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Cost of Milk and Meat Production & Price Decapping Prof. Dr. Talat Naseer Pasha Vice Chancellor, UVAS Lahore

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Page 1: Cost of milk and meat production

Cost of Milk and Meat Production

& Price Decapping

Prof. Dr. Talat Naseer PashaVice Chancellor, UVAS Lahore

Page 2: Cost of milk and meat production

Milk Production Models in Punjab

Traditional Rural- Subsistence dairy- Animals as cash- Surplus milk sold to dodhi/collection agent etc.

Progressive - Rural market oriented- Milk sold to Dhodhi or processor

Commercial- Purpose built through investment- Milk sold to processors or city buyers

Corporate- Purely investment based by large groups producing high quality milk- Milk sold to processors

80% 15% 5% Negligible (only 14 farms)

Source: • Sosheel SG, 2015, Milk Value Chain Analysis: Industry competitiveness and the dairy policy environment in Pakistan,

Charles Sturt University Australia (Based on real time farm economics data of 213 farmers in District Okara and Bhakkar through fortnightly recording for 3 years by ASLP Dairy Project in collaboration with L&DDD, NRSP, LDDB and Idara-e-Kisaan.

Production Cost Rs. 83.8 / Lit.

Sale PriceRs. 40-42 / Lit.

Production Cost Rs. 49.8 / Lit.

Sale PriceRs. 43-44 / Lit.

Page 3: Cost of milk and meat production

Meat Production Models in Punjab

Culled Animals/ Old Animals

Disposal- Based on sale of

old and culled animals

Small Subsistence Calf

Rearing- Based on male calves from dairy animals

Progressive/ Commercial

Fattening- Purpose built for fattening purposes

Corporate / Feedlot

Fattening- Purpose built for fattening of

50% 45% 5% Negligible (only 4 farms)

Production CostTerminal End

Sale PriceRs. 130 / Kg

Production CostRs. 228/Kg

Sale PriceRs. 130 / Kg

Production CostRs. 169 / Kg

Sale PriceRs. 145 / Kg

Production CostRs. 151 / Kg

Sale PriceRs. 165 / Kg

Page 4: Cost of milk and meat production

Impact of price capping below free market equilibrium

Supply Shortage

Inefficient market

Decrease of total economic surplus / total

welfare

Black Market is promoted and/or adulteration is

practiced

Page 5: Cost of milk and meat production

Price Decapping?

Can livestock products’ prices be de-

capped?

YES

Success example is Poultry products

Page 6: Cost of milk and meat production

Historical market prices of various food items (PKR/Kg)

Wheat Beef Mutton Chicken0

100

200

300

400

500

600

700

800

4 32 70 5035

350

750

210

1993 2015Source: Action Plan for livestock marketing systems in Pakistan, NARC 2003

875%

1093%

1071%

420%

Page 7: Cost of milk and meat production

Potential Impact of Price De-capping

Producers will get adequate price of their produce leading

towards rural prosperity & poverty alleviation

Trigger growth in milk and meat production leading

towards job creation in rural areas. Enhanced growth will

meet domestic demand

Supply chain will be strengthened leading towards

minimizing adulteration issues, avoiding black market

economy

Consumers will get healthy food items of premium quality while making them cheap in

long term

Enhanced growth will help in

tapping export market and

generate foreign exchange

Investments will be attracted in

farming/ production

Page 8: Cost of milk and meat production

Recommendations

Decapp the prices of livestock products, i.e. milk and meat

Enhance import duty on powder to the levels equal to Indian as minimum, i.e. 65%+

Incentivize small scale regional milk processing, enhance farmer access and subsidize freight

Instead of giving inputs support to farmers, give them only training and provide an enabling environment for business through market linkages. Time to redefine EXTENSION

Develop rural entrepreneurship models and integrate micro-financing in rural development programs

Page 9: Cost of milk and meat production

Recommendations

Start school milk and egg program. This will provide local market to producers and lead to poverty alleviation while also help in copping mal-nutrition

Improve consumer awareness on quality food items

Page 10: Cost of milk and meat production

Thank you for your attention

Prosperous Farmer

Healthy Pakistan


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