Pakistan Agribusiness Investments in Dairy & Livestock

[Riaz Haq]

US venture investor Tim Draper, Swiss food giant Nestle, and American beverage titan Coca Cola are investing heavily in Pakistan's agribusiness.

Silicon Valley private equity investor Tim Draper, a well-known international venture capitalist, is quietly investing in Pakistan's agribusiness, the largest provider of food commodities in the Middle East, according to San Francisco Examiner.

The share of livestock in Pakistan's agriculture output nearly doubled from 25.3 percent in 1996 to 49.6 percent in 2006, according to FAO. As part of the continuing livestock revolution, Nestle is investing $334 million to double its dairy output in Pakistan, according to Businessweek. Reuters is reporting that the company has already installed 3,200 industrial-size milk refrigerators
at collection points across the country to start the
kind of cold storage chain essential for a modern dairy industry, and
give farmers a steady market for their milk. In another development on the infrastructure front, Express Tribune has reported that  Pakistan Horti Fresh Processing (Pvt)
Limited has invested in the world's largest hot treatment plant to process 15 tons of mangoes per hour for exports.  Hot water treatment  will also help reduce waste of fruits and vegetables by increasing shelf-life for domestic consumption.
 

The Coca-Cola Company is planning to invest another US$280 million by 2013 in
Pakistan, according to BMI's Q3 2012 Food & Beverage Report for Pakistan.  Coke plans to channel the bulk of its
capital expenditures towards increasing the production of its existing
brands as well as expanding its overall beverages portfolio. Coca-Cola
plans to introduce more juices and mineral water in the Pakistani market
over the coming years. This strategy could diversify Coca- Cola’s
presence beyond the carbonates sector and help it secure early footholds
in the higher-value bottled water and fruit juice segments, which boast
tremendous long-term promise.

In addition to foreign investors, big name Pakistani companies like Dawood Group's Engro, billionaire industrialist Mian Mansha's Nishat Group and former minister Jahangir Khan Tareen's JK Dairies are placing big bets on food and beverage market in the country. Annual milk consumption in Pakistan reached 230 kg per capita in 2005, more than twice India's per capita consumption, according to FAO.

Business Monitor International expects "Pakistani agriculture sector to reap record harvests for key crops
such as rice, sugar and cotton owing to favorable weather in 2011 and the year-on-year increase in
crop area following floods in 2010". "We expect the dairy, poultry and
wheat industries to be the biggest beneficiaries of increased investment in the agriculture sector", adds BMI's report.

 Pakistan is world’s eighth
largest consumer of food and food is
the second biggest industry in the country, providing 16 per cent
employment in production, according to report published in Express Tribune.  In addition to rising domestic demand, growth in agribusiness is supplemented by
increased exports as Pakistan expands trade with new partners. BMI expects basmati rice to take
up a greater share of the trade as production increases. Cotton production to 2015/16: 45.5% to 12.8 million bales. Increased demand from Europe and
emerging markets will drive output. BMI also expect an increase in domestic farmers switching
from rice and sugar to cotton cultivation. Sugar production to 2015/16: 22.1% to 4.8 million tons. Large-scale consumers such as
confectioners, candy makers and soft drink manufacturers account for about 60% of the total
sugar demand and will be the main drivers of growth.

Pakistan witnessed a livestock revolution follow Green Revolution. Here's how International Livestock Research Institute puts the dramatic changes in Pakistan's agriculture sector since the mid 1960s: 

 Since the mid 1960s, investment in Green Revolution technologies – high-yielding varieties of cereals, chemical fertilizers, pesticides, irrigation and mechanization of farm operations – significantly increased cereal crop productivity and output. Success in the crop sector created a platform for diversification of farm and non-farm activities in the rural areas including the livestock sector, especially the dairy sector. Some of the Green Revolution technologies had a direct impact on the dairy sector while others had an indirect impact. Increased cereal productivity and output helped to reduce prices of cereals relative to other commodities in both rural and urban areas. This, along with increased income from high crop-sector growth, created  demand for better-quality foods including livestock products. This created market opportunities and incentives for crop producers to diversify into higher-value products, such as milk, meat, vegetables and fruits.

Pakistan has made significant progress in agriculture and livestock sectors showing that it has the potential to feed its people well and produce huge surpluses to fuel exports boom. The continuation of this progress will depend largely on success in making needed public and private investments in energy and water infrastructure and education and health care.

Related Links:

Haq's Musings

FMCG Consumption Boom in Pakistan 

Music Drives Coke Sales in Pakistan

World Bank Report on Pakistan Agribusiness

Pakistan's Sugar Crisis

FAO Livestock Sector Brief 2002 

Recurring Floods and Droughts

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan

Growing Water Scarcity in Pakistan

Political Patronage in Pakistan

Corrupt and Incompetent Politicians

Pakistan's Energy Crisis

Culture of Tax Evasion and Aid Dependence

Climate Change in South Asia

US Senate Report on Avoiding Water Wars in Central and South Asia

[Riaz Haq]

In the ever-raging battle between Coca Cola and Pepsico, Sting is King - Profit by Pakistan Today


https://profit.pakistantoday.com.pk/2024/05/13/in-the-ever-raging-b...


There has been a major change in Pakistan’s carbonated drinks industry. In the year 2023, Coca-Cola was the most-sold carbonated drink in the country. Just over 451 million litres of Coke were sold in the last calendar year.

This beat out Pepsi, once the biggest carbonated drink in Pakistan, which sold just over 372 million litres in 2023. This is seemingly a major shift in consumer preference. Besides the flagship products, Coca Cola also had the bigger share of the overall carbonated drinks market.

Of the overall 1.33 billion litres of carbonated drinks sold in Pakistan last year, including all of the other brands these two companies operate such as 7Up and Sprite, Coke Pakistan had a market share of 42.7%, while Pepsico was close behind with 39.8%.

But even though Coke Pakistan technically has more sales than Pepsico in the carbonate beverages department, Pepsico is well ahead of Coke off the back of one single product.

Pepsico launched the iconic energy drink in Pakistan back in 2010. Since it is considered an energy drink, or a “stimulant drink” as it is legally labelled in Punjab, it falls under a separate category of product entirely. Over the years it has become abundantly clear that Sting’s competition is not Redbull or other canned energy drinks with ginseng (the product present in most energy drinks), but rather Coca Cola and Pepsi.



In the 14 years since it has been around, Sting has become the fourth largest drink in Pakistan after Coca Cola, Pepsi and 7Up. And it is fast catching up with 7Up. This means it sells more than Sprite, Mirinda, Mountain Dew, and Fanta. In fact, according to the sales numbers available for 2023, Sting has sold more litres than Mountain Dew and Fanta combined.

This is all despite the fact that Sting does not (yet) come in packaging of over 500ml. Currently, this 500ml litre bottle of Sting costs Rs 100. Its competitors like Fanta, Mountain Dew, Sprite, 7Up all come in packaging of 1 litre, 1.5 litre, and in some cases even 2.25 litres and are cheaper per litre in larger packaging. These drinks are also more in demand because they are served at weddings, corporate events, and other such gatherings. Sting is not a drink of choice for such occasions.

This presents us with a unique situation. It means Sting, despite billing itself as an energy drink, is directly in competition with carbonated drinks such as Coca Cola and Pepsi. Whatever it may claim, Sting also looks, tastes, and behaves more like a carbonated drink than an energy drink. But food and health authorities treat it as an energy drink, which can often mean regulatory scrutiny. But it seems the marketing benefit of Sting being labelled an energy drink is well worth it to Pepsico. After all, it is keeping them ahead of the competition.

So how do we get to the bottom of the Sting miracle? Easy, we start at the beginning and move on to the numbers.

Fizzy fights

There isn’t really any major competition to Coca Cola and Pepsi. Sure, there are a few anomalies in the world where local brands compete with the two multinationals. In fact, Peru is possibly the only country in the world where a local soda seller, Inca Cola, outsells both Coca Cola and Pepsi. But these are all outliers. Everywhere in the world the market for carbonated drinks is almost evenly split between these two Global Giants.

Pakistan is no exception. Coca Cola first hit the Pakistani market way back in 1953. Pepsi followed not long after. The logic from the global headquarters of both Coke and Pepsico is simple. Since they are each other’s eternal competition, wherever one goes the other follows. Whatever pricing strategy one follows the other copies. However much one spends on marketing, the other tries to one-up. Wherever there is Coca Cola, there must be Pepsi.

[Riaz Haq]

Nishat’s focus towards corporate farming - Newspaper - DAWN.COM


https://www.dawn.com/news/1844573

Quietly but steadily, corporate money is betting on Pakistani agriculture. One of the country’s largest business conglomerates — Nishat Group — for example, which began to expand into agriculture by setting up a modern dairy farm near Sukheki more than a decade ago is now planning to venture into the manufacturing of “precision” farm machinery in the country.

The growing corporate interest in agriculture is not surprising given the huge business opportunities offered by this sector in terms of its production of some key agriculture commodities like wheat, rice, cotton, meat and milk.

“I am very much excited about the agricultural sector in Pakistan. There are enormous opportunities here for sustainable business growth and exports,” Mian Mohammad Mansha, the chairman of Nishat Group, told this correspondent last week.

The country’s food exports, especially of rice, grew 37 per cent to $8bn in the first 11 months of last fiscal year to May. “The sector’s actual potential remains unexplored. The large productivity gap underscores that agriculture can make huge contributions to economic growth, food exports, and poverty alleviation,” he adds.

Ever since venturing into corporate farming in 2013, his company, Nishat Agriculture Farms Limited (NAFL), has invested consistently and heavily in agriculture. The group owns five farms spread over 1,500 acres of farmland and a large modern dairy farm producing packaged milk and other dairy products in collaboration with a Turkish firm for the large urban market.
“When Nishat Agriculture bought the land, it was water-logged and barren. We have constantly been investing in mechanisation of our farms every step of the way, from seed plantation to irrigation to crop harvest since 2017. This has helped us reclaim uncultivable land and turn it into one of the most fertile pieces of farmland in the country,” Mian Mansha notes.

His efforts to turn his own farms into fertile land have also helped his neighbouring farmers in Thatha Raika village recover their thousands of acres of water-logged farms. Nishat Agriculture is growing four crops — Alfalfa (protein-rich fodder), corn, rice and wheat — at the farm.

“Our lands were almost knee-deep below water when Nishat began reclaiming their land,” a local farmer recalls. “Now the groundwater level has gone down significantly, and we are again able to cultivate our area.”

Mian Mansha argues that Pakistan’s agriculture has enormous potential, but there is a need to improve farming practices, especially replacing the age-old flood irrigation method, by promoting mechanisation to get more out of the land at a reduced cost and less burden on natural resources and land under cultivation.

“The rapid climate change demands that we quickly adopt mechanisation in agriculture to reduce water consumption (around 90pc of available water in Pakistan is consumed in farm irrigation in the country), improve crop output, and cut time spent on sowing and irrigation,” he maintains.

Since Pakistan does not manufacture most of the machines used in farming, the upfront cost of farm mechanisation is quite formidable, especially for smallholder farmers.

“Nevertheless, the long-term benefits of mechanisation in the shape of huge water conservation, significantly reduced input and labour costs, and notable increases in crop yields and product quality can be enormous,” the Nishat Group chairman underscores.

“We are also helping smallholder farmers from the area by educating them in efficient farming practices and new technology.”

“The Pivot Irrigation System that we have installed to irrigate our farms, for example, is extremely efficient and uses 70pc less water compared to conventional flood irrigation, lowers electricity consumption, improves precision application of inputs, and results in time and labour savings due to its uniform uses as against flood irrigation methods.

[Riaz Haq]

Nishat’s focus towards corporate farming - Newspaper - DAWN.COM


https://www.dawn.com/news/1844573

“The pivot irrigation system can also be accessed online through a mobile app to perform various functions. The water thus saved could be used by other farmers. This also helps us get much better crop yields even from dry land or sandy soils than other farmers,” he says.

Local Manufacturing: Recently, Nishat Agriculture Farms has imported the Yanmar rice transplanter, the automated seedling picking and planting system, from Japan and aims to manufacture the machine locally.

“We have plans to invest in local manufacturing of agriculture equipment and machines in Pakistan, starting with the Japanese transplanter. We may collaborate with Millat Tractors or may use our own auto assembly facility in Faisalabad,” he asserts.

A hydraulic system for effortless operations and maintenance, the transplanter significantly reduces seedling waste, improves crop spacing and uniformity for optimal growth, controls plant density, and increases efficiency in water and fertiliser usage.

“The use of rice transplanters is estimated to drastically slash the labour costs from present Rs11,000 per acre to less than Rs1,000,” a senior Nishat Agriculture Farms official claims. According to him, the Japanese manufacturer of the machine claims that Bangladeshi rice growers had more than doubled (up to 100-200pc increase) their production by using this machine.

Agriculture is the backbone of Pakistan’s economy, contributing more than a fifth. The sector is the largest employer, employing more than 45pc of the country’s total workforce and is a major source of export earnings.

However, the sector faces multiple challenges: low yield, negligible mechanisation, growing water scarcity, large post-harvest crop losses, absent storage and cold chain facilities, rapidly declining soil fertility, extreme climate events, land fragmentation and so on.

Economic experts are unanimous that Pakistan cannot achieve robust, sustainable economic growth without a boost to its agricultural productivity and rural incomes. That will require intensive efforts to manage energy, water, land, soil and energy more efficiently and sustainably through adaptation to climate change and mechanisation.

It requires substantive policy reforms in agricultural research, extension, seed technology, and input markets, as well as large investments. Corporate participation and investment in agriculture are key to tackling these challenges and transforming agriculture with precision and efficient farming techniques and practices.

With Pakistan’s agriculture at a turning point, corporate participation will go a long way in realisation of the sector’s untapped potential provided policymakers seize this opportunity to execute reforms needed to encourage corporates like Nishat Group to invest in this largely neglected area.

[Riaz Haq]

Pakistan's Arshad Nadeem won Olympic gold, $1 million in rewards and a buffalo : Goats and Soda : NPR

https://www.npr.org/sections/goats-and-soda/2024/08/21/g-s1-17578/o...

Arshad Nadeem made history at the Paris Olympics.

A strapping 6 feet 4 inches tall, he set a new Olympic record for the longest javelin throw – 92.97 meters or 305.02 feet.

The 27-year-old became the first Pakistani to secure an individual gold medal.

And oh, one more historic thing: He is undoubtedly the first Olympic champion to be given a buffalo as a reward for his prowess.

Nadeem grew up in a rural community in the Punjab province of Pakistan, the third oldest of eight children. He was a gifted athlete who gravitated to cricket. Then his dad, who worked as a mason, suggested he try a javelin.

------

And from his father-in-law: a buffalo.

Jokes were made – including by Nadeem. On a morning TV show, an anchor asked about the buffalo. Arshad said he had been hoping for a large tract of land since his father-in-law is wealthy. Then he added, “Okay, a buffalo will suffice, too.”

Actually that’s an understatement. The buffalo holds deep cultural significance in Nadeem’s home province of Punjab. “In rural communities, a buffalo is considered one of the most honorable and valuable gifts, much like camels in desert regions like Saudi Arabia,” says Rashad Bukhari, a writer and cultural commentator born and raised in Punjab.

The gift that keeps on giving ... milk
Buffalo are valued for their milk –- called the “black gold’ of Pakistan. With a higher fat and protein content than cow’s milk, buffalo milk makes up 72% of the nation’s milk supply. Their milk is also well-suited to turn into ghee, a clarified butter that is a staple of the Pakistani diet,

So for farmers in the agricultural province of Punjab, a female buffalo is … um … a cash cow.

And it’s a gift that keeps on giving … milk. The average lifespan of a buffalo is 20 years. A female usually starts producing milk after birthing a first calf at 3 years old. The animal will continue giving milk for the rest of its life, according to Dr. Burhan-e- Azam, a veterinarian who works for Punjab’s livestock dept as a farm manager and an animal nutritionist at a buffalo research institute. He notes that most buffalo will yield milk if the udders are massaged – even if the calf is not around.

If you have a buffalo and need some money, you’re in luck. “You can sell it whenever you want and get good money right away,” says Azam. The price of a buffalo typically ranges from $1,500 to $3,600.

That’s why Pakistanis call a buffalo “a poor man’s bank.”

“Buffalo is a blessing for our region,” he adds. “It does not even require too much care like other high maintenance animals.” After letting the animal graze during the day, he says, “mostly people would tie their buffalo with a tree” in their compound at night. He adds that buffalo are well-suited for both hot and cold climates.”

The importance of a buffalo for Punjab can be gauged from the fact that in ancient times there was a profession called khoji, an Urdu word that can mean “detective.” A khoji could study the footprints left by a buffalo thief and follow trails for days, even weeks, until the buffalo rustler was discovered. (The advent of security cameras and modern roads have brought an end to the profession.)

Buffalo are also a part of the traditional dowry in Punjab. And when a family buffalo dies, Bukhari says that to this day, neighbors visit to offer condolences.

And you may wonder – is it a little odd to have just one buffalo? That’s often the case for families in Punjab, says Azam. Many households have a sole buffalo — and benefit from free door-to-door vaccination services and medical care provided by the government.

For javelin king Nadeem, the buffalo is not just symbolic. Buffalo milk and homemade ghee were a staple in his diet while training. His father-in-law’s gift ensures that the Olympic medalist will have fresh milk as he trains for his next competition.