Toxic milk in China –> Business opportunity for Pakistan!!

53,000 children in China have been struck by illness caused by traces of melanine in Chinese milk.

Fully 25 countries, as well as the entire European Union, have banned or restricted all imports of Chinese milk and products with Chinese milk in them.

Read the Wikipedia report: 2008 Chinese milk scandal

Amid reports that China is suffering heavy losses as a result of the milk scandal, I see a business opportunity for the milk industry in Pakistan.

Toxic milk products go off shelves in more countries -DAWN – Top Stories; October 05, 2008.

Pakistan has one of the largest counts of cattle in the whole world and certainly has no shortage of milk – Mr. Danishmand, ex-Dean and Director of IBA, estimated that at least 4-5 new companies were going to enter this sector in Pakistan very soon because of the opportunities that exist. Engro Foods (Olper’s) and Shakarganj (Good Milk) did so successfully, grabbing market share from both Nestle and Haleeb.

A very positive news report from DAWN in this regard, quoted verbatim:

Rs422m milk scheme approved
By Muzaffar Qureshi
KARACHI, Oct 4: The Provincial Development Working Party (PDWP) has approved a Rs422 million scheme for provision of chilling tanks and other allied equipment for milk collection centres to be set up in the province.

The tanks will be provided to the marketing companies, such as Engro, Pakola and Nestle etc., on 50 per cent cost for 10 years. The milk will be collected, stored and marketed by these companies.

A senior official of the Livestock department told Dawn that cooperatives, farmers and large dairy farms will also be encouraged to take advantage of the scheme.

About 2010 milk collection centres will be set up in milk pockets of various districts in the province where milk in bulk quantity is available. The function of milk collection, management of chilling tanks and marketing will be performed by the private companies.

The official pointed out that the scheme is a shift from the earlier government policy of procuring commodities on subsided rates from the farmers and later market the same, which is a pure private sector function. In this case the government is only providing half of the scheme’s cost to the private companies to help them organise milk collection after paying genuine price to the farmers. The scheme is aimed at ensuring collection, processing and marketing large quantity of milk, which was earlier wasted due to lack of proper storage and marketing arrangements.

An amount of Rs255 million has been earmarked for purchasing equipment for milk collection centres in 2010 villages. One collection centre will at least cover five villages. The Sindh government is giving top priority to development of livestock to increase production of milk and meat, whose prices have registered abnormal increase in urban areas.

The senior official expressed the hope that the milk prices in big cities like Karachi would automatically come down with increased availability of the commodity through milk collection scheme. Meanwhile, Mansoor Nawaz of Engro Foods told Dawn that his company was operating a milk collection network in villages around Sukkur for the last three years.

An interesting facet to this story is the Chinese government’s fantastic response to this scandal – once Pakistani products lose consumer confidence, they never seem to get any support to regain that confidence!


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