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PAKISTAN DAI RY ASSOC IATIO N

Daled: tlay 27tn,2015

Naseem Sadiq

Secrelary Livesfock and Dairy DevelopmenlCovernmenl of the Punjab

SUB.JECT: ISSUES PERTAINING TO DRV MILKAND WHEV POWDER

Dear Sir,

This is wilh reference lo your leller daled May 25m, 2015, wherein various cerlain allegations have beenmade againsf the Pakislan Dairy Associafion (PDA) and informalion has been soughf for review of theconcerned aulhorilies. On fhe very oulsel we would like 1o state on record thal our earlier leller daledMay 16tt'', 20.l5 has nol only been misunderslood bul also wrong perceplions have also been exlracfedoul of if.

Please find below the PDA's clarificalions lo fhe "revelalions" (as you have called fhem) thaf wereexlracled oul of lheleller, albeil we are surprised thal your departmenl has chosen fo read somethinginlo lhe letter which is nol fhere, as no such revelalions were made.

It was never menlioned in the letler thaf lhe milk processed by fhe Dairy processing companiesis subslitufed wilh imported milk powders. Neither was it menlioned in the lelTer that importedpowders are being used fo reconstitule and sell as milk.

The processed UHT milk is based on raw milk. On the confrary, specialized products lhat arecalegorized under the heading of lea whiteners (which is nol sold as milk) and infanl formulasare processed using imported milk powder simply because if is not possible to produce thesespecialized producfs up to lhe desired and required quality with the raw milk alone. lf lhe leawhileners are produced solely from raw milk they will have significanfly shorler shelf life, poordelivery in fea making and poor consumer feedback.

Adulleralion in raw milk is verV common in Pakislan though if was nol menlioned in our lefferlhaf we avoid raw milk due fo this. Being cautious aboul procuring good quality milk is notavoiding procuring milk; hence, it needs correction of your underslanding. To ensure that goodquality milk is procured, processing companies apply more than 50lests on the raw milkcollecled al three different stages before il is consumed for processing. These lests checkanlibiolic levels, aflaloxin level, mixing of vegelable oil, high sodium, high salf, high whey profeinand any chances of mixing of other hazardous compounds in order 1o ensure thal the raw milkprocured meels qualily sfandards for human consumption.

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PAKISTAN DAI RY ASSOC IATIO N

Therefore, we would like 1o pul on record that our products such as UHT milk, cream, bufler,Desi ghee, hi-calcium milk, milk for adult and child nufrilion, yogurf, buffer oil and cheese are allbased on milk and not on the imported or local powders. The only formulafions thaf requireimporled milk powder are in infanlformula andleawhileners for reasons hereinabove stated.

5. PDA is working for the beffermenl of poor dairy farmers and is always supporling them. lf is fhelarge dairy farmers or milk conlraclors thal exploil the small dairy farmers. The reason whyprocessing companies have eslablished huge network of milk colleclion cenlers across fheregion is 1o ensure.fhat the small famers have an easv access 1o them. Therefore, if is unfair fosuggest thaf PDA works fo.fhe delrimenf of the local dairy farmer.

4. As 1o the evidence fhal Pakislan faces shortage of milk, produclion of milk in Pakisfan does nolmeet fhe per capila milk demand of 126.5 lifre per person per Vear. lncreasing demand of foodcoupled with fhe deficienf per capifa availabilify of milk and meat has put a great stress on lheprices of these goods. Pakistan has a very low yield of milk from animals, as is duly supportedby fhe Food and Agriculfure Organizalion sfalisfics reveal thaf Pakistan obfains 5Z million tonsof milk from 21 million animals compared wilh over 40 million lons obfained by China from

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million animals and 90 million produced in fhe United Stales by 9.0 million cows, respecfively.

5. Reilerating whaf is already explained above and to answer Vour concern raised in bullet point"2",milk powders or palm oil is consumed in specialized products i.e. fea whifener, thal are notcalegorized under the heading of milk. Hence, any decrease in the prices of fhese items wouldnol have any effecf on the cosfs and, fherefore, subsequent prices of UHT milk.

However we fail lo undersland why fhe poinls of concern lhat were addressed in our leller missed youratfenfion and we again bring the same fo your nolice below:

1. Comparison made wifh fhe neighboring counlry, lndia, is a lopsided comparison as lndia is a milksurplus counlry while Pakislan observes shortage of milk. Accordingly, as lndia exporfs milkproducfs, we imporf il and comparing the duty regimes of both counlries is irrelevanf. Milkprices in lndia are around 55% cheaper than Pakislan in equal dollar ferms and have decreasedby 50% from lasf year, whereas the prices increased by 10% in Pakistan as compared lo lastyear. Therefore, comparisons may also be drawn belween counlries whose circumslances aresimilar.

2. lmporfed milk powders are of premium qualify. Milk powder shipments are accompanied withCerlificale of Analysis (COA), Maferial Specification Dala Sheet (MSDS), Halal Cerlificales andother cerlificafed cerlifying it nol only fit for human consumption bul also of best quality.Samples of lhe same arelesled by Pakisfan Sfandards and Oualify ConfrolAufhorfly (PSOCA)during clearance al lheY,,arachi porf. The fact that milk powder was imporfed when lhese weresignificantly expensive needs lo be undersfood by the livestock deparlmenf.

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PAKISTAN DAI RY ASSOC IATION

Milk powders were being imporfed in lhe recenf pasf when fhe raw milk was about 20% cheaper.Thaf signifies fhal lower price is not fhe primary reason for milk powder imporls. lf is, in facf,because fhe quality of formula of infanf andleawhilener cannof be produced lo the desiredspecificafion solely from milk.

5' The dairy farms in Pakislan are subsfanlially inefficienf as compared 1o the world. Milk yield ofanimals is lower in Pakisfan, and dairy farmers charge higher prices fo cover their inefficiencies.Efforls need fo be made in ihis direction on a national scaie fo improve fhe yield of animals andmake dairy farms more cosf-eftecfive and transparenl lo bring them al par wilh the globalstandards.

Finally, the PDA calls on your deparfmenf ro address fhe following queslions:

a. The issue of sale of "milch animals", referred in bullel poinl 4 of your lelIer,is an issue thaf theLiveslock deparlmenf should address. lf has been proven above thal Pakislan faces shorlage ofmilk; hence, claiming lhaf the slaughtering fakes place due fo low milk requiremenfs is beyoidlogic.

We have nolseen progress on lhe Minimum Pasfeurizalion Acl already referredlo yourdeparlment. This is now a global phenomenon and even our neighbor, india loo has this law inplace.

Low yield of milk per animal in Pakislan is due 1o many faclors like losses due fo diseases, laleage al maturify, unorganized marketing sysfem, farming on lradifional lines and lack ofextension services. There is a need Io crealefhe undersfanding about trans-boundary diseasesand ensure the control of prevailing diseases leading to the low productivily. A progressivecontrol of diseases will not only improve the inter-region lrade buf also proiecf lhetountriesfrom frans-boundary diseases. PDA has been highlighling these issues since long and iswifnessing virfually slow, if anv, progress made.

Furthermore, losses due fo diseases are one cause of low milk produclion and farm income.There are manv fatal diseases in the country like Foot and Moulh Disease (FMD), parturienfHemoglobinuria, Bovine Viral Diarrhea (BVD), and black quarler. Farmers do noi vaccinate fheiranimals againsf lhe fafal diseases regularly which lower dairy producfion and fhe concerneddeparfmenfs have failed to ensure proper vaccinafion. A very large number of cows / buffaloessuffer from Masfitis which is greafly responsible for loss of milk. The exlernal parasiles such asficks are also lowering production of lhis secfor. The ofher conslraints faced by livestockseclors include feed and land scanifv, poor managemenf, insufficienf credil facililies, and lack ofg

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PAKISTAN DAI RY ASSOC IATION

exlension services. Allfhese arcas arc unallended and need grealer affention of the respeclivedeparlmenls.

e. One can never find meal al fhe Government lisf price rafes and the meal sellers are exploiting' the general public wifhoul any fear. Adding fo if, newspapers have recently been flooded wifharticles regarding sale of subsfandard meal,deadanimal meat and meal of Haram animals soldas beef. This is an alarming situafion and there is a serious lack of solid sleps lo counter if.Perhaps, one mav allribute fhe reason for slaughlering of milch animals to fhe demand supplygap of meaf, and cheeking thal is the responsibilify of liveslock deparfmenl

PDA, representing alargeindustry wilh annual lurnover in excess of PKR 150 billion has noted withconcern thaf ifs earlier leller 1o the minisfry of Food Security has been ill exlracfed and inslead of takingsfeps lo support the indusfry as desired lhrough Iheleller,queries based on misunderslood informafionare being broughl out by fhe Liveslock Department. We hope fhal we have now clarified fhe saidmisperceptions.

Furfher, our indusfry slill awails your assislance in the malfers lisled in "a" lo"e" above and also inrealizalisn of the legifimafe demand of sales lax refunds, confinuafion of zero raling, and mainfaining thecurrenl duly regimes on imporls fhat is already at fhe highest level according to the governmenf ruieson imporl duties.

Regards,

Faisal lmran Huss Malik

c.c.

1. Federal secrefary, Minisfry of National Food Security and Research2. Finance Secrefary, Covernmenf of Pakisfan3. Secrelary Food, Covernmenl of Punjab4. Secrelary Healfh, Government of Punjab5. VC, UVAC, Lahore6. Member lRS, FBR, Covernment of Pakisfan7. Member Cusfoms, FBR, Covernmenl of Pakisfan8. Chairman, Pakisfan Board of lnveslmenl and TradeL DG, Food Aufhorify Punjab

Chairrnan

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