Jassar Farms

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.

Acumen Fund just issued a press release announcing new investments in Pakistan: Jassar Farms and AMC.

We’ve talked previously about Jassar Farms in the context of our new Agriculture Portfolio. Jassar Farms is focused on producing high quality, affordable inputs to help poor farmers improve breeding of livestock and increase milk productivity.

Our latest investment in housing is Ansar Management Company (AMC), a housing development company that builds off our past work with Saiban in Pakistan to create much-needed housing for low-income consumers.  As much as houses and infrastructure, AMC is focused on building community — the company is making sure residents are invested in living there, creating ownership in the truest sense of the word.

AMC represents the evolution of a rising leader as well. The entrepreneur behind the investment is Jawad Aslam, a former Acumen Fund Fellow, who has taken his learning and commitment (he is building a home in the community for his own family) to start AMC. By investing capital (and giving him access to additional Fellows to support his work), Acumen Fund is betting on his ability to succeed.

Kyle is a summer associate in the Pakistan office for Acumen Fund.  He is also a Master of International Affairs candidate at Columbia University’s School of International and Public Affairs.  Prior to graduate school, Kyle worked as a management consultant at The Lucas Group in Boston and as a research assistant at MIT’s Security Studies Program.  He holds a BA in Middle East Studies and Politics from The Gallatin School of Individualized Study at New York University.

Shahzad Iqbal gazed across Jassar Farm’s sprouting field of maize deep in rural Punjab where a new sprinkler system sputtered around in endless circles.  Without warning, he kicked off his sandals, rolled up his pressed chinos, and bounded through the muddy field toward the device, narrowly missing the rotating blast of water.  The rest of the management team, myself, and a pack of local villagers watched from a safe distance as the CEO of the Farms wrestled the beast into a position he found more agreeable.  After instructing his staff member on how to properly set up the system, he returned grinning, feet encased in rich mud.  “Look how beautifully it works. See the quality of those plants?  Never before in these fields.”

Ensuring proper plant quality to use as cattle feed is part of any Pakistani dairy farmer’s job, but then Shahzad Iqbal is not your average Pakistani farmer.  After graduating with an MBA from Pakistan’s elite Lahore University of Management Science (LUMS) at just 22 years of age, he began a 16-year career international climb through the operations of Coca-Cola, PepsiCo, and British American Tobacco.  Before the age of 38, he sat at Union Bank where he successfully managed a team of over 2,500 responsible for 40% of all profit.  He was at the top of his game—highly educated, well paid, and well connected.

Then in 2007, Iqbal unexpectedly quit his job at the bank.  In a crisis of conscience, he realized that the corporate executive lifestyle was not compensating for his growing sense of personal mission to help his largely impoverished homeland of Pakistan.  The idea of Jassar Farms was born soon after, commencing months of intense research and a feverish search for financing until Acumen signed on.

As Batool Hassan eloquently described in a previous post, it is common for rural Pakistanis to own a few cows but the milk productivity of these animals is often up to a fifth lower than their cousins in more developed economies.  The disparity emerges from the highly advanced selective breeding techniques that Western farmers have developed and implemented.  With financing from Acumen Fund, however, Jassar Farms is playing catch-up by importing high-grade cow semen and embryos to breed a more productive dairy herd.  At the same time, it will sell quality semen produced on the farm to local farmers at affordable prices.  Within a few years, the Farm expects to multiply the amount of milk a poor Pakistani farmer can produce by several times.

From an American perspective, Iqbal fits a familiar archetype: Banker becomes disillusioned, quits his or her job, and joins the ministry or becomes a writer  (or starts a little non-profit call Acumen Fund).

But Pakistan is different.  As a Summer Associate without any prior experience in Pakistan, I did not fully understand Iqbal’s story until I found out that my own two-week project on the farm was longer than most urban Pakistanis will spend outside major cities in their entire lives.  By simple observation, it becomes clear that Pakistan’s disparity in wealth positively correlates with the urban and rural divide.

In many ways, Iqbal has become an outlier, spending most of the last three years out in the cow pens and hay fields of Jassar Farms with the goal of improving lives of Pakistan’s poor dairy farmers. “I’m completely mad.  You have to be in order to do this,” Iqbal disclosed with some measure of pride as he sat in the 120-degree heat at the farm.

Acumen Fund’s model of patient capital assumes that there are talented and passionate entrepreneurs who want to roll up their chinos to lift their countries up.  In the case of Pakistan and its divided culture, finding this type of leader is often one of Acumen Fund’s greatest challenges.  As Iqbal began washing his feet in a nearby irrigation canal, however, he proved that with a little bit of “madness” nothing is impossible.

“This looks just like South Jersey!” In true Acumen fashion, I had an “Aha” moment driving through rural Punjab on the way to see Acumen Pakistan’s newest investment, Jassar Farms. Located two and a half hours outside Lahore in Narowal, the region is surrounded on three sides by India and is only three kilometers from the border. So why did it look like South Jersey? Punjab is the breadbasket of Pakistan with a beautiful sea of green fields on both sides. As we drove deeper into the heart of Punjab, we passed fields of rice and wheat and sugar cane, all sporadically peppered with brick kilns. Even at the farm itself, spread across 250 acres of land, there were fields of sorghum, alfalfa, and corn, all being grown to process into livestock feed at the farm. At the farm, I met up with Shehzad Iqbal, social entrepreneur and CEO of Jassar Farms who had a thing or two to share about dairy farming in Pakistan and the social impact of this new line of business. Jassar Farms is a corporate dairy farming business focused on dairy and breed improvement of poor livestock farmers aiming to increase milk productivity. Here are a few interesting facts about dairy farming in Pakistan:

• Pakistan is the 5th largest producer of milk worldwide, yet one cow has the productivity level of only 1/5th of a Western cow.
• On average, the milk production of one cow is approximately 1,800 liters of milk per year.
• As a comparison, one western cow has a milk yield in the range of 8000 – 10000 liters per year.
• In the normal 9-10 year lifespan of a cow, she can give birth 9 times in her lifecycle and is lactating 270 - 305 days per year.
• The milk producing livestock in Pakistan is divided almost equally between buffalo and cow. Pakistan is among the top producers of buffalo milk globally but herds most commonly suffer from poor farm care, poor quality feed and lack breed improvement. While buffalo breed improvement could reap great benefits, breed enhancement through artificial insemination has been less studied in buffalos as compared to cows, worldwide.
• Through experiments in artificial insemination and other methods of livestock breed enhancement, there is strong potential to improve the gene pool of cattle offspring.
• If a cow is on average producing 1,800 liters of milk per year and it is artificially inseminated with a bull who’s mother and grandmother averaged, were producing for example, 10,000 liters of milk per year, then the cow’s female offspring will have the genetic potential to produce the average of the two (10,000 + 1,800)/2 = 5,900) and thereby slowly improve the milk production capability generationally.

This is where Shahzad really explained the social impact of the business idea. In the Pakistan agriculture sector, over 75% of livestock owners are poor farmers owning less than four cows.

The cost of importing high quality bull semen doses costs between $75-$100 and is essentially unaffordable to rural, dairy farmers who own 2-5 cows per household. Shahzad gave the example of a local farmer, Mohammad Butta, who owns two cows and has a family of five. Mohammad milks the cows in the morning and then sets off to work his fields. With a family of five and a household income of $75 per month, he cannot afford the high cost of imported semen dosages. So by producing semen doses locally and making it affordable to the rural livestock farmer, Jassar Farms has the potential to increase incomes of farmers from increased milk yields.

This is the first Acumen Fund investment in agriculture and specifically in the livestock and diary space and it will be interesting to see the value and impact this new business innovation may yield.