Pakistan is one of the world’s largest milk producers, but its share in global dairy exports remains limited. A new government-backed policy brief says low animal productivity, weak processing, fragmented milk supply chains, disease risks, high production costs and insufficient cold-chain infrastructure are among the main barriers preventing the country from fully exploiting its dairy export potential.

Pakistan’s Dairy Sector at a Glance

The policy brief describes livestock as a major pillar of Pakistan’s agricultural economy. It states that the livestock sector includes around 250 million animals and contributes about 15% to national GDP and 64% to agricultural GDP.

Pakistan’s dairy industry is estimated at approximately US$30 billion, while annual milk production is placed at around 72 billion litres from approximately 34 million cows and buffaloes in milk.

Around 95% of dairy farmers are smallholders keeping fewer than 10 animals, yet they are responsible for approximately 80% of the country’s total milk supply. More than 11 million farm families are linked to the livestock sector.

Major Challenges Facing Dairy Exports

The brief highlights low per-animal productivity as one of the most serious constraints. Local dairy animals produce substantially less milk than animals in many major dairy-producing countries, creating a strong case for investment in genetics, feeding systems and reproductive technologies.

Pakistan’s milk supply chain also remains highly fragmented. A large proportion of milk continues to move through informal channels, often without refrigeration or standardized quality testing.

Formal milk processing remains limited, restricting the country’s ability to move beyond fresh milk, yogurt and ghee into high-value products such as cheese, whey-based ingredients and specialized dairy products.

Animal Disease Control Critical for Export Growth

The policy brief identifies transboundary animal diseases as a major challenge for the dairy sector. Foot-and-mouth disease and lumpy skin disease are among the diseases highlighted as threats to animal productivity and export market access.

It recommends development of internationally recognized animal disease surveillance, traceability and disease-control systems, together with disease-free livestock zones.

Potential Export Markets

Dairy Products Pakistan Could Target

The policy brief identifies several product categories that could help Pakistan enter regional and international dairy markets.

• Ghee, butter and cheese
• Whey protein and functional ingredients
• Camel milk and goat milk
• Flavoured and fruit-based yogurt products
• Bovine sexed semen and embryos
• Silage and hay

Strategic Recommendations

1. Reform Milk Market and Regulatory Policies

• Deregulate milk markets and move toward market-based pricing.
• Introduce safe milk laws and enforce quality and safety standards.
• Rationalize GST on value-added dairy products.
• Reduce duties and taxes on dairy machinery and modern technology.
• Improve access to finance for small farmers.
• Approve and implement national livestock breeding policy.

2. Improve Animal Genetics and Productivity

• Expand genomic screening for breeding bulls and heifers.
• Increase use of sexed semen and embryo transfer.
• Develop high-quality bull and heifer nurseries.
• Support breeding for fertility, heat tolerance and disease resistance.
• Improve feed efficiency and milk productivity.

3. Organize Small Farmers

The brief recommends formation of Farmer Entrepreneur Groups and cooperatives to improve access to technology, organized markets, finance, extension services and processing companies.

Farmers could receive access to chilling tanks, silage, total mixed ration, climate-smart housing, mechanized feeding and milking, reproductive technologies and digital advisory services.

4. Expand Processing and Value Addition

• Establish rural milk processing units.
• Develop cheese, butter, ghee and whey processing.
• Strengthen laboratory testing services.
• Improve antimicrobial residue testing.
• Develop dairy packaging standards.
• Align standards with Codex and target export markets.

5. Improve Veterinary Input Traceability

A national traceability and monitoring system has been proposed for veterinary medicines, vaccines, semen and feed to control counterfeit and substandard products.

6. Strengthen Animal Disease Surveillance

The brief proposes a national digital animal disease surveillance, control, tracking and traceability system covering transboundary diseases, zoonotic diseases, mastitis and tick-borne diseases.

It also recommends animal identification, mandatory dairy farm registration, stronger vaccine registration systems and development of local vaccine manufacturing facilities according to international standards.

7. Improve Cold Chain and Logistics

• Support milk chillers and refrigerated transport.
• Promote solar-powered dairy cold-chain systems.
• Modernize livestock railway transport.
• Develop dairy export processing zones.
• Connect dairy clusters with Karachi and Gwadar ports.

Immediate Actions Proposed for 2026–2027

• Approve pending National Breeding Policy and Animal Health Act, 2026.
• Deregulate milk markets by removing milk from the essential commodity list.
• Launch animal identification and traceability pilots across all provinces.
• Establish disease-free dairy zones in Punjab and Sindh.
• Simplify group loans for Farmer Entrepreneur Groups.
• Reduce GST on value-added dairy products from 18% to 5%.
• Reduce taxes and duties on dairy machinery, processing equipment and modern dairy technologies.
• Subsidize rail transportation of animals.
• Enforce laws protecting productive female dairy animals from slaughter.
• Control illegal import and smuggling of milk powder.
• Revamp livestock and dairy development institutions with stronger private-sector participation.

Why This Matters

A stronger dairy export industry could diversify Pakistan’s agricultural exports, reduce milk losses, encourage formalization of the dairy supply chain and improve animal health and food safety standards.

However, success will depend on effective implementation, federal and provincial coordination, access to finance, enforcement of quality standards and sustained private-sector investment.