Dearer milk: paying the price of poor regulation

Thats right. Every time dairy businessmen increase milk prices, blame them, rebuke them and admonish them. Agreed, that many of them are involved in selling adulterated milk, while others pay no heed to the price set by the governments commodity administrators.
But think again. Should all the blame be placed on industry players or the governments failure to oversee them is equally responsible.
In the list of dairy producers of the world, Pakistan stands strong at number 5, with almost all of the milk produced consumed domestically. Yet, of the 35 billion liters of milk produced annually, 97 percent passes through informal distribution channels, according to International Farm Comparison Network (IFCN).
This makes regulation almost impossible. So, its no surprise then that even though the government has mandated a price of Rs37 per liter, milkmen are demanding up to Rs50-52 for the same quantity.
And, from what it seems, the argument of dairy farmers appears quite justified. Milk producers claim that rising input prices have to be passed on if they are to remain in business.
The price of buffaloes has increased by about 50 percent over the last six months. Similarly, green fodder, food for the animals has witnessed a threefold increase over the last month.
But these are just the short end of the problem. Milk price hikes are inevitable because, Pakistan faces a shortfall of 10 percent annually between supply and demand of milk, according to a research paper published by scholars at Punjab University.
Interestingly enough, owing to a primitive supply chain, almost 20 percent of the production is wasted before it reaches the consumer. These wastages may be reduced if the cool supply chain method, whereby milk is kept cool to prolong its shelf life, is employed with the help of the government.
Plus, yields in Pakistan, averaging at about 3.5 liters per unit, are significantly lower than other dairy producing countries. Technological innovation in livestock management is yet to be seen because the 5 million cattle are very thinly distributed. The average farm has only 2 animals in Pakistan.
It is time for the government to understand that dairy farming contributes significantly to the overall output of the economy. It is also the largest employer as a sector in the economy. Initiatives in modernizing the infrastructure and supply chain will pay huge dividends in the long run.