Islamabad: Federal Minister for National Food Security and Research Rana Tanveer Hussain has underscored the need for rationalising taxes and bringing about structural reforms in the dairy sector to improve affordability, ensure safe nutrition and support farmers in the country.
The minister was speaking at a pre-budget consultation jointly organised here by Sustainable Development Policy Institute (SDPI) and Pakistan Dairy Association (PDA). The minister said that livestock accounts for nearly 60 percent of the agriculture sector and holds significant potential for both domestic nutrition and exports.
He acknowledged that taxation policies, particularly sales tax on dairy products, affected production and growth. “Softening of tax regime can help increase both production and revenue,” he suggested.
He noted that reducing GST on milk was not difficult, thus proposals like pilot projects for pasteurisation and the establishment of “safe milk cities” are under consideration. He said improving milk quality and formalising the sector would be key priorities going forward.
In his welcome remarks, SDPI Executive Director Dr Abid Qaiyum Suleri suggested multiple taxation scenarios and called for placing processed milk in a third schedule. He warned that rural milk collection centres were shutting down, since pricing of processed milk directly hits loose milk markets.
Usman Zaheer Ahmad, Chairperson, PDA highlighted that 40 percent children in Pakistan suffer from stunting due to malnutrition, despite milk being the most widely consumed animal protein.
He said the sector remains 98 percent informal, with limited quality controls. He warned that 18 percent GST in 2024 caused 27 percent decline in formal dairy sector. He proposed reducing GST to 10 percent and bringing part of the informal economy into the tax net, which could generate up to Rs250 billion in revenue.
Country Director Global Alliance for Improved Nutrition Farrah Naz said malnutrition costs Pakistan around 3 percent of GDP annually, with over 40 percent of children under five stunted.
She stressed that safe milk is essential for child development and advocated reducing GST on milk from 18 to 5 percent. She also stressed the need for strengthening formal dairy systems, expand processing capacity and utilise by-products such as whey.
