Latest news with #PakistanDairyAssociation
Express Tribune
25-06-2025
- Business
- Express Tribune
Dairy sector shrinks 20% after GST blow
At high tax rates, profit margins for sellers decrease, leaving them with options to pass on the burden to consumers, compromise on the quality of products, evade taxes or find cheaper illicit goods. photo: file The government may have generated a revenue of Rs44 billion after the imposition of 18% General Sales Tax (GST) on dairy products in the last budget. However, this move has also resulted in a 20% drop in the production and sales of these products in Pakistan. Some key office-bearers of the Pakistan Dairy Association (PDA) on Tuesday told the media that since July 2024, investment of millions of dollars has stalled in the dairy sector due to rising production costs. Moreover, around 500 milk collection points — set up by dairy companies for purchasing milk from farmers — have also been shut down and 20% of the workforce has lost employment. PDA Chairman Usman Zaheer, CEO Dr Shehzad Ameen, Noor Aftab and other officials stated that over 100 developed and developing countries, including India, Bangladesh, Afghanistan, the US, and the UK, do not impose taxes on packaged milk. Where taxes are levied, the rate is usually around 5%. In response to a question, they said that before the 18% GST, the dairy sector was already contributing over Rs13.7 billion in revenue through income and super taxes. But in 2024, the sudden imposition of GST pushed the total tax revenue — income tax, super tax, and GST — up to Rs44 billion — a significant increase on the surface, but one accompanied by a dangerous decline in dairy product sales and production, which threatens the industry's sustainability. They warned that the decrease in dairy product sales will eventually reduce Federal Board of Revenue's (FBR) revenue collection and affect employment. They added that if the GST had been reduced, even higher tax revenues could have been achieved. The PDA admitted that there is a public perception that loose milk is safer than packaged milk but this is not true. In Pakistan 92% of the population uses loose milk, which poses serious health risks, while only 3% to 4% consume packaged milk. The association emphasized that taxation is a major challenge for this industry. Despite the obstacles, Pakistan's dairy sector has exported $35 million worth of packaged milk in the current fiscal year — double the amount compared to the previous year. According to the association, 45% of loose milk is unsafe, due to higher risks of bacterial contamination, whereas packaged milk meets international safety standards. The official said Rs1.3 trillion loose milk economy remains undocumented, which needs to be brought under the tax net. They also noted that Pakistan currently exports packaged milk to the Middle East, Africa, the US, and Central Asian countries, and efforts are underway to expand exports to China.
Express Tribune
25-06-2025
- Business
- Express Tribune
Dairy industry offers price cut by Rs50 if tax reduced
Listen to article Pakistan Dairy Association has offered a reduction of Rs50 per litre in milk prices, if sales tax rate is revised downwards from 18% to 5% while approving the federal budget for fiscal year 2025-26. The government's refusal to cut sales tax on packaged dairy milk in the budget has caused dismay among members of the dairy association, which has cautioned the government that its revenue collection and industry exports may go down. Tax collection on packaged dairy milk was Rs13 billion in 2023, which went significantly higher to Rs44 billion in 2024. "This is for the first time that tax hike may actually lead to a drop in tax receipts," remarked Pakistan Dairy Association Chairman Usman Zaheer, along with representatives from different dairy companies, at a press conference. He added that they had started exporting milk to the United States and Middle Eastern nations while new markets in Central Asia were also being explored. Exports of milk amounted to $15 million in 2023, which jumped up to $35 million in 2024. "We will not be able to achieve our export target of $70 million due to higher taxes," they lamented, adding that the government had agreed to reduce taxes in the budget but their proposals were not adopted. They had requested the government to slash general sales tax on dairy items (liquid and powder) from the existing 18% to 5%. The dairy association added that since the imposition of the tax in July 2024, sales volume had dropped 20% and it would continue to decline further. Reduction in sales tax to 5% from July 2025 could help volumes grow by 20%. Similarly, government revenue will rise 22% year-on-year. "The move will renew investments in farms, milk processing and exports. Lower taxes will also lead to contraction in the undocumented economy by limiting the consumption of loose milk," they stated, adding that milk prices would fall by Rs50 per litre.
Business Recorder
25-06-2025
- Business
- Business Recorder
Dairy sector urges govt to reduce ST on milk
ISLAMABAD: The formal dairy sector has requested the government to reduce sales tax on milk from 18 percent to 5 percent, through amendments in Finance Bill (2025-26), which will grow volumes up to 20 percent and increase in revenue collection by 22 percent per annum. Pakistan Dairy Association (PDA) briefed media here on Tuesday that the reduction is crucial because since imposition of tax in July 2024, volumes have declined by 20 percent and governments expected revenue collection is not likely to be achieved. The remarks were made during a media briefing held in Islamabad, attended by representatives from Friesland Campina, Tetra Pak, and Nestlé Pakistan. The industry has offered to reduce the milk prices by Rs50 for consumers if sales tax is brought down from 18 to 5 percent in budget (2025-26). It also proposed a little tax on informal sector which is paying nothing in the form of taxes to the national kitty. The industry is paying 18 percent sales tax, 4 percent further sales tax, 2.5 percent advance withholding tax on sales to un-registered persons as well as Super Tax on direct taxes sides. The PDA argued that lower taxation would not only make milk affordable and safe for the public but also revitalize the formal sector, restore investments in farmer development, and increase government revenue. Speakers emphasized that milk is considered as a zero-rated, essential food item worldwide and in more than 100 countries it is either tax exempted or subject to very little taxation including Bangladesh, India, Europe, Egypt, Sri Lanka, Indonesia and many others. They claimed that even among countries backed by the IMF, Pakistan's 18% GST on dairy is highest in the world. Talking about the challenges faced by the dairy industry in Pakistan, Usman Zaheer Ahmad, Chairman PDA claimed that, 'Due to the current taxation 20% of workers have been laid off, processing facilities are running at less than 50% capacity. Now, there is a significant risk to the nation's $30 billion dairy export potential.' The formal dairy industry has experienced a 20% decrease in milk volumes since its implementation in July 2024, which forces the industry to purchase much less from farmers. This has caused 35% of registered farmers to enter the unregulated, informal milk trade and resulted in the closure of 500 milk collection centers. 'We used to invest Rs1.3 billion annually on farmer development. Today, that support is gone,' said Dr Muhammad Nasir, Head of Corporate Affairs Pakistan at Friesland Campina. Common households are being directly impacted by the tax; the cost of packaged milk has increased from Rs280 to Rs350 per litre, making it the most expensive food item in many households. The demand has decreased by more than 20% as a result. According to the experts, 91% of milk produced in the unorganized sector does not pass compliance inspections. Dr Shehzad Amin, CEO, PDA stressed that it is unsafe to consume half of the milk, in light of the pervasiveness of malnutrition, the safe milk is a fundamental right and needs to be kept within the means of low- and middle-income families. Experts brought to attention that despite the Punjab Pasteurization Act of 2017 in place, which requires safe milk practices, we do not see implementation. Noor Aftab, Director Corporate Affairs Pakistan and MENA, Tetra Pak, questioned the rationale behind taxing the only industry making an effort to maintain public health and regulate quality. Despite these challenges, Pakistan's dairy export potential remains high. In 2023, the country exported$15 million worth of dairy products. In 2024, exports rose to $35 million, primarily to the Middle East, Africa, and the United States. 'We are meeting global standards. The same products we export are sold locally. Yet, we face the highest utility costs, lowest scale, and the most punitive taxation,' stated Imran Husain, Deputy Managing Director, Friesland Campina. With a fair tax environment and consistent government support, PDA expects the potential revenue from a formalized milk sector could multiply exponentially. Copyright Business Recorder, 2025
Business Recorder
19-06-2025
- Business
- Business Recorder
PDA seeks cut in packaged milk tax to 5pc
LAHORE: The Pakistan Dairy Association (PDA) on Wednesday urged the government to immediately reduce the 18 percent sales tax on packaged milk to just 5 percent to provide relief to consumers, stimulate industrial activity, and generate higher revenue for the national exchequer. Under the Finance Act 2024, both liquid and powdered milk have shifted from zero-rated to an 18 percent sales tax. According to PDA representatives, this rate is not only excessive but also unprecedented globally. 'No developed or developing country imposes such a high tax on a basic nutritional commodity like milk,' they said. 'Since the imposition of this tax, the price of a one-liter pack of milk has surged from Rs 280 to Rs 350. If the industry's suggestion to reduce the tax is accepted, prices could potentially drop by Rs 50 per liter,' said PDA Chairman Usman Zaheer, along with CEO Dr. Shahzad Iqbal, Dr Nasir, Mian Mitha, and Noor Aftab, while addressing a press conference. Zaheer highlighted that the formal dairy industry has already reduced its milk procurement from farmers by 20 percent due to the increased tax burden. This has forced nearly 35 percent of farmers to unregulated loose milk trade from formal market. Consequently, around 20 percent of milk collection centers have shut down, disproportionately impacting small-scale dairy farmers. In addition, farmers have lost quality and safety-based incentives worth Rs 10 to 15 per liter, while prices of loose milk have climbed by Rs 30 to 40 per liter - profits that do not benefit the producers. This policy has also discouraged farm productivity and long-term investment in the dairy sector. Citing a Nielsen study, Zaheer pointed out that two-thirds of Pakistani consumers earn less than Rs 50,000 per month. With prices now higher, many low- and middle-income families are forced to turn to loose milk which lacks quality control and safety assurances. 'Milk - one of the most nutritious staples in the average food basket - has now become unaffordable for many,' he said. PDA CEO Shahzad Iqbal added that the formal dairy industry is now facing serious setbacks and has shelved an annual investment of Rs 1.3 billion meant for farm development and support. With processing plants now operating at less than 50 percent capacity and profits under severe pressure, many companies have halted investment in branding and innovation over the past two quarters. Around 20 percent of employees in the formal dairy sector have already been laid off, and an annual Rs 400 million investment in consumer conversion programs has also been abandoned. This, Iqbal warned, is putting Pakistan's $30 billion dairy export potential at serious risk. He further said the informal sector - gawalas and shopkeepers - is now generating nearly Rs 1,319 billion annually due to the gap created by the tax on formal milk. 'The widening price gap and lack of enforcement are driving consumers toward unsafe loose milk, which not only endangers public health but also strengthens the undocumented economy,' he cautioned. Copyright Business Recorder, 2025
Business Recorder
31-05-2025
- Health
- Business Recorder
‘Access to safe milk should be considered right not a privilege'
LAHORE: Ramesh Singh Arora, Minister for Minorities & Human Rights, Punjab, has emphasized that access to safe milk should be considered a right, not a privilege. 'Every citizen deserves access to clean, safe, and nutritious milk. Unfortunately, loose milk often contains harmful adulterants like urea, posing serious health risks. Packaged milk, on the other hand, maintains strict quality standards and offers a reliable alternative. The government of Punjab is acutely aware of the province's malnutrition challenges and is committed to ensuring safe milk reaches every household. We also recognize the negative impact of the current taxation on packaged milk and are working to address this as part of our broader health and nutrition agenda.' Romina Khurshid Alam, Minister of State & Special Assistant to the Prime Minister, emphasized the essential role of milk in ensuring nutritional well-being. 'When we talk about health and nutrition, milk stands out as the one element that completes the nutrition cycle. In the fight against malnutrition, a single glass of milk can make a significant difference - it's one of the healthiest, most complete foods we can provide.' They were speaking at recently convened a national seminar in Lahore to commemorate World Milk Day under the theme 'Safe Milk, Safe Nation: Affordable Dairy for a Healthier Nation.' The Pakistan Dairy Association (PDA) hosted the event which brought together senior government officials, industry leaders, and dairy experts to advocate for a national shift toward safer, regulated milk and to explore the strategic role of the formal dairy sector in enhancing public health, food security, and sustainable economic development. 'According to WFP, stunting is costing Pakistan an estimated $6 billion annually. We must learn from global success stories. For example, China launched a school milk program in 2000 and saw measurable improvements in child growth 0.72cm in 7-year-olds and 0.46cm in 9-year-olds. They have successfully tackled malnutrition and micronutrient deficiencies through such initiatives. As Chairman of the PDA, I believe it's time we ask ourselves: what do we need to do differently to achieve the same for our children?' said Usman Zaheer, Chairman – Pakistan Dairy Association and CEO Fauji Foods Ltd. He also expressed his gratitude to key government stakeholders for their ongoing support and emphasized the urgent need to address the country's nutrition crisis through strategic interventions like school milk programs. Dr Shehzad Amin, Chief Executive Officer of Pakistan Dairy Association, opened the seminar by highlighting the central role of dairy in public health and national development. He said, 'World Milk Day is not just a celebration — it is a global moment to acknowledge nature's most complete superfood and its profound impact on nutrition, food security, livelihoods, and economic growth. Initiated by the Food and Agriculture Organization of the United Nations, this day honours the tireless efforts of millions of dairy farmers while spotlighting the sustainable development opportunities the dairy sector offers. At PDA, our mission is firmly rooted in ensuring that safe, nutritious, and affordable dairy is accessible to every citizen. We believe and advocate that safe milk is not a choice, but a fundamental right of every Pakistani.' Adding to this perspective, Noor Aftab, Director Corporate Affairs – Pakistan & MENA at Tetra Pak, highlighted the importance of innovation in dairy processing and packaging. 'Milk is more than daily nutrition — it's a cornerstone of public health, food resilience, and economic progress. Through advanced technologies and collaborative efforts, we are committed to making safe, affordable dairy accessible to every household in Pakistan,' he noted. The seminar featured in-depth discussions on regulatory reforms, standardization, certification, and enforcement mechanisms necessary to ensure the safety of milk. Key officials, Jahan Ara Wattoo, Vice Chairperson, Punjab Social Protection Authority, Dr Talat Naseer Pasha – DG PAFDA, Amina Rafique, ADG Technical, Punjab Food Authority, and Saqib Ali Ateel, Secretary for Livestock & Dairy Development, shared institutional strategies for quality assurance and public awareness. The role of the private sector in driving innovation and ensuring a consistent supply of safe milk was also a central theme. Copyright Business Recorder, 2025
