Pakistan’s dairy farms bucking a global trend

This NYTimes article discusses how a great technological break-through in breeding inputs can potentially harm the dairy industry during these times of recession. While global milk prices have tumbled during the last year or so, due to the global economic recession, more and more cows and hence milk is being produced as a result of the use of “sexed semen,” which allows for the birth of more female (i.e., milk-producing) calves.

However, in sharp contrast to global trends, in Pakistan, during the last four months, we have seen milk prices rise by at least 10%, generating a buzz in the industry with investors lining up to set up dairy farms. This is primarily because there exists a huge gap between demand and supply for processed milk in Pakistan. While the annual increase in the demand for processed milk is over 20%, the annual increase in supply is only 5%, thus driving up milk prices. This increase in milk prices in Pakistan is also incrementally altering the way the poor farmers view their livestock. Historically, livestock has been viewed as a mode of savings and a store of wealth for the poor. However, this perception is changing rapidly with farmers beginning to view their cattle holding as an increasingly viable revenue generator and a net contributor to the household income. This is leading them to take increasing interest in the well-being and efficient management of their cattle to maximize the income from milk sales. So, while the fortunes of dairy farmers globally are going through a rough patch, the poor dairy farmers in Pakistan seem to be eyeing a new ray of hope in their cattle.

Jassar Farms, Acumen’s first investment in livestock, has been one of the early adopters in the use of sexed semen in Pakistan. We have seen a success rate of over 85% with its use — with the first generation of calves projected to come into milk production during the 2nd half of FY10. This will be a key milestone in the country’s dairy industry and one of the first successful experiments with the use of sexed semen in the private sector.