Pakistan's Dairy Industry: A Comprehensive Overview

Pakistan's dairy sector is an integral part of its agricultural landscape, supported by a vast dairy cattle population of 49.6 million. This robust livestock base allows the country to produce approximately 42 million metric tons of milk each year. However, formal processing accounts for only about 5% of this milk, roughly 2.1 million metric tons, primarily catering to urban areas through established distribution networks.

Milk Production and Processing

The processing segment is predominantly focused on urban markets, where formal processing ensures the availability of pasteurized and UHT milk. In contrast, rural areas rely heavily on informal channels for their dairy needs.

Cheese, Milk Powder, and Whey Production

Pakistan annually produces around 10,000 metric tons of cheese, 160,000 metric tons of milk powder, and 20,000 metric tons of whey. These products are crucial for prolonging the shelf life of dairy items and providing a variety of consumer choices.

Key Dairy Enterprises

Major corporations like Engro Foods, Nestlé Pakistan, and Haleeb Foods play pivotal roles in ensuring a consistent supply of dairy products nationwide. Additionally, prominent dairy farms such as JK Dairy Farms and Nishat Dairy (Pvt) Ltd. significantly contribute to milk processing and retail activities.

Exports and Imports

Pakistan exports approximately 40,000 metric tons of dairy products each year, primarily targeting neighboring regions and the Middle East. Conversely, to satisfy domestic consumption demands, the country imports about 50,000 metric tons of value-added dairy products, including cheese and flavored milk.

Significant Dairy Market Events

Recent notable developments include a collaboration with Italy aimed at enhancing dairy processing technologies, spearheaded by Federal Minister for National Food Security and Research, Rana Tanveer Hussain. In 2024, the import of dairy products from Belarus saw a threefold increase, indicating strengthened trade relations. Furthermore, discussions with Federal Minister Ahsan Iqbal have focused on reducing the general sales tax on packaged milk from 18% to 10%. A significant legal event occurred when the Competition Appellate Tribunal upheld an antitrust decision against major dairy farmer associations in Karachi for milk price collusion.

Global Impact

Pakistan contributes notably to global milk production growth, with a 3% increase in 2024 aligning with Asia's overall production rise. The country's status as a major buyer of Iranian dairy products has bolstered Iran's dairy exports.

Challenges

The industry faces multiple challenges, including significant milk price hikes driven by rising production and transportation costs. In Hyderabad, milk production has decreased significantly, leading to the closure of many smaller dairies. Efforts to address these challenges include an agreement with the United States to enhance agricultural collaboration, focusing on hybrid and disease-resistant crops, local vaccine production, and livestock breed improvement. The Punjab Food Authority's crackdown on food adulteration in Lahore resulted in the sealing of a restaurant and two dairy shops, with 84,000 liters of milk inspected and adulterated products disposed of.

Future Prospects

Pakistan's fodder industry aims to achieve $1 billion in exports within five years. Efforts to reform the dairy sector include plans to enhance productivity and formalize operations in the predominantly informal sector. The government has approved the export of 40 food items, including dairy products, to Gulf countries, aiming to alleviate potential food supply disruptions due to regional conflicts.

Camel Milk Production

Pakistan ranks among the leading countries in camel milk production, alongside Kenya and Somalia. Punjab has partnered with FrieslandCampina Engro Pakistan to enhance skills in the dairy sector, offering market-oriented training to benefit various stakeholders.

Opportunities and Innovations

Pakistani exporters see opportunities in China's expanding dairy market. Pakistan produced 74.69 million tonnes of milk in the 2025-26 financial year, with buffaloes contributing 44.41 million tonnes and cows 28.10 million tonnes. Pakistani dairy firms have export capabilities and meet international quality and Halal standards. A Punjab delegation examined China's national big-data pilot zone, expressing interest in further digital cooperation with China, which could support Pakistan’s development needs and help Punjab address smog through stronger environmental monitoring and control.

Despite being one of the world's large milk-producing countries, Pakistan's average milk yield remains below levels in leading dairy markets. Opportunities to broaden collaboration in the dairy sector extend beyond milk production to include value addition through processing, breeding, animal nutrition, cold-chain infrastructure, and branding. In 2026, Pakistan finalized a Material Transfer Agreement with China’s Royal Group for the export of high-value buffalo genetic material, including embryos, semen, and sexed semen.

Najam Mazari has urged the federal government to establish dedicated production areas for organic meat and dairy products. He advocated for the creation of a national platform named the Pakistan Organic and Halal Export Mission to promote organic production, assist producers with international certification, arrange quality testing and traceability, and build connections with buyers in foreign markets.