A new government policy brief proposes major reforms, investment incentives, disease control measures and modern processing systems to transform Pakistan into a competitive exporter of milk and dairy products.
Thank you for reading this post, don't forget to subscribe!Introduction
The Government of Pakistan has presented a comprehensive policy framework aimed at attracting domestic and foreign investment in the dairy sector and increasing the country’s dairy exports to US$2 billion by 2035.
The policy brief has been prepared under the Uraan Pakistan National Economic Transformation Plan by the Planning Commission, Ministry of Planning, Development and Special Initiatives, Ministry of National Food Security and Research, Food and Agriculture Organization of the United Nations, Pakistan Dairy Association and Dairy and Cattle Farmers Association Pakistan.
The document proposes major reforms in milk marketing, taxation, animal genetics, disease surveillance, milk processing, cold chain infrastructure, farmer financing and export market development.
Pakistan Produces 72 Billion Litres of Milk Annually
Pakistan is identified as the fourth largest milk producing country in the world, with annual milk production estimated at 72 billion litres. This represents around seven percent of global milk production.
The livestock sector consists of approximately 250 million animals and contributes about 15 percent to the national economy and 64 percent to agricultural gross domestic product. Pakistan’s dairy industry is estimated to be worth US$30 billion and provides livelihoods to more than 11 million farming families.
Around 95 percent of dairy farmers own fewer than 10 animals. These small farmers produce approximately 80 percent of the country’s total milk supply. Despite this production capacity, Pakistan has only a limited presence in the international dairy market, which was valued at approximately US$50 billion in 2024.
Dairy Export Targets
The policy brief proposes increasing Pakistan’s annual dairy exports to approximately US$500 million by 2029 or 2030 and US$2 billion by 2035. The document refers to 2029 in some sections and 2030 in its executive summary for the US$500 million target.
The proposed export strategy focuses on transforming Pakistan from a supplier of raw milk for domestic consumption into a producer of processed and value added dairy products for international markets.
Major Challenges Facing Dairy Exports
Pakistan’s dairy sector faces low milk production per animal, high production costs, weak animal genetics and longer intervals between calving.
Milk collection and marketing remain largely informal. Most milk is sold fresh through traditional milk collectors, while only around five percent is processed through the formal dairy industry. The absence of adequate chilling facilities, refrigerated transport and modern storage systems also causes substantial supply chain losses.
Foot and Mouth Disease, Lumpy Skin Disease, mastitis and other animal diseases reduce milk production and restrict Pakistan’s access to premium export markets.
The policy also identifies milk adulteration, weak regulatory enforcement, price controls, limited processing capacity and the slaughter of productive female animals and young calves as major concerns.
Potential Export Markets
The policy identifies China, Saudi Arabia, Malaysia, Indonesia, Gulf Cooperation Council countries, Central Asian Republics, Russia, the Middle East, North Africa and other Asian markets as potential destinations for Pakistani dairy products.
China imported dairy products worth approximately US$12.1 billion in 2023, while imports by Gulf Cooperation Council countries were valued at about US$11.05 billion in 2024.
Indonesia and Malaysia also represent growing dairy markets because of increasing urbanisation, changing food consumption patterns and rising demand from younger consumers.
Dairy Products with Export Potential
Pakistan can develop exports of ghee, butter, cheese, whey protein, functional dairy ingredients, camel milk and goat milk.
Flavoured milk, fruit yogurt and other specialised dairy products may offer opportunities in Middle Eastern, North African and regional markets.
The policy also highlights export opportunities for bovine sexed semen, embryos, silage and hay.
Camel and goat milk could be marketed as specialised products for health conscious consumers, particularly in Gulf countries.
Proposed Tax and Import Duty Reforms
The policy recommends reducing General Sales Tax on value added dairy products from 18 percent to five percent to improve the competitiveness of local processors.
It also proposes abolishing import duties and limiting taxes to five percent on machinery, genetic material, feed ingredients, milk chilling equipment and technologies used in dairy processing and mechanisation.
Feed ingredients identified for possible tax rationalisation include soybean meal, canola meal, corn gluten, feed additives and mineral premixes.
Milk Quality and Food Safety
The government has been advised to introduce a safe milk law and strictly enforce milk quality and safety standards.
The proposed system would control milk adulteration, build consumer confidence and encourage investment in formal milk processing. Dairy packaging and product standards should be aligned with Codex requirements and the standards followed in Asian, African and Gulf markets.
The policy also calls for stronger laboratory networks to test dairy products for antimicrobial resistance, toxic residues and other food safety risks.
Animal Disease Surveillance and Traceability
A national digital animal disease surveillance, control, tracking and traceability system has been proposed. The system would cover transboundary animal diseases, zoonotic diseases, mastitis and tick borne diseases.
The policy recommends animal identification through tagging and mandatory registration of dairy farms. Disease free dairy zones should initially be established in Punjab and Sindh according to national standards and requirements of the World Organisation for Animal Health.
Local vaccine production should also be encouraged under internationally recognised manufacturing and quality standards.
Genetic Improvement and Farm Productivity
The policy recommends expanding genomic testing, sexed semen laboratories, embryo transfer services and the supply of semen from proven bulls. Breeding programmes should focus on milk productivity, fertility, heat tolerance, feed efficiency and disease resistance.
Small farmers should receive affordable access to improved genetics, balanced feed, silage, hay, climate smart housing, mechanical milking systems and manure management technologies. The document also proposes supporting heifer development farms and nurseries for high genetic merit bulls.
Organising Small Dairy Farmers
Small farmers should be organised into Farmer Entrepreneur Groups and dairy cooperatives. These groups could collectively obtain veterinary services, feed, improved genetics, chilling facilities, technical training, financing and formal milk purchase contracts.
Corporate dairy processors would work with these farmer groups to ensure consistent milk supply, agreed quality standards and market linked prices. Banks and financial institutions have been advised to provide group loans and recognise livestock as a form of equity or collateral.
Milk Processing and Value Addition
The policy recommends establishing small mechanised dairy processing units in rural areas. These facilities could produce cheese, butter, ghee, whey powder and other value added dairy products. Developing processing businesses near milk production clusters could reduce milk losses, generate rural employment and improve farmers’ earnings.
The government, dairy processors, financial institutions, farmer organisations and development partners would jointly support these businesses.
Cold Chain and Export Infrastructure
Dairy farms and processing facilities should be classified under agricultural electricity tariffs to reduce operating costs. The policy recommends incentives for solar powered milk chillers, refrigerated transport, cold storage and value addition machinery.
Dairy export processing zones should be developed near major milk producing areas and connected with Karachi and Gwadar ports. Modern livestock railway corridors have also been proposed for the economical transportation of animals, feed and other livestock inputs.
Immediate Actions for 2026 and 2027
The policy recommends approval of the National Livestock Breeding Policy and the proposed Animal Health, Welfare and Veterinary Public Health Act. Milk markets should be deregulated to encourage quality based pricing and investment.
Pilot animal identification and traceability programmes should be launched in all provinces. The government should establish disease free dairy zones, simplify financing for farmer groups and reduce taxes on dairy processing technologies.
Authorities have also been advised to control the illegal import of milk powder and strengthen enforcement of laws protecting productive female cattle and buffaloes from slaughter. The Livestock and Dairy Development Board and Punjab Livestock and Dairy Development Board should be restructured with stronger private sector participation and a clear responsibility for dairy export promotion.
Background
The policy brief was developed following consultations with government institutions, dairy processors, farmers, industry associations, researchers, input suppliers and development organisations.
A National Dairy Conference was held on February 9, 2026 to discuss productivity, milk quality, formalisation of the supply chain and the development of an exportable dairy surplus.
The policy presents the private sector as the main driver of investment, processing, market development and farmer integration, with government institutions providing regulation, infrastructure, disease control and financial support.
Why It Matters
Pakistan already has one of the world’s largest milk production bases, but low productivity, weak processing capacity and inadequate quality controls prevent the country from benefiting from international dairy trade.
Successful implementation of the proposed reforms could create new investment opportunities in dairy farming, animal genetics, veterinary services, vaccines, feed production, milk processing, packaging, cold chain logistics and exports.
The strategy could also increase farmer income, generate rural employment, improve food safety and strengthen Pakistan’s foreign exchange earnings.