Enhancing dairy sector export competitiveness - International Trade ...

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ENHANCING DAIRY SECTOR EXPORT COMPETITIVENESS IN PAKISTANFigure 1: Share of Processed and Raw Dairy Supplies in Domestic MarketShare in percent age8070605040302010072%6% 9%3%Processed Dry Ghee Raw SuppliesSource: Author’s calculations on the basis of data available with Small and Medium Enterprise Development Authority (SMEDA)Imported Dairy ProductsDomestic supplies of milk and other dairy products are insufficient to meet the home market’s needs andtherefore Pakistan imports dairy products from the world to bridge demand and supply gap. Some of theproducts that Pakistan imports include powdered milk (US$ 24 m in 2009, US$ 52 m in 2010, US$ 89 m in2011) from the United States, New Zealand, France, Denmark, Turkey and Singapore etc., cream powder(US$ 17 m in 2009, US$ 12 m in 2010, US$ 6.9 m in 2011) from France, Ireland, New Zealand, andMalaysia etc., cheese and curd (US$ 3.9 m in 2011) from New Zealand, Australia, Saudi Arabia andDenmark etc., milk cream (US$ 1.36 m in 2011) from U.A.E, Malaysia, and Netherlands etc., and butterand other fats and oil derived from milk (US$ 0.25 m in 2011) from Denmark, United States and Italy etc..Table 5Import of Major Dairy Products (Value/Quantity)(Value in 000’ US $, Quantity in Tons)Product 2007 2008 2009 2010 2011Powder Milk (Value) 11,342 24,200 24,390 52,152 89,128Quantity (tons) 5,604 6,882 8,192 17,731 27,706Unit cost/kg (US$) 2.02 3.52 2.98 2.94 3.22Cream Powder 30,638 1,770 17,333 12,206 6,885Quantity (tons) 10,741 711 7,017 4,049 2,224Unit cost/kg (US$) 2.85 2.49 2.47 3.01 3.10Cheese and Curd 4,111 4,666 3,412 3,476 3,933Quantity (tons) 1,355 1,485 1,103 1,117 1,215Unit cost/kg (US$) 3.03 3.14 3.09 3.11 3.24Milk Cream 7,929 809 1,087 1,561 1,354Quantity (tons) 3,407 511 656 862 801Unit cost/kg (US$) 2.33 1.58 1.66 1.81 1.69Butter and other Fat and 404 124 452 355 249OilQuantity (tons) 208 67 168 101 8921
ENHANCING DAIRY SECTOR EXPORT COMPETITIVENESS IN PAKISTANUnit cost/kg (US$) 1.94 1.85 2.69 3.51 2.80Source: Author’s calculations based on UN COMTRADE statisticsThe above statistics further provide an insight into the fact that much of domestic demand is not met fromthe domestic supplies in milk. This is either due to incapacity to fully cater to the domestic powder milkrequirements or that the country does not specialize in production of instant powder milk including coffeemate and milk for infants which is a major part of the imported powder milk. There is one other reason andthat is the high cost of establishing powder milk plants and their viability from a sustainability point of view.Instant milk is mostly required in the metropolis as it has created a large market share in these city centreswhere either the access of dodhis is limited or people consider powder milk as more hygienic and easy touse.Further to the above, many milk producing business concerns require powder milk to produce UHT milkwhich is cost effective for the producers and also complements the taste for milk. The import of powdermilk surged to US$ 89.128 million (2011) from US$ 24.39 million (2009) or by 265%, in only two yearsperiod. The rise is also reflected in the quantity wise sharp increase of 238 % in 2011 as compared to2009, which was manifested by increase in quantity to 27,706 MT in 2011 from 8,192 MT in 2009. Anotherreason that was determined during the survey appears to be the fact that during the previous years, globalmilk prices were reduced due to excess supply and therefore powder milk was available at attractiveprices. The local producers and dealers imported powder milk in sizeable quantities, as shown in abovetable, and built their stocks for use in production of UHT milk that resulted in a sharp rise in import volumesand value.The trends also reflect that the gap would further widen due to increasing demand for milk and insufficientdomestic supplies to meet the requirements of a growing population. In addition to this, other dairy valueadded products such as cream powder, cheese, milk cream and butter are imported though these couldeasily be prepared locally had the dairy industry been diversified to produce variety of value addedproducts.Figure 2: Import Trends of Major Dairy Products (Value)Value in 000 US$100,00090,00080,00070,00060,00050,00040,00030,00020,00010,00002007 2008 2009 2010 2011Powder Milk Cream Powder Cheese and Curd Milk Cream Butter, Fat, OilSource: Author’s calculations based on UN COMTRADE statistics22
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