EDITORIAL: Dairy and livestock farmers demanding a seat at the policy table are asking for something considerably more fundamental than another increase in the official price of milk. Their complaint goes to the economics of producing it. Feed, fodder, electricity, medicines, vaccines, labour and transport all carry costs that producers must absorb, while government price controls can restrict what they receive for the final product.
A pricing regime that ignores this relationship eventually leaves somebody paying the difference, and farmers cannot be expected to subsidise consumers indefinitely from their own balance sheets.
The importance of getting this right extends far beyond dairy farms. Livestock is the largest component of Pakistan’s agricultural economy, contributing 62.45 percent of agricultural value added and 14.64 percent of GDP in 2025-26.
Agriculture is often discussed primarily in terms of crops, yet livestock constitutes the larger share of the sector. Policy affecting milk and meat therefore reaches deep into rural incomes, food security, nutrition and the wider economy.
The farmers’ demand for a transparent assessment of milk-production costs consequently deserves serious consideration.
Pakistan Kissan Ittehad wants farmers, dairy experts and relevant institutions brought together to determine the actual cost of producing a litre of milk. Whether its proposed farm-gate price of Rs250 per litre and profit margin of 25-30 percent are ultimately justified should emerge from precisely such an exercise.
Producers should be required to substantiate their costs, and government should have to explain the economic basis of any price it imposes. Price-setting by administrative decree without a credible cost calculation serves neither purpose.
There is a larger policy contradiction here. Agricultural income is constitutionally outside the federal income-tax domain and subject to provincial taxation, but livestock businesses still operate within an economy where federal taxes, duties and trade policies can affect numerous inputs and commercial activities.
Government cannot influence costs through taxation and import policy, regulate prices at another point in the chain, and then expect investment and productivity to somehow take care of themselves. Policy must allow commercially viable producers the opportunity to earn a reasonable return.
That matters particularly because Pakistan needs scale and efficiency in livestock. Farmers will invest in better breeds, modern farms, cold chains, testing systems, veterinary care and more efficient production only when the expected return justifies committing capital.
Persistent pressure on margins encourages precisely the opposite behaviour: underinvestment, informality and eventually exit from the business. The consumer may enjoy an artificially restrained price temporarily, only to encounter weaker supply and poorer quality later.
The call for complete deregulation of milk and meat prices deserves careful examination rather than automatic acceptance, since food affordability remains a serious concern and markets require effective competition. But the farmers are right that consumer protection cannot rest indefinitely on forcing producers to absorb rising costs.
Government can protect vulnerable households through targeted measures while allowing prices to reflect genuine production economics more accurately. Quality enforcement and traceability should simultaneously be strengthened so that higher prices, where justified, are accompanied by safe and better products.
The immediate requirement is therefore a credible policy process with farmers sitting at the table rather than waiting outside. Government, producers, dairy experts and consumer representatives should establish verifiable production costs and determine where taxes, imports, inefficiencies and regulation are distorting the chain.
Pakistan cannot build a modern livestock industry by treating the farmer as both the investment plan and the subsidy.
Copyright Business Recorder, 2026
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