Transforming Pakistan's Dairy Sector for Growth

Milk production is a vital component of global agriculture, supporting the livelihoods, nutrition, and food security of over 750 million people (FAO, 2023). Over the past few decades, global milk output has grown substantially from 522 million tonnes in 1987 to 918 million tonnes in 2023. This increase reflects not only rising demand but also improved production and market systems. Cow milk dominates global production, accounting for 82%, followed by buffalo milk at 14%. Goats contribute about 2%, while sheep and camels together provide the remaining 1% (IFCN, 2024).

South Asia, despite having relatively lower milk yields per animal, plays a pivotal role in global dairy supply, contributing approximately 25% of the world’s milk. This regional strength stems from its vast population of dairy animals, supported by a deeply embedded culture of smallholder farming. The region is home to 21% of the global dairy animal population, comprising an estimated 745 million cattle, buffaloes, sheep, goats, and camels (FAO, 2023). India, Pakistan, and Bangladesh are major contributors, relying heavily on buffaloes and indigenous cow breeds adapted to local climates and fodder resources.

While productivity challenges persist due to constraints in feed, genetics, and veterinary services, the region has shown resilience through traditional knowledge, cooperative structures, and a growing interest in dairy innovation. The integration of small-scale farmers into dairy value chains has empowered rural communities, particularly women, by generating income and improving household nutrition. To further boost productivity and sustainability, South Asia must now focus on genetic improvements, climate-resilient dairy practices, and market access. As global demand for milk and dairy products continues to rise, South Asia’s role will be increasingly significant in shaping the future of the dairy economy.

Pakistan’s Dairy Sector: Growth, Challenges, and Regional Dynamics

Pakistan’s dairy industry is a cornerstone of its agricultural economy, with livestock contributing 60.8% to the agricultural GDP and 11.5% to the overall national GDP (Economic Survey of Pakistan, 2024). It serves as a primary source of income for over 8 million rural households, highlighting its importance in rural livelihoods and food security (Pakistan Bureau of Statistics, 2023). Pakistan is currently the fourth-largest milk producer globally, with an annual output of 65.3 million tonnes (USDA, 2024), marking a remarkable growth from just 6.6 million tonnes in the 1960s.

Over the decades, milk production has steadily increased, driven by population growth, rising demand, and expanding livestock numbers. However, a gradual shift in milk composition is noticeable. In 1985-86, buffaloes accounted for 67% of total milk production, which declined to 58% by 2024, while the share of cow milk increased from 31% to 38%. This transition reflects changing preferences and evolving farm practices. Despite this growth, 97% of milk in Pakistan is still sold raw, leading to significant post-harvest losses of 15–20% due to poor handling and inadequate cold chains (LUMS, 2023).

Provincially, Punjab dominates the sector, housing 64% of the buffalo population and producing 31.5 million litres of milk annually. Sindh follows with high per capita consumption (250 kg/year), while Khyber Pakhtunkhwa and Balochistan contribute smaller shares but remain vital in local economies (Pakistan Dairy Development Company, 2024). Yet, productivity remains a critical issue average daily milk yields are only 10 liters for buffaloes and 14 liters for cows, significantly lower than the 50–60 liters seen in European and North American herds (ICAR, 2023). Addressing this yield gap through genetic improvements, better feeding practices, and modern dairy infrastructure is essential for sustaining growth and ensuring food security.

Dairy Cooperatives and the Path to Inclusive Growth in Rural Pakistan

Dairy cooperatives are transforming Pakistan’s rural economy by enhancing farmer incomes, empowering women, and improving milk quality. One of the most promising examples comes from Vehari district, where Plan International Pakistan, in partnership with the Punjab Cooperatives Department, has launched targeted initiatives to modernize the dairy value chain.

The Milk Value Chain Project (MVCP), implemented across 100 villages, provided modern equipment, artificial insemination (AI) training, and veterinary services. A strong emphasis was placed on women’s empowerment, with over 400 women trained in livestock management (Plan International, 2024). Alongside this, the formation of Cooperative Milk Societies helped eliminate exploitative middlemen, leading to a 30% increase in farmers’ profits (Punjab Cooperatives Report, 2024). According to the Impact Assessment Report (2023), women saw a 76% rise in income, while men reported a 91% increase demonstrating the cooperative model’s broad socioeconomic impact.

The project’s success is further reflected in its tangible outcomes: 33 women-led dairy enterprises were established, milk bacterial counts dropped by 40%, and over 1,200 jobs were created, including roles for drivers, milk collectors, and sales personnel.

However, challenges persist. Low productivity remains a critical issue, with the National Dairy Council (2024) advocating the promotion of high-yield breeds like Holstein and Sahiwal and expanding AI programs. Only 3% of milk is processed into UHT milk, cheese, or powder highlighting the need for investment in processing infrastructure and tax incentives (Finance Bill, 2024). Additionally, heat stress due to climate change is reducing milk yields by up to 15%, necessitating drought-resistant fodder initiatives (University of Agriculture Faisalabad, 2023).

Looking ahead, Punjab’s 2025 expansion plan aims to replicate the Vehari model in 10 new districts and introduce digital milk collection systems, reducing spoilage and ensuring traceability (UNDP, 2024). These steps signal a promising future for inclusive, climate-resilient dairy development in Pakistan.

Conclusion

Pakistan’s dairy sector stands at a crucial juncture rich in potential yet challenged by low productivity, poor processing infrastructure, and climate vulnerabilities. As the fourth-largest milk producer globally, the country’s livestock sector contributes significantly to rural incomes, national GDP, and food security. The integration of smallholder farmers into cooperative models, as demonstrated by Plan International’s success in Vehari, has shown transformative effects: improving milk quality, raising household incomes, and empowering women through enterprise development.

However, systemic issues such as high post-harvest losses, limited milk processing, and underdeveloped cold chains hinder progress. Future efforts must prioritize genetic improvements, climate-resilient fodder systems, and market-oriented infrastructure. The replication of successful cooperative models and investment in digital systems offer pathways to inclusive growth. If supported by the right policies and investments, Pakistan’s dairy industry can become a model for sustainable, equitable, and climate-adaptive agricultural development in South Asia.

References: FAO; Economic Survey of Pakistan; Punjab Cooperatives Department; Plan International Pakistan; IFCN; USDA; LUMS; Pakistan Dairy Development Company; ICAR; National Dairy Council; University of Agriculture Faisalabad; UNDP

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the Institute of Agricultural and Resource Economics, University of Agriculture, Faisalabad, Pakistan.

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