Fuel Crisis and Impact of Fuel Prices on Dairy Sector in Pakistan – Dr. Shahzad Amin
The recent increase in fuel prices has raised serious concerns for Pakistan’s dairy sector, which is already operating under significant economic pressure. Dairying is a sector that is heavily dependent on logistics, where milk must be collected daily from farmers, transported to processing plants and then quickly distributed to retailers across the country. Any increase in fuel prices directly increases the operational costs of the entire dairy supply chain. This article by Dr. Shahzad Amin, highlights the impact of fuel prices on dairy sector in Pakistan.
Impact of Fuel Prices on Dairy Production
Milk collection from farmers in rural areas is the first step where the impact of fuel prices is clearly felt. Dairy companies operate extensive milk collection networks that rely on refrigerated tankers and transport vehicles to collect milk from thousands of small farmers. A sharp increase in fuel prices will increase the cost of running these vehicles, making milk procurement even more expensive. Since milk is a perishable commodity that needs to be moved quickly, companies do not have much room to delay transport or reduce logistics costs.
Pakistan Dairy Association (PDA)
Impact of Fuel Prices on Dairy Processing & Distribution
The second impact is evident in the processing and distribution stage. After processing, the packaged milk has to be transported to wholesalers, distributors and retailers across the country. Rising fuel prices increase the cost of distribution and cold chain logistics, further increasing the cost of delivering safe dairy products to consumers. Ultimately, these additional costs will put pressure on the retail prices of dairy products such as UHT milk, yogurt and other processed dairy products.
Livestock Companies and Dairy Companies in Pakistan; Livestock and Dairy Sector
Taxation and Other Factors
This situation is made even more serious because in Pakistan, preserved and packaged dairy products are already subject to 18% sales tax, one of the highest taxes on milk in the world. In most countries, milk is considered a basic dietary necessity and a superfood, so it is either not taxed or taxed very little. In Pakistan, the unusually high tax on safe milk significantly increases retail prices, making clean and quality-produced dairy products less affordable for a large segment of the population.
Veterinary Health Services and Veterinary Diagnostic Services Providers in Pakistan
As a result, many consumers are turning to unregulated, open-source milk, which often lacks proper safety testing and quality assurance. This shift has serious implications for public health. Unsafe milk can contain bacterial contamination, adulteration, and other health risks. Moreover, consumption of unsafe and nutritionally poor milk leads to a wide range of health problems, including malnutrition and stunted growth in children, problems that Pakistan is already struggling to address.
The combined effect of rising fuel prices and an 18 percent sales tax on safe dairy products could further widen the gap between safe and unsafe milk consumption. Rather than promoting a safe food system and a regulated dairy sector, these economic pressures may inadvertently push consumers towards cheaper but unsafe alternatives.
Policy to Strengthen the Dairy Sector
If Pakistan wants to strengthen its dairy sector and improve public nutrition, policymakers need to carefully examine the cost structure affecting the industry. Rationalizing taxes on safe milk and addressing rising logistics costs will help ensure that nutritious and healthy dairy products remain accessible and affordable to consumers. It will also support the formal dairy sector and the millions of farmers who depend on the sector for their livelihoods.
Poultry and Livestock Data 2025; Pakistan Economic Survey 2024-25
