i n P u n j a b

T h e p o l i t i c a le c o n o m y o f

Mi l kA people ’s perspect ive

Punjab Lok Sujag100 Tipu Block, Garden Town, LahorePh: +92 42 583 0985sujag.lhr@lokpunjab.org

10 Allama Iqbal Street, Ratta Khana Road, DepalpurPh: +92 4441 540 375sujag.dpr@lokpunjab.org

www.loksujag.org

ISBN 969 8766 00 6 August 2003Price: Rs 30

The politicaleconomy ofmilk in PunjabA people’s perspective

This document is a sum-

mary report of a research

exercise conducted by

Punjab Lok Sujag over

the last three years. It

underlines Sujag’s inter-

est in understanding and

changing lives of the

dairy farmers of Punjab

through organized and

well thought-out social,

political and economic

interventions.

The report comprises of

two parts. The first offers

facts and figuresrelated to livestock farming,

dairy market, caricatures of

stake holders and an

overview of national policies

and global trends. This is

necessary to understand

and analyze the present sit-

uation. Sujag relied for this

on literature search in

libraries and on the internet.

Most of the figures are

quoted from Livestock and

Agriculture Censuses

Reports, and other govern-

ment documents. On-line

databases of UN’s Food and

Agriculture Organization

(FAO) have also been used.

Sujag also conducted two

primary source research

exercises to supplement the

literature search and fill

important gaps. These exer-

cises included questionnaire

based interviews of farmers

in six districts of Punjab and

interviews of consumers

and quality testing of milk

samples. One of these exer-

cises was supported by

Consumers International -

Regional Office for Asia

Pacific and the other by

Pakistan Poverty Alleviation

Fund.

The second part of this

report is about issuesand debates that

have arisen in this course.

Sujag team has been dis-

cussing the subject in for-

mal and informal sessions

through out this period. We

have also made presenta-

tions to a number of gath-

erings across Pakistan on

our findings and have been

able to engage friends in

discussions. This publica-

tion is aimed at widening

this debate and raising

questions, finding answers

to questions and teaming

up people who want to

take these questions and

answers to real life.

We owe acknowl-edgements to a lot of

persons. Scores, if not hun-

dreds, of individuals have

helped us during the discourse

which is summarized in this

report. Their contributions var-

ied from offering space to set

milk testing laboratory inside a

village to bringing to light new

dimensions to complex ques-

tions about state, cooperative

and companies as human

organizations. We acknowl-

edge contributions of all these

invisible participants. We are

here mentioning the names of

visible participants of the

process who as active Sujag

members have led and organ-

ized various parts of this effort.

The entire initiative is led by

Shafiq Butt. Mohammed Umer

and Qaisar Abbas have con-

tributed technical expertise.

Matloob Ali, Safeerullah Khan,

Muhammed Asif and

Mohammed Iftikhar brought

field experiences. Tahir Mehdi

has done most of the writing,

the layout and graphics.

Cartoons are contributed by

Sabir Nazar and photographs

mostly by Shoaib Iqbal. Aamir

Butt has been filling lots of

gaps. Akbar Pasha and Ayyaz

Kiani have enriched discus-

sions and helped analyze infor-

mation.

Any part of this report

can be reproduced

provided credit is given

to Punjab Lok Sujag.

No part of this publica-

tion or any information

contained in it, howev-

er, can be reproduced,

quoted or used in any

form for promotional

purposes and direct or

indirect commercial

gains.

P akistan is the fourth biggest milk producer of theworld. Its massive herd of 47 million cows and buf-faloes produced 30 billion liters of milk in year

2002. Punjab alone contributes over 60 percent in thecountry’s milk out put.Milk consumption in Punjab has been traditionally very

high. Oldest accounts of Punjab’slocal life style documented as

high milk consumption as 1.25liters per person daily. Therewere many pastoral tribesthat had milk as their staplefood.Per capita milk supply inPakistan is 440 ml daily or160.3 kg per year. This isalmost four times the milk

consumption average of Asiaor all developing countries put

together. The country’s share inworld milk production (5 percent) is double its share inglobal population.Milk is a very important food item in Punjab as wheat andmilk provide two third of the daily calories to majoritypopulation here. Official figures show that expenditure onmilk and milk products by all in Punjab is the highestamong all major food items - 22.8 percent for urban fami-lies and 26.2 for rural.Animal ownership in Punjab is wide spread. Overall there

fact

s an

d fi

gure

s

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are more herds in the province than there are agriculturalfarms. Official statistics put number of land farms to 2.96million (1996-97 figures) while there were 4.08 millionhouseholds that reported keeping milch buffaloes or cowsor both.Animal ownership is heavily skewed in favor of smallherds. Majority of animals are owned by families withsmall herds while large herds constitute a small portion of

the overall animal population. Thisis in sharp contrast to land owner-ship as huge number of small landowners occupy a fraction of thetotal cultivated land and a few lordsown large areas.Herds thrive on a mix of grownfodder, crop stubs and free foliage- proportion of the three sourcesin animals’ overall feed variesdepending upon geography, seasonand the family’s access to land.

Animals are part of our agri-eco system. Yet the size ofthe herd that a family maintains is not proportionatelylinked to the size of land it owns.A herd size of three or four animals means one in-milkand one pregnant animal at any given time or in otherwords regular round the year supply of milk - around five

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A very wide animalownership base ensuresregular milk supplyacross classes.

liters a day. Small farmers with less than 3 acres underplough, landless farm workers or serviceproviders in villages also try to get tothis size of herd.A Sujag study shows that thefamilies ploughing three to 30acres of land prefer a herd sizeof seven to eight animals thismeans three to four in-milk orpregnant animals enabling thefamily to achieve the cherishedmilk consumption level of a liter aday per person. After achievingthis herd size families generallyloose desire to further expandtheir animal possession. Theyprefer to put land resources to other more profitableuses.Since centuries rural families have been producing milk forhome consumption alone. Seasonal surplus was convertedinto ghee, again, for home use. Surplus ghee was howeveroffered to eager urban buyers. The situation changed dur-ing last quarter of century as a lotof milk produced by small ruralfamilies started flowing towardsurban markets.

T raditionally, urban centersused to have their own milkproduction centers in and

around cities. Very little milk used tocross the urban-rural boundaries.But then in 1980s municipal author-ities decided without much thoughtto throw cattle out of cities. Themost aggressive and violent cam-paign was in Lahore. This madeimpossible for the peri-urban milkproducers to remain in business.The peri-urban milk producers, gawalas, operate fromcompounds inside cities or from peripheries. They will set

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Animals are invisiblefamily members and avital part of the agri-eco system. Milk isproduced for homeconsumption.

Peri-urban producerswere the enterprisingstars of the dairy sectortill the industry decidedto declare them villains.

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Cows are tougherthan buffaloes.

They are also lessdemanding on waterand fodder. Cows thusbecome animals ofpoor families. Poorfamilies’ access to fod-der resources is limited resulting in an underfed and lowperformance herd. A Sujag study shows that cows ofpoor families produce (3 liters a day) half of what richerfamilies’ cows give. Experts acknowledge that farm ani-mals in Pakistan get 30 percent less than their appetite.

Buffalo and cowpopulation in Pakistan

has doubled over last quarterof a century. Yet the areaunder fodder crop has notchanged much and the fodderout put has increased by onlya third. In contrast productionof all major crops hasdoubled or tripled. Thispoints out that the massiveincrease in milk trade volumehas failed to stimulate changesin milk production pattern.

Mechanization has reduced the demand for workoxen resulting in a sharp decline in their

population. In 1976 there were 159 males per 100females in cow herd, it came down to 33 by year 1996.Bulls are replaced by milch cows increasing milk out putof the same herd. Milch members of a herd have grownfrom one in four to one in three during the two decades.This increase in milk production has not put anyadditional burden on fodder resourcesas well.

up a sales point at the gate early in the morning and in theafternoon as the people from neighborhood carrying potsflock around. These entrepreneurs had to build repute inthe area to ensure quick disposal oftheir highly perishable produce.They had binding supply contractswith consumers and the gawalamilk was generally unadulterated.The gawala held sway on bothsides of urban milk economy thatis production and marketing. Theperi-urban milk producer ran amarket-oriented entrepreneur andnot a subsistence one that is knead-ed into the agri-eco system. All ofits positive attributes and the vastpotential for its development, however, became its failings.Gawala stood between success and the modern dairyindustry. Packaged milk could never win consumers’favour if the supply line from peri urban producers wasnot cut off.The municipal corporations acted as a mercenary for dairy

Lahore’s cattle coloniesare designed to be filthy.That is one sure way ofsecuring markets forpacked hygienic milk.

Peri-urban milk producers ofKarachi are more organizedand resourceful than theircounterparts in Lahore. Theyalso do not face tough com-petition from rural middle-men as, unlike Lahore,Karachi is quite far awayfrom agricultural lands. They probably have more polit-ical clout as well, as municipal corporation Karachicould not be manoeuvred to launch a gawala elimina-tion campaign.All these factors have contributed to help develop peri-urban milk production in Karachi. A group of produc-ers have made better use of this situation by formingAl-Momin Cooperative Dairy farming Society. Theynow have a modern collective farm, milk processingand marketing facility (Royal Dairies) and a brand(Milkflo). This demonstrates that the local milk pro-ducers have the potential to develop to industrial level.

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industry in the war for urban milk markets over last quar-ter of century. Lahore’s corporation declared all milch ani-mals a public health hazard and an obstacle in making thecity neat and clean and initiated a campaign to throw allof them out of city (and out of business as well, ofcourse). The anti-cattle drive in Lahore has been the hard-est one. All the twists and turns in the history of anti-cat-tle drive synchronise well with developments in dairy

industry. Each time the industryneeded a boost and an expansion inmarket, the corporation’s campaignagainst gawalas got aggressive.Gawalas sought refuge mainly in thecountry’s judicial system and keptchallenging corporation’s actsthrough writ petitions. This howevercould only help delay what was cer-tain to happen.Peri-urban producers were effectivelyeliminated from Lahore by mid1990s. The upper slot in the milkmarket gap thus created has beenfilled in by the packaged milk whilethe lower price market is still beingcontested by the industry and themiddlemen receiving supplies fromrural producers. The industry is now

looking for new pastures and the municipal corporationsof a number of other cities like Rawalpindi, Faisalabad,Multan and Gujranwala are trying to replicate Lahore’ssuccess story.

Dairy industry and middlemen both receive theirsupplies from rural families of which a majority issmall, in fact micro producer.

A Sujag study shows that more than half (51.2 percent)of a milk collection from rural areas is contributed bysmall herd families with only one in-milk animal. Thepoorer the family the more milk it sells. The study basedon a survey of 422 families in six districts of Punjabshows that the small herd families that sold their entire

Farmers in Pakistanare not producing milkfor market. They arerather selling whatthey have beenproducing for family.

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milk produce (4.8 liters) were ploughing less than an acreof land. While families with 15 acres of land underplough refused to sell their 10.7 liters of milk. However,families with same land ownershipand more milk production soldmilk only after saving 10 liters forhome use.The decision to sell milk is deter-mined by the families access toother livelihood resources. If theyare not under any economic pres-sure they prefer a home consump-tion level as high as a liter a day perperson and refrain from selling it.This shows that the milk supplyfrom rural areas is not driven bysurplus production, it is ratherpoverty driven.Market pressure for higher per acreyield is making cropping intensiveleading to an increased demand forcash in-puts. Cash is, however, therarest commodity in rural economy.Moreover, market prices are declin-ing or are beyond the producers’control. Farm out-put maybe onthe rise but farmers’ net income issliding down. The farmers are try-ing to fill this widening gap by sell-ing their essential home milk sup-ply.The farmers cannot take up milkproduction as an alternative eco-nomic activity either, as dairy farm-ing is not commercially viable atcurrent market prices. This is evi-dent from the static fodder crop pattern noted above anda decrease in average size of large herds in last two tothree decades. It is not surprising then that commercial orintensive dairy farming is non existent in Punjab despitemassive milk trade.

A chain of middlemenmakes the most out ofmilk trade while theproducers and theconsumers both suffer.

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Milk flows through a chain of middlemen to reachurban consumers or the processing industry. Firstcomes the kacha dodhee, the village based mid-

dlemen who collects milk from farmers door steps andpedals it to the next buyer - pakka dodhee. They generallyhave milk storage and chilling facilities and have contracts

with bulk buyers. These buyers inturn are either suppliers to industryor urban retailers or are industrialconsumers themselves.Farmers are paid on average Rs 11per liter by village based middle-men. The price varies owing to anumber of factors.In winter milk out put almost dou-bles compared with low yield sum-mer and monsoon period, depress-ing farmer price of milk. Anadvance payment from dodhee to

farmer also enables him to suppress milk purchase price.Moreover, the declared price is for the premium qualitymilk. The milk buyers have themselves set 6 percent fat or15 percent total solids as purity standard. The price of

Price of milk being paidto farmers isridiculously low. It is, infact, less than the costof production.

Milk is mixture of fat, proteins,carbohydrates, water and a

number of other con-stituents present in verysmall quantities. All the con-stituents except fat are col-

lectively named solids-non-fator SNF.

Fat and SNF can be easily meas-ured using simple lab equipment. These tests are usedto measure the quality of milk and are now routine atall milk purchase centers. The above graphics showsthe standard compositions (in percentage) set byPakistan’s food laws. Buffalo milk is fat rich and is pre-ferred over cow milk by consumers.These percentages however vary with the season, quan-tity and quality of the fodder and the breed, age andstage of lactation cycle of the animal. Specially, in caseof buffaloes fat percentage varies between 4 to 9.

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each batch is adjusted in proportion to its tested fat andSNF contents. This means that 100 liters of buffalo milkwith five percent fat fetches the price of 83 liters despitebeing unadulterated and pure according to Pakistan’s foodlaws. Similarly pure cow milk having 12 percent total solidsgets 20 percent less when measured against the standard of15 percent total solids.The farmers cannot independently verify buyers’ assess-ment of the quality of their produce and have to acceptwhatever is offered. They are invari-ably cheated of upto 20 percent oftheir due payments by the buyers.The above graphics shows thecomposition and price of milk atfarm gate and at the consumers’end calculated by Sujag through asurvey. The exercise included col-lection and analysis of over hun-dred samples each from Lahorecity and villages supplying milk tothe city.The local milkmen pay farmers 11thousand rupees for 1,000 liters ofmilk. They take out 12 kg of fatfrom it and add 300 liters of waterand sell ‘the milk’ at Rs 15 per liter.This generates a margin of up to Rs 9.90 per liter for thechain of middlemen involved.The companies also pay farmers the same amount of Rs

Farmers have no meansto contest fat and SNFassessments of buyers.They are invariablycheated ofupto 20%of their duepayments.

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11 per liter. They take out a hefty 31 kg of fat (desi ghee)from a thousand liter of pure milk and sell the remaininglow fat milk after processing and packing at Rs 32 per liter.This generates a margin of Rs 24.66 per liter for the com-panies to bear all the expenses and enjoy profits.Another method used to get the standardized milk out ofthe one purchased from farmers is as follows. Adding 800liters of water to 1,000 liters of pure milk reduces fat per-centage from 6.6 to 3.5. But it also reduces the SNF per-centage specified in Food laws. To make up this shortageone has to add 83 kg of skim milk powder to the 1,800liter mixture. Skim milk powder is available internationally

One may never be able to decidewhether it was the egg or thechicken first. But one can knowfor sure that it was the packagingand not the milk first, in case ofpackaged milk in Pakistan.Packages Limited, Pakistan’s biggest paper manufactur-er, leased in 1977 a small inactive milk sterilizationplant in Lahore to test its new liquid holding paper.Packages had a joint venture with the original inventorsof the special paper, Tetra Pak of Sweden. The UHTmilk in paper cartons proved to be successful inPakistan’s climate compared with earlier experiments ofpasteurized milk refrigerated in polythene bags.Packages created in 1981 a company Milkpak.Milkpak became the brand leader in packaged milk

market. It had relied heavily on the limitedmarket evacuated from peri-urban pro-ducers under duress of the municipalauthorities. Nestle joined Milkpak toform Nestle Milkpak in 1988. Itenabled the business to pump in mil-lions to develop packaged milk market.Corner stone to the new game planhas been a nasty TV campaign demo-nizing small peri-urban producers.Nestle provided strategic depth tothe business concern as well by con-

centrating more on powdering, valueadded products like infant formula,and export orientation.

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at $1 per kg and locally at retail level at Rs 112 per kg.Packaging and selling this ‘pure milk’ gives companies amargin of Rs 40.17 to 44.30 per liter.Everybody in the milk business is rich except for the onewho actually produces the very thing. This doesn’t holdtrue for small farmers alone as big farmers also make noprofits. As noticed elsewhere the big producers are retro-gressing steadily.In fact the current purchase price of milk is less than thecost of production. This disincentive has blocked the wayof any changes that increased demand could have broughtto the way farmers produce milk. The production side is

Center piece to the packaged milk marketing strategy inPakistan is a countrywide TV campaign. An over ten-minutes long docu-drama is aired frequently. It paintslocal milkmen as infectious animals whose eliminationis the only way to safeguard public health. Horrifyingwide-angle close-up shots and derogatory languagedeclares gawalas as cruel villains. They are shown blow-ing cigarette smoke in people’s faces and mixing dirtypond water in milk. In contrast the companies areshown doing all the good to a gift that nature made sogreat but only forgot to pack. The milk packaging iscompared to peels and shells.Tetra Pak being the sole provider of the packagingmaterial to the dairy industry, has an interest in expand-ing market for this milk. The campaign is thus eitherrun by Tetra and/or by Pakistan Dairy Association,representative body of the industry. Though Nestledominates the market, a joint ownership of the cam-paign by all the companies helps establish the impres-sion that it is for public good and certainly not forpetty interests of individual companies.

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still organized and managed in the manner it used to bewhen milk was a subsistence activity and an important pil-lar of food security. Yet unlike subsistence days, it is nowbeing traded in huge quantities.One may ask, if it is not profitable why do farmers sellmilk? Well, what else they can do. They have alreadyexhausted their land and human resources but are unable

to get out of the clutches ofpoverty. Selling milk is like sellingthe proverbial family silver forthem now. The rising bulk of themilk trade only represents lack ofeconomic opportunities amidstgrowing poverty in agricultureeconomy.Even more grim and ironic is thefact that selling milk makes themeven poorer. What nutritional valuecan a farmer buy for Rs 11, madeby selling a liter of milk? How

about half a liter of Coke?The milk economy has become a vicious cycle. The marketoffers no incentive on milk production. The overall pover-ty in agriculture economy is on the rise. The farmers sellmilk produced for family consumption to get out of thepoverty. They end up even poorer as they can’t buy from

Corporations, like Nestle, have been living on heavilysubsidized western dairy farming system. They arenow substituting it with cheap supplies from smallproduction units run by very poor Pakistani families.

Growing bulk of milktrade only representslack of opportunities inagri economy amidstrising poverty.

The new global divide

13

the sale proceeds, nutritional value equivalent to what theyhave sold. That’s why we call this milk trade a drain onnutrition, a threat to the secondmost important pillar of foodsecurity after wheat.

F armer’s loss, however, isthe industry’s gain. Thedairy industry in Pakistan

has lived an artificial life formuch of the period. Up to1970s, it owed its existence tothe huge surpluses of westerndairies dumped in the country atvery low prices. Then in 1980s itcomprised the highly over writ-ten and non performing dairyprojects offered as bribery bythe banks to a pro-military polit-ical elite. The 1990s however saw some more dramatic inthis sector. It marks the entry of the world’s biggest dairyand food giant, Nestle, in the country.Nestle products have been there on Pakistani shelves for

Developing, and not thedeveloped, countries offerdairy dollars growth.

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quite some time. The company entered the country withmore than the improvement of its sales in its mind. Thefactors that motivated Nestle decision also define features

of global dairy scene.1: Milk and milk products marketsin developed countries havetouched saturation. Consumers inEurope and US have in fact beenover consuming. It has made obesi-ty a national problem in thesecountries. The markets there arethus bound to decline. In contrast,markets in developing countries areon the up swing. Studies show thatmilk consumption rises with

incomes. Main centers of growth identified are Far East,Middle East, South Asia and Central Asia.Pakistan is at the hub of these blooming mar-kets.2: New economic policy regimes took over theworld in 1980s. Privatization and deregulationbecame the buzz words and subsidy and state sup-port went out of fashion. It was evident that inthe years to come the pampered dairy farmers ofEurope won’t be getting at least the same level of

subsidies and in turn the dairy industrywon’t be receiving cheap raw material

supplies from home countries.3: Milk rich Pakistan is the naturalnext option. Dairy farmers here

have never tasted any kind ofstate support and have

no political clout. They

Can Pakistan enterdairy export markets?That is a $4billionquestion.

Cola drink:Rs 30 a liter

Bottledwater:Rs 15 a liter

Pure milkfrom small

farmers: Rs 11 per liter

The levelplayingfield?

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Pakistan has been afavourite dumping groundfor western dairy surplus-es. Fat free powderimports surged tounprecedented and highlyinflated levels in late 70s.We were told that thisnutritional influx is forthe good of the poorhere. The massive stocks available at lower than thelocal cost of production over took urban markets, jolt-ed peri-urban production system and made local dairyprocessing unfeasible. The tide then started to settledown. Big corporations took over the market in 90s,and started substituting imports with ‘local production’.Corporations now oppose imports into Pakistan at sub-sidized rates. They are convincing everyone thatexporting milk from Pakistan, not importing, is for thegood of the poor.

are very small micro producers that are unorganized andalready crippled by poverty. They can be coerced to acceptany rate for their produce. Any company will find this tootempting. For Nestle, Pakistan is not only a growing milkmarket, it is also an unmatchable source of cheap milksupplies.4: Nestle has kindled export ambitions in Pakistan as well.The company has already made the country a dairyexporter for the first time in its history.Pakistan’s export profile lacks depth. It is too muchdependent on raw and semi processed cotton products.The country’s economic planners are desperate to diversify.Milk exports seem to be a bright option to them. Expertshave calculated a milk export potential of up to $4 billion.(Pakistan’s total exports for 2002-03 stand at $ ...) Thisconfluence of short term interests of the State of Pakistanand the dairy corporations could prove fatal for the coun-try’s poor. It will snatch a vital source of nutrition fromthem to serve the rich consumers in other countries andwithout giving local poors any alternative. This nutritiondrain will increase poverty.

SMP: Skim Milk PowderWMP: Whole Milk Powder

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The official Punjab data shows that milk produc-tion in the province has more than tripled

(218.6% increase) during the period 1976-1996. Thenumber of in-milk animals however has only doubledduring the two decades (110.2% increase). The addi-tional increase in milk through put is attributed to a51.6 percent rise in per animal milk yield.We have serious reservations about this data. Thereare no suggestions that fodder availability hasimproved in any way. Growth in fodder crop area hasalmost been zero and rise in production quantity verymodest. Increase in production of other crops, yield-ing more waste to be used as fodder, is also notenough to cater to the massive increase in number ofanimals. A very optimistic statement would be thatour animals are as hungry today as they have beentwo decades ago. There are researches and data sayingthat breed quality is getting poorer. How could peranimal yield increase without improvements in breedand increase in fodder availability is a secret wellguarded by the statisticians of our government.

The official documents calculate milk productionby multiplying numbers of in-milk cows and buf-

faloes to a flat average yield of 6.194 liters per cowand 7.500 liters per buffalo. Sujag studies show thatthese figures hold only for well-fed animals of largeherds while animals of the poor living in small herdsare far less yielding. If only this factor is added toPunjab data the official milk output would be reviseddownward by 19.2 percent.

Is this statistical incompetence of gov-ernment functionaries or a number

game to exaggerate total outputand justify export ambi-

tions?

State or no stateThe major stake holders in the dairy, or broadly speakingthe entire agriculture, sector are the farmers and the cor-porations. Farmers are small, powerless and unorganized.They have just woke up from subsistence slumber and try-ing to come to terms with harsh market realities. Whilecorporations are massive in size and power besides beingexclusive owners of technology and information. Theywere born to colonial imperialism and grew with industrialrevolution.What could be the power equation between the two part-ners of an economic activity when one is a small 4 liter aday milk farmer and the other is a $40 billion annual turnover corporation?State is the only hope of the small economic entities. Ithas to put its weight behind the hapless micro-producersto straighten the huge imbalances. It may be termed as outof fashion or even archaic by the neoliberal advocates offree market. But we know they are lying as that is exactlywhat has happened in the so-called developed countries.State’s role in the market has not ended even there. It hasonly become more complicated and subtle. From bluntregulations and open protections, the strategy has changedto tacit support and covert manoeuvres.The developing countries have to devise new strategies toprotect the interests of their people. They have to fight forand win space for negotiating more equitable solutions tothe world trade in agriculture.Parameters of the State’s involvement can however beredefined learning from the experiences of the past centu-ry.The experiments of State ownership of units of goodsproduction and service provision have not yielded thedesired results. Centralization and bureaucratization makethese institutions inefficient, non-productive and callous.Though theoretically these are owned by the peoplethrough a representative government, the bureaucracies infact become a vested interest group themselves and theirbiggest interest becomes to maintain the status quo, resistchange and oppose creativity.Sujag, thus is not for state-owned dairy collection, process-ing and sales units. We are apprehensive that it might

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issu

es a

nd d

ebat

es

become as repressive as its traditional alternative, the com-pany.The failure of the exclusive State ownership of means ofproduction is hurriedly interpreted as ‘the end of the state’by the neoliberal economists and used as a pretext to forcepoor governments into all sorts of deregulations and pri-vatizations.The ‘failure’ of state in fact points out to the highlyuneven development within the neo-colonial states. Thesestates were assigned different roles in the global imperialstrategy and institutions (or parts of these states) responsi-

18

Subsidies in developed countries spurred massive output flooding world markets. This facilitated westerndominance of food and agri raw material marketsthrough glutting. Availability of cheap, at times belowlocal cost of production, agri produce in world marketsalso distorted and hampered transformation of produc-tion systems from subsistence to market in developingcountries.The West sees spendings on subsidy as a burden nowand is perhaps not interested in the dumping strategyanymore. Yet wants to retain its controlling status in themarket. They thus have replaced ‘market distorting’ sub-

sidies with ‘hands off ’ directincome support to their

farmers. This makes itpossible for the western

farmers to throw awaytheir produce at lowprices and thus keep the

international prices sup-pressed. In this level playing

field world, the same lowprices hold for poorproducers of the

developing countries whohave no direct or indirectincome support. This

translates into persistent anddeepening poverty for them. Theynow have the entire world mar-ket opened for them but prices

are too low to support even a verybasic living. Who needs an open world?

Directincomesupport!

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ble for implementation of this strategy were allowed andsupported to develop, mostly at the cost of other institu-tions. Phenominal growth of army in Pakistan is a classicexample. The failure is caused by this lopsided develop-ment and the solution is to balance out differnces.The State’s role to architect the economy, lay down theinfrastructure and define the legal spaces is here to stay.Sujag wants to strengthen this but with the common popu-lace, the working masses at the center of all the policies.

Food or commodityA European or American dairy farmer producing thou-sands of liters of milk a day, goes to the town market tobuy the few liters he needs for his family. To the utter sur-prise of many a highly educated experts, that is not thecase in Pakistan.Milk is the second most important pillar of food securityafter wheat in this country. If a rural woman wants to havean insight into the well being of another’s family, that iswhat she will ask: “Do you have home milk?” “Oh no,poor you,” will be her response to a negative reply.Selling milk is a recent phenomenon. A few decades backit was considered immoral and almost a sin to sell this giftof God. This rather basic level protectionism in the garbof morals ensured abundant supply and thus healthy livingfor everybody in the family.There is no evidence suggesting that milk production willmove to commercial farming in the next few decades. Inevery likelihood, it will continue to be produced by smallfamilies.The State policy on dairy sector shall see milk as a sourceof nutrition for the family that produces it. Selling shall beassociated with the surplus and the bulk of the trade shallrise with increase in production.If we really need to nurture export ambitions, growth inmilk production should be stimulated through marketbased incentives to the producers. The small incentive ofan increased Support Price for wheat did the trick in 1999,making this ardent importer of the food grains a surplusproducer for the first time in its history. Support Price formilk defining the production cost to farmers and offeringsome premium can give the milk production the requiredboost.

One can find an expert every now and then on some TVchannel telling his/her misinformed compatriots that weas a nation are wasting a lot of golden opportunities ofearning ‘precious’ foreign exchange. We are asked to packour mangoes to China, cargo dates to Middle East, sendoranges to Far East and export milk to Central Asia. Andeat what? Grass! No probably we will get a timely consign-ment of high energy biscuits as a famine relief for ourfarmers from international charities.Experts and policy makers behave like if not exportedthese delicious, nutritious gifts of nature will go waste. Infact these are never wasted and eaten by local people (or isthat a wastage in the global village?) that are already anation of underfed, sick and malnourished men, womenand children.And who needs this precious foreign exchange? The Statedoes to service the debt it owes to international monetaryinstitutions or to go around the world shopping militaryhardware or to import Coke concentrate and burger pat-ties. That is senseless.We must acknowledge one thing before boasting of mak-ing Pakistan a milk giant of Asia. The massive dairyexports of Europe, Australia and New Zealand are drivenby a production glut inspired by financial assistance fromtheir States and backed up by technological advancementsin animal sciences. Pakistan’s dairy sector by contrast hasnever seen any kind of state support and neither has thesector tasted any technological transformation, let alone arevolution. The poor of this country are producing theamount and quality of milk that they have been since cen-turies and in the same old fashion.The market forces and the state policy must inspire someprogressive changes in the milk production side, if theyreally intend to develop dairy sector. Otherwise the wholeactivity as being conducted presently is no less than lootinghapless small families of their last penny.

National or transnationalCan exploiters be identified from the color of their skin ortheir ethnic background? What can a very effective nation-alist model of economy offer to its people? That they willonly be exploited by their compatriots and not by foreign-ers. We think that nationalism and transnationalism are

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only two successive stages in the development of capital-ism.The company nationalism is based on a market protectedby a State through tariff and non-tariff barriers. A nationalmarket has geographic and demographic limits and whenan enterprise out grows the potential of its local market, itlooks towards foreign markets for growth. It wants to betreated at par with local competitors in foreign marketsand becomes an advocate of transnationalism.Advances in communication technologies and transportinfrastructure have changed production and marketingconcepts altogether. There are textile factories in Pakistanthat do not sell a yard of their produce in their homecountry while Pepsi Cola sells here and sponsors NationalDay celebrations. So who is a Pakistani, the one who isproducing here as a sub-contractor of a foreign marketingenterprise or the one who is selling here as a franchiseholder of a foreign producer?Nationalism has been reduced into an advertising peg, amarketing strategy that has sales value in some countries.Transnationals, like Pepsi Pakistan, use this peg to keeplocal competitors at bay. While the local and ‘real national’enterprises do not have millions to invest in media toestablish their nationalist credentials in public and in gov-ernment’s eyes. Transnational corporations have even beencashing in on India Pakistan war mongering and hatredhypes by using these as advertising pegs.Dairy transnationals have been dumping Western surpluseson Pakistan market all through 80s. Substituting importswith local production should have been a priority withnationalist policy makers. Well, this is now a priority withNestle in Pakistan. They are furthering our nationalistagenda by substituting imports with local production. Notonly that, they are kind enough to have introduced us indairy export markets. An importer Pakistan was a prof-itable proposition in 1980s, an exporter Pakistan hasbecome a lucrative option in 2000s.In older paradigms one could say that the foreigners takethe profits back to their country but locals invest that intheir homeland. Countries like Pakistan allow foreigners100 percent repatriation of profits while Pakistanis cankeep their money in foreign banks and in foreign currency.You don’t know where Nestle has its coffers, yet you can

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expect that ‘Pakistani’ dairy bigs will be having their moneyin Swiss banks. With profits and money flowing so freely,almost without resistance where does nationalism stand?One could argue that local companies generate employ-ment as against foreigners. But this isn’t true either. Theissue of being labor or capital intensive varies from sectorto sector and with the choice of technology. A local com-pany will also like to choose a technology that is capitalintensive and more profitable.So what really makes a company national or transnationalis not a political or historical or philosophical matter. It isonly that small could survive being ‘national’ and bigrequire to be ‘transnational.’ The economic environmentdoesn’t need nationalization. All it needs to be is to seeeconomic enterprises as livelihood resources and not hous-es of profit. Be pro small and design economic environ-ment to promote horizontal integration and not verticalgrowth of enterprises.

Company or cooperativeThe concept of cooperatives offers an alternative organi-zational model to the small producers to develop into aforce. That is the way for the small units, renderedinsignificant by the shear size of companies, to regain afoothold in the mainstream economy. Yet perhaps, cooper-atives are more than a survival strategy.Cooperatives are about market and profits. No doubtabout that. These operate in the same economic space ascompanies do yet these are significantly different. Thecompany puts all the resources under centralized controlof a vertical management structure. The company eats upsmaller competitors to fulfill its desire of perpetualgrowth. In contrast the cooperative knits small productionunits together into a network on the basis of the com-monality of their interests. It uses the same principal ofeconomy of scales as companies and operates as one forcein the market without killing members’ individuality.In company, a shareholder has votes proportionate tohis/her investment. This effectively puts financialresources of numerous small investors under the controlof few bigger investors making them factual owners ofthe ‘public’ enterprise. In comparison cooperatives thoughpay dividends to members in proportion to their invest-

ment, but decision making follows the rule of one mem-ber one vote. This is the vital difference between the twoorganizations.The concept of ‘cooperatives’ developed in 18th centuryEurope as a humane intervention in the cruel industrialcapitalism that was fast changing the continent. Its muchdistorted form reached the colonies in early 1900s ascooperative laws and implemented through a callousadministration. Many believe that it was a half hearted andcosmetic measure by the British Raj to check the virtualtake over of the economy of India by money lenders.Wether it achieved the political objectives of the colonialrulers is a different subject, the neo colonial rulers inPakistan however bothered little to revamp or reorient thelaw and the associated administrative set up.The porous boundaries that the co-op law defines andthe corrupt and ineffective admin that guards it, make it afavourite vehicle for fraud. Cooperatives are synonymouswith fraud and plunder in Pakistan. Much of this badrepute has roots in the multi-billion rupees finance coop-eratives scam of 1991. Tens of thousands of investorswere deprived of their savings by ‘private banks’ operat-ing in the legal space apparently reserved for coopera-tives.For Sujag cooperative means structured horizontal integra-tion of units of livelihood for the common benefit of par-ticipants. Sujag wants to organize producers into coopera-tives that define and develop markets and production tech-nologies.Cooperatives may be a way out for the small, speciallywhen the huge corporate bulldozers are zooming in, yetare these the panacea, the way forward? Can there be acooperative of resourceless people? Can cooperativesserve those who do not have the requisite purchasingpower? Can cooperatives co-exist with companies in thesame economic space? If the company could decimate thesociety into greedy, selfish individuals, can the cooperativesas a dominant economic model make inter-dependence ofindividuals work for the collective well-being? If the coop-eratives grow into a movement, what lasting impacts will ithave on the nature of the State?These are the questions that could only find answers whenthe cooperative model is put to practice.

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Power or peopleTechnological input is the second most important aspect ofproduction after human organization. Human capacity tofind solutions to problems by employing mechanical, elec-tric, electronic and managerial knowledge has expandedvastly over last few centuries. Its importance has risen tosuch an extent that it has itself become a precious commod-ity. The ownership of knowledge has also slipped fromstate-owned research institutions and academia to privatecompanies. That are only interested in making profits, most-ly quite quickly too, and without accepting responsibility for

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Milk handling, transportation, processing,preservation, and packaging is a ‘great

science’ that has fathered a number of hi-fi technolo-gies and ‘revolutionized’ our lives many a times duringpast decades. Consumers are daily reminded throughmedia that without these interventions milk wouldhave been an infectious bovine secretion.Theoretically, milk of a healthy animal should be freeof germs. It gets contaminated during handling andstorage and becomes fit for human consumptionwhen pasteurized at 70C for 30 minutes.In older times milk was stored for shorter time peri-ods minimizing risks of contamination. A Sujag sur-vey revealed that every fifth family in Lahore buysmilk twice a day though many of them have refrigera-tors. That means they get morning and evening sup-plies, following traditions of their parent families andexpressing their preference for fresh.In Pakistan, milk is always boiled before consumption.Unboiled milk is considered another commodity withspecific uses. One can find families that boil pasteur-ized or even UHT milk. Karrhni is a special stove thatuses dung as fuel to give very low heat. Milk is put onthese for hours to simmer and become fit for con-sumption. This is being practiced in our villages sincecenturies.So all that one needs is that milk should get to theconsumers fresh with minimum storage time and usedonly after boiling it. Who needs all the expensive tech-nologies and difficult terminologies then? Longershelf life and attractive packaging are requirements ofdairy industry and not of consumers.

social or environmental fallout of their interventions.All this has turned technology into a power tool that is usedto beat out competitor and subjugate consumers. Lust forprofit maximization and the dream of monopolizing marketsets the direction of development of technology. Scientistsand technologists are serfs of companies while the market-ing teams set the agenda of research and development.Can the technology made to order by the companies beused by cooperatives to more humane and eco-friendlyends? Can a socially, environmentally responsible co-optechnology compete with the companies?

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Milk has a short life span of about four hours.It must pass through the producer-middle-

men-consumer chain within this time period. All thepartners need to be efficiently knitted and committed toeach other to make this time-limited transaction a prof-itable proposition. Traditionally, this was done inPakistan through the baandh system.Baandh (literally meaning binding) are unwritten agree-ments ensuring supply of specific quantity of milk at afixed rate and time. These are backed by a traditional dis-pute settlement system and violations could tarnish onesrepute for life. The agreements are renewed in peak sea-son (November) every year.The baandh system offered no space to opportunism andbuilt a rather equitable power equation between all thestake holders. But that was before the advent of technol-ogy.The middlemen can now preserve and store unlimitedquantities of milk. They are not under pressure of buy-ing quantities on pre-fixed rates. So they will offer farm-ers the mysterious market rate - which actually is what-ever suits them best. They will then process and packmilk and increase its shelf life to months. So they arenot pushed to sell it then and there.Instead of engaging them into an equitable baandh rela-tion, they can now bondage their consumers throughanother technology - media. The subliminal war ofimages and perceptions has only one winner - the onewho invests more.The producers and the consumers both are now power-less subjects of the middlemen - the industry. Thanks toscience and technology.

The question of technology is important as it impacts anddictates a number of aspects of an economic venture.It decides the scale of operation. One has to optimally uti-lize installed capacity to remain in positive columns of prof-it. The capacities are not available in all denominations.Even the minimum capacity of the latest technology wouldbe mind boggling. If a venture is to qualify as a modern andtechnologically competitive, it must be big. The bigger, thebetter.The choice of technology also decides the human and thefinancial inputs required in a project. A progressive technol-ogy would tend to minimize human input by raising finan-cial input. This necessitates involvement of banks and linksthe project to international financial system. Invisible playerslike ‘the bank’ and ‘the investor’ starts shaping the ventureand real people made of bones and flesh become leastimportant disposable commodities. How could the scientificknowledge be accessed and utilized for the common goodof humans without falling into this trapis a big questions?

Intensive or organicAnimals of this country get a rebuke from experts everynow and then for yielding so little. They are compared withproficient cows of the West that have caused a milk delugein world markets. Envious local experts have their sum-maries ready for the government laying out plans to‘replace’ the current subsistence system with a modern onewhere companies research technologies, banks set cash flow,market dictates targets, machines milk and animals performobediently.Many enthusiasts have imported exotic breeds and tried toemulate Western models. But it has not worked. And itwon’t. As genetic make-up is only one of the factors thatcan help improve an animal’s productivity. Quantity andquality of the fodder is another. An underfed high yieldbreed performs verypoorly. To get maximumout

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of these modern animals, one will have to increase fodderavailability by putting more cultivable area under this crop.This would create a competition between food grains andfodder crops.(In Punjab, area under fodder was second largest after wheattill 1970s. Cotton has pushed it down to third position inthe following decades.)In our system of production animal concentration is evenlyspread over a vast area and across a large number of people.Crop stubs that would otherwise be wasted are fed to ani-mals. This small scale mixed crop and livestock systemenables livestock wastes to be returned to local fields main-taining soil fertility and organic matter content.In contrast western model favors concentration of livestockin intensive dairy operations that rely heavily on mechanicaland chemical inputs. Grown fodder has to be transportedand waste disposal becomes a big problem. Intensive dairyanimals are born through a careful selection of the mostprofitable set of genes. They grow on hormone injectionand are kept alive by antibiotic shots.High yield animals are not just a remarkable genetic compo-sition discovered by Western experts. They are a part andparcel of a very different production system that can workwith the kind of State support that only developed coun-tries can offer to their dairy sectors. These animals cannotperform outside that system.Moreover, corporations hold patents and exclusive owner-ship rights to all the technologies and chemical and biologi-cal interventions that guarantee high yield. A large scaleimport of these would in fact benefit corporations throughroyalties. Local level gains, if any, would only be marginalbyproduct of the global game of development. An inter-vention into our system of production must not be basedon shear fascinations. Livestock is a very important liveli-hood resource for millions of people here. Our animals arenot thankless inefficient creatures and our farmers are notpoor in animal husbandry. In fact they have given the world,one of the best breed of zebu cows - Sahiwal - that isrenowned for its performance and toughness.Both our farmers and their animals have a rich and contentpast. But they lost to the cruel market politics of colonialarmies. A change in their lives, a return of the good dayswould only come through a long and hard struggle.

Punjab Lok Sujag is a group of people committed toworking towards a society that ensures equitable access tolivelihood resources for all and respects their rights irre-spective of race, faith and gender.Sujag believes that this could be achieved through organ-ized conscious efforts and by institutionalizing theseefforts. Sujag is of the firm opinion that the change can-not be imposed from outside and through legal andadministrative measures alone. It can come only as a resultof voluntary involvement of communities in designingand implementing social, political and economic interven-tions meant to change the existing system.

Sujag is working with rural communities in Punjab. It isleading a public health initiative in an area with extremeiodine deficiency located in Depalpur and Pakpattan. It hasadopted a very innovative communication strategy usingtheater and puppets and has been successful in motivatingvoluntary involvement of local individuals and communi-ties. It is raising hopes of turning near failure of iodinesupplementation through common salt into a successstory.

Sujag is working with a number of small farmer communi-ties and others involved in dairy production and business.This booklet offers a summary of the work Sujag hasdone in this sector over last three years.

Making modern technologies work for the under privi-leged and the marginalized is another aim that Sujag isactively pursuing. It has developed a full text database oflocal English dailies with a focus on social sector as an ongoing effort. Sujag is also involved in development of anIT tool to transliterate the two scripts used to writePunjabi language - Gurmukhi and Shahmukhi.

Historically, Sujag is a spin off of an alternative and politi-cal theater group - Punjab Lok Rahs formed in 1986.Though Sujag has been in existence for quite some time, itbecame a legal entity in 1996.