household. Many of these smallholders are
subsistence farmers and thus do not proactively seek to improve the productivity of their animals. Economic
pressures and shrinking common grazing areas are forcing these subsistence smallholders into market oriented
smallholders in rural areas where there is a market for milk. Demand of dairy industry for raw milk is increasing @
20% annually. This demand however, cannot be met by just emphasizing improved milk production from the
smallholder dairy farmers. With increased international prices and demand for milk and dairy products, many big
investors have started planning investment in dairy farming in the country. Government has also announced
incentives for setting up corporate livestock farms (ClF) including permission for 100 % foreign equity; local or
foreign, private or public limited companies can invest in corporate farming; no government sanction is required
except registration with Board of Investment; availability of liberal credit; no restriction on size of farm; possibility
of lease or purchase of state land; application of Agriculture Income Tax regime on incomes from ClF; exemption
of dividends from tax; exemption of duty on transfer of land and zero-rated duty on import of machinery and
equipment not manufactured locally, are some of the examples of incentives that may be availed by investors. A
few corporate dairy farms have already been set up and a few more are in the construction phase. Un-availability
of animals of high production potential from a known source in the country has resulted in import of animals from
abroad for establishing these farms. These imported animals suffer from adaptability problems and are
particularly prone to tick borne diseases and foot and mouth disease. The success of these corporate livestock
farms will depend upon the professional competence of the farm management. So far almost everyone has hired
managers from abroad. Success of these large dairy farms will also be directly correlated to the degree of
mechanization at the farm particularly in machine milking, fodder cutting and silage making. The cost of
production of milk at these corporate farms is expected to be higher than the one seen at smallholders' farms.
However, availability of better quality milk in sizeable quantity from a single source will result in payment of higher
prices for milk from these corporate dairy farms by the dairy industry. Many of these corporate entities will also
directly enter into processing and marketing themselves.
