Pakistan's Dairy Industry: A Comprehensive Overview

Pakistan's dairy industry is a cornerstone of its agricultural sector, supported by a substantial dairy cattle population of 49.6 million. This extensive livestock base enables the country to produce approximately 42 million metric tons of milk annually. However, only about 5% of this milk is processed formally, equating to around 2.1 million metric tons, mainly serving urban areas through established distribution networks.

Milk Production and Processing

The processing segment of the industry remains limited and focused on urban markets. Formal milk processing is crucial for ensuring the availability of dairy products like pasteurized and UHT milk in cities, while rural areas depend largely on informal channels.

Cheese, Milk Powder, and Whey Production

Annually, Pakistan produces approximately 10,000 metric tons of cheese, 160,000 metric tons of milk powder, and 20,000 metric tons of whey. These products are essential for extending the shelf life of dairy items and diversifying consumer options.

Key Dairy Enterprises

Major players such as Engro Foods, Nestlé Pakistan, and Haleeb Foods play critical roles in ensuring a steady supply of dairy products nationwide. Prominent dairy farms like JK Dairy Farms and Nishat Dairy (Pvt) Ltd. significantly contribute to milk processing and retail.

Exports and Imports

Pakistan exports about 40,000 metric tons of dairy products annually, primarily to neighboring regions and the Middle East. To meet domestic consumption needs, the country imports around 50,000 metric tons of value-added dairy products, including cheese and flavored milk.

Significant Dairy Market Events

Recent developments include a collaboration with Italy to enhance dairy processing technologies, supported by Federal Minister for National Food Security and Research, Rana Tanveer Hussain. In 2024, the import of dairy products from Belarus increased threefold, reflecting strengthened trade relations. Additionally, discussions with Federal Minister Ahsan Iqbal have focused on reducing the general sales tax on packaged milk from 18% to 10%. The Competition Appellate Tribunal upheld an antitrust decision against major dairy farmer associations in Karachi for milk price collusion, marking a significant legal event in the industry.

Global Impact

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

Challenges

The industry faces several challenges, including significant milk price hikes driven by rising production and transportation costs. In Hyderabad, milk production has dropped significantly, causing many smaller dairies to close. 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 led to 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 reach $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 mitigate potential food supply disruptions due to regional conflicts.

Camel Milk Production

Pakistan is one of 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, providing market-oriented training to benefit various stakeholders.

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 accounting for 44.41 million tonnes and cows for 28.10 million tonnes. Pakistani dairy firms have export capabilities and meet international quality and Halal requirements. Punjab delegation examined China's national big-data pilot zone, expressing interest in developing further digital cooperation between Pakistan and China, saying that data technologies could support Pakistan’s development needs and help Punjab address smog through stronger environmental monitoring and control.

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