The Cost of Living: Of Milk and being a Lakh-Patti

Posted on November 2, 2006
Filed Under >Adil Najam, Economy & Development
33 Comments
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Adil Najam

Our educated chattering classes do not consider it sophisticated to talk about milk.

(Photo Credit for this powerful picture: Baba Dody)

They would much rather spend their time pontificating about global geopolitics, the power politics of our would-be-saviors (both those in power and those waiting to come back to power), the intricacies of conspiracy theories about ‘hidden hands’ and not-so-hidden motives, and trying to read the ‘real’ story ‘between lines’ even as they ignore the stark realities of the lines themselves. Of course, for others there is always the option to belch out slogans reeking of pious religosity or self-righteous modernity.

Ultimately, however, you need to think about the price of milk. Because milk is a necessity and slogans are merely a distraction.

I know enough economics to know that while improvements in macro-economic trends matters, they matters much less when the cost of living and making ends meet for the citizenry at large run contrary. We at ATP have been and remain quite concerned about everyday inflationary trends. As we have stressed before, there is something very wrong when the denomination of the highest value banknote (Rs. 5000) is greater than what is considered a decent monthly wage for a middle-class Pakistani! We have also written about just how much it really costs ordinary Pakistanis to get petrol. Now, it turns out that the cost of milk – a daily necessity – is on the rise and moving in the same direction as the cost of petrol.

Many of us tend to think of Pakistan as a place where things are cheaper than in Europe, the US, the Middle East, or elsewhere. I don’t want to go into the math again (see here and here), but this graphic from The Daily Times (3 November, 2006), reminds us yet again that the real cost of living in Pakistan is not just higher than in most other places, for ordinary Pakistanis it is exorbitant.

The text in the graphic reports that most companies have raised the price of their one-litre packs of processed milk, and what used to sell for Rs. 30 is now selling at Rs. 38. Moreover, it reports that the price is likely to increase further.

All of this reminds me of a post Mansoor had recently written in Karachi Metroblog where he posed the question “What exactly can you do with a Million Ruppees?” The answer he came up with was, ‘Not too much!’

A lakh-patti (One Lakh=100,000) is not necessarily rich and depending of how many ‘lakhs’ one has, may even be poor!

The really sad part is that despite all this, most Pakistanis will never know what a Lakh Ruppees look like. And it is we, and not just the ‘authorities’ who are need to accept the blame. For those of you who like to get agitated about things, get agitated about this: The cruelty in society comes not only from the actions of those in power, but from the neglect, the silence, and the inaction of all of us. Indeed, from our willing participation in keeping things as they are.

33 Comments on “The Cost of Living: Of Milk and being a Lakh-Patti

  1. bhitai says:
    November 2nd, 2006 10:18 pm

    Just the other day Mushy claimed to have reduced poverty by 10%. Obviously he presented nothing to back up his claim. Even if he had, few would believe him anyway.

    Of all the excuses our ‘ministers’ make to justify inflation, one irks me the most ‘yeh cheez toe india main ziada menhgi hay’..as if Pakistan is at par with india in every other regard…

  2. Roshan Malik says:
    November 2nd, 2006 11:24 pm

    What a coincidence!!!
    I am writing on Pakistan’s Dairy policy which has been recently evolved with the support of USAID. Ironically, Pakistan is the fifth largest milk producing country and has the lowest Farmgate milk prices among the major dairy producers of the world. In this regoverned market structure the milkman (gawala) or the corporate distributors who processing and selling UHT milk are minting profits while marginalizing the poor farmers and consumers.

    Food for thought about our dairy policy:

    The Strategic Plan for Pakistan Dairy (2006) also known as the ‘White Revolution’ identifies challenges and potential repercussions in the dairy sector of the country. The targets set in the strategic plan for the year 2015 seek to boost the competitiveness of the industry by regoverning the dairy production and marketing structure. This is to be done by first establishing model commercial dairy farms. Even in the US, which has such a modern dairy sector, the transition from small family farms to larger commercial farms has not been without social cost. The strategic plan (2006) does not represent the interests of small farmers who represent more than 70% of total farms in Pakistan. Even though increased world food supplies are a positive outcome, the ‘Green Revolution’ has also resulted ecological and economical imbalances in the rural livelihoods. Therefore, one needs to be very careful assessing the total costs and benefits of the ‘White Revolution’ especially for the subsistence farming communities. Restructuring and regoverning of dairy production and supply & marketing chain should not undermine the livelihoods concerns of rural dairy farmers. We believe that the participation of small farmers’ organization and civil society organizations should be encouraged before the implementation of the strategy.

  3. Sridhar says:
    November 3rd, 2006 12:01 am

    Roshan:

    Thanks for your insights on the dairy industry and dairy policy in Pakistan. This is actually one industry in which India has had a good degree of success through the cooperative route. It has its own problems, but for the most part, it has helped the small farmer get a renumerative price, while keeping prices low for the end consumer.

    Bhitai:
    As a comparison to the prices of milk quoted in the report, I was checking the prices in my home city of Chennai. The major supplier of milk there is the local cooperative, called Aavin (it has roughly 75% market share in the city). This is at least one case where the ministers cannot say that “India main zyada mehngi hai”.

    http://www.aavinmilk.com/milk.html

    Prices are similar across the country. The prices are in the Rs. 12.50/litre to Rs. 18.00/litre range for various types of milk. Even after conversion to PKR, it is way cheaper than the Rs. 30-38 quoted in these reports. And this has been made possible at least partially due to the heavy presence of cooperatives. The cooperatives have also helped greatly expand production – the white revolution has been primarily facilitated by them.

    The biggest cooperative is Amul, which is the brandname of the Gujarat Cooperative Federation (each state has its own cooperative dairy operation, with its own brandname – some are more successful than the others). Amul is in fact one of the biggest brand names in the country and has a formidable marketing muscle. Even a large multinational like Unilever (a company I worked for in the past) has had to concede defeat and scale down its operations in the ice-creams market due to the drubbing it received from Amul. And it is 100% owned by the farmers.

    I would imagine that Pakistan has similar grassroots strengths in the dairy industry and can potentially benefit both end-consumers and farmers through the cooperative route.

  4. Roshan Malik says:
    November 3rd, 2006 12:33 am

    Sridhar,
    Thanks for your prompt response. No doubt Amul is successful cooperative dairy model which has established its supply chain from farmgate to consumer. But here in Pakistan, we have one similar initiative Hala dairy (cooperative model) but it has limited outreach and has pasteurizing plant rather than Ultra High Temperature (UHT) milk treatment technology which has long shelf life for milk. The corporate sector on the other hand opted for UHT milk treatment plants and therefore having competitive advantage over cooperative initiative. Similarly, the recent dairy policy also has more thrust to promote corporatization of dairy sector rather than strengthening cooperative model.

  5. November 3rd, 2006 12:48 am

    Sridhar, Roshan, thank you for these very pertinent points. Amul is, of course, an icon in cooperative and participatory development processes. As with Yunus and Grameen, Dr. Kurien – who is teh inspiration beind the Amul idea – is someone who was able to have a great vision and also the entrepreneurial skills to turn it into reality. I remember meeting him in Ahmedabad on two sepertae trips and have learnt much from him.

    There has been talk and even some attempts to apply the idea of Amul, including the milk trains that are part of its lifeline in Rajhistan and elsewhere, in Pakistan but to the best of my knowledge (Roshan may know more) these were not successful becasue the corporate milk producers were already well set in (Haleeb and others) and had already developed their networks of collection, etc. There has also been talk of trying out the cooperative model in other commodities but have not been very successful in Pakistan, partly for scale and partly for infrastructure reasons.

  6. Roshan Malik says:
    November 3rd, 2006 1:17 am

    Adil
    You are right the corporate sector has established a strong network of milk collection centres in remote areas of Pakistan and particularly in Punjab. Nestle has more than 3000 milk collection centres, then comes CDL (Haleeb) and now Engro is entering in the market. There are more than 23 UHT milk treatment plants in Pakistan and most of them are owned by private sector.
    Gawala (milkman) collects 90% of the milk from farmgate and the new policy wants to eliminate gawala’s role and relegate it to the milk collection centres.
    I think after cooperative scandal in 80′s people are really scared of it. But still I believe that the small scale producers can only survive with strong cooperative (Amul) initiatives against the corporate giants.

  7. Owais Mughal says:
    November 3rd, 2006 1:29 am

    aayiay hum ‘doodkh ka doodh aur pani ka pani karte haiN’

    Interestingly, according to 2006 livestock census of Pakistan, we have 1 buffalo per 5 people and 1 goat per 3 peoplw which means the country should be ‘khud-kafeel’ in meat and dairy both. I had a post on this topic at another forum and I’ll gather some census number of live-stock in pakistan as of 2006 :)

    buffalo population: 28,400,000
    Goat: 61,900,000
    Sheep: 25,500,000

    Milk production of Pakistan for fiscal year 2005-06 was:

    31,294,600,000 tonnes

    Some other interesting numbers for pakistan:

    Human population in 2006: 154,000,000

    Donkeys: 4,300,000

  8. November 3rd, 2006 1:36 am

    Owais, are you sure we have ONLY 4.3 million donkeys…. always seem like there are more… maybe some are being counted in other populations ;-)

  9. Samdani says:
    November 3rd, 2006 2:08 am

    Thoughtful post and interesting discussion. I do not know the detials of the dairy industry but do hope that the broader message of the post and the second half – which is about how difficult daily survival is becoming with increasing costs – is not lost. That is a real challenege and has been for this and last many governments. All have failed to address this meaningfully.

  10. Adnan Ahmad says:
    November 3rd, 2006 8:41 am

    “Donkeys: 4,300,000″
    “maybe some are being counted in other populations ..”

    I can think of four seen in the diwali celebration picture. Four well-fed donkeys. Could the one in the middle of that picture be a khuchur? He just seemed big for a donkey.

  11. Khalid R Hasan says:
    November 3rd, 2006 8:48 am

    Interesting to see that the price of packaged milk in India is in the same price range as fresh unpackaged milk delivered to one’s doorstep in Karachi. The cost of living in India seems to be half of that in Pakistan, judging by this one item.

    On the broader point,it is difficult to see why we need a 5000 rupee note when the USA manages with 100 dollar notes. Annual per capita income in the US is around $40,000 whereas Pakistan’s is about Rs.50,000. The undocumented “black” economy is the only one to benefit from it, and it seems strange that the government is tacitly encouraging it through the issue of this note.

  12. Adnan Ahmad says:
    November 3rd, 2006 9:09 am

    Khalid, I agree with you. Pakistan’s parallel undocumented economy and its participants are more powerful than people know and can almost dictate terms with the government. True the rupee has lost much of its value over the last few year but still an increase of 30 percent in one shot in milk prices is appalling. In the 80s and 90s we knew the sugar mafia was powerful but over the last decade cement manufacturers have joined the ranks. Remember what happned recently to people who imported cement from China. Govt made them suffer to the last breath after encouraging them to import. Not just that, after all that talk against the cement producers, the PM signed the law stating all roads being built in the country will use cement going forward. Existing stocks of bitumen will be exported (god knows to who). The timing was odd yet no one in the media talks about it. Nor do they talk about the last year’s KSE scam which was huge. When the ex KSE chief blames people in public for a loss in billions it ought to be taken seriously. God also knows why the general is keeping mum on these issues.

  13. Sridhar says:
    November 3rd, 2006 9:36 am

    Owais:

    The numbers of milk production seem to be off by a factor of 1000 (it must be kilos and not tons). For a milk production of 31 billion tons is more than the world’s production of milk and would further mean that each buffalo produces about 3T of milk a day on average, rather than about 3kg per day.

    BTW, the figures suggest that milk availability in Pakistan is pretty high. India’s average milk availability per capita is about 250g/person/day. In Pakistan, it is of the order of 500g/person/day. Of course, this figure is driven by the province of Punjab (Indian Punjab has a milk availability of almost 1kg/person/day and Haryana and Western UP follow have high milk availability). But it suggests that Pakistan has significant export potential since consumption is likely lower than the average of 500g/day. India has one of the biggest dairy industries in the world, but inadequate export potential because all its production goes towards meeting domestic needs.

    Also, productivity of Pakistani buffaloes is quite high (remember that the 3Kg/day figure is averaged over non-milch cows – i.e. male buffaloes and underage/overage female buffaloes). It is lower than the figure for Indian Punjab/Haryana (~5Kg/day), but much higher than the figure for India as a whole (of course, India’s figures are also distorted by the fact that there are much older cattle in the population due to the fact that miniscule numbers are killed for their meat, so averages tend to be downward biased).

    To Roshan and others: Indian cooperatives have their own problems that need to be avoided if Pakistan wants to go down this route. Many state cooperatives are sick since they are not run on entrepreneurial lines, but like typical Govt. departments. Corruption and inefficiency have eaten away at cooperative operations in some states (the usual suspects like UP and Bihar have virtually non-existent cooperative operations). Amul (Gujarat) is a huge success across the country and brandnames like Aarey (Maharashtra) and Aavin (Tamil Nadu) are reasonably strong local brands, but the success is not uniform across states.

  14. Adnan Ahmad says:
    November 3rd, 2006 9:46 am

    A friend had recently told us that Australia was importing cows from Sahiwal for they considered them genetically superior. They are thought to be the only breed that can shrug ticks effectively from their skin.

  15. Sridhar says:
    November 3rd, 2006 9:54 am

    Khalid:

    One cannot judge cost of living by a single item. I have come to the conclusion that cost of living is indeed lower in India on average, but certainly not by a factor of two. Prices are lower for most goods, but by a factor of 10-15% on average. Some goods are even cheaper in Pakistan, for instance, telephone calls (they were cheaper in India as recently as two years ago, but the situation has reversed).

    The biggest difference in prices between India and Pakistan seems to be for newspapers. Typical national dailies (Times of India, Hindustan Times, Hindu, Indian Express, Telegraph etc.) range in price between Rs. 1.50 and Rs. 3.50 (depending on the degree of competition in the respective cities). Typical dailies in Pakistan seem to cost about Rs. 13-15. (A caveat is that the goods are not strictly comparable unlike say milk)

    The penetration of this sector reflects the prices. The circulation of the largest (or at least the most respected) daily in Pakistan, the Dawn, is roughly equal to that of Lokmat Times (an English language daily based out of a small city of Maharashtra called Aurangabad) or the Hitavada (based out of Nagpur) and lower than that for the Pioneer (based out of Lucknow). The penetration of the newspapers will be way higher in Pakistan, if prices come down (and revenues for the newspaper sector will increase due to greater advertising revenues). It would impact the country (positively) in many ways.

  16. Sridhar says:
    November 3rd, 2006 10:07 am

    Roshan:

    You mention that UHT milk has competitive advantage over pasteurized milk. Why is that the case? In Western countries like the US/Canada, pasteurized milk has the bulk of the market, with UHT milk in tetrapaks accounting for a small share. In India too, pasteurized milk accounts for most of the market. People buy UHT milk too, but only in regions where the cold chain (i.e. refrigerated supply chain) is not well developed or for emergency use (due to its long shelf life).

    If most of the Pakistani market is indeed UHT milk, it would explain the price differential at least partially (though even for UHT, the prices seem high, given the volumes). But the question is, why has the Pakistani market shifted to UHT? Is it the absence of a cold chain? Or is it led by aspects of consumer behavior?

  17. Pervaiz Munir Alvi says:
    November 3rd, 2006 10:11 am

    About myself:
    First few days of my visit to Pakistan I notice every beggar, handicapped, malnourished person on the street.
    I notice the disparity between ‘servant’ and ‘master’ classes in the houses of my friends and relatives.
    I notice the very large piles of garbage along very broken roadsides. The very sick and poor masses just sitting around doing nothing.
    I see people just looking to steal any thing they can.
    I see my rich friends and relatives trying not to see any of this.
    After few days of my stay, I become just like my friends.
    I try not to see any of this. I do nothing.
    I simply 72 hours before my departure date re-book my return flight and come back to the USA.

  18. November 3rd, 2006 10:41 am

    Mr. Alvi,
    I share your sentiments about our (Pakistani expats’) visits to Pakistan and wanted to share a piece I have written that might resonate with you: http://www.ambreen.net/clips_detail.asp?id=9.

    As for the point on mehngai in Pakistan, I am always taken aback by what is considered a “decent” wage for college graduates and “middle-class” corporate workers in Pakistan. I can’t imagine sustaining myself on such an income alone if I lived there. Sure the economy has improved, but does anybody have a sense of the concrete steps we need to take to improve the wage standards in Pakistan?

  19. Adnan Ahmad says:
    November 3rd, 2006 11:14 am

    Ambreen, I enjoyed reading your piece. Mohsin Hameed had also written a terrific paragraph in his “Moth Smoke” on two classes in Pakistan differntiated by their access to airconditioning. I visited after eleven long years earlier in the year and honestly felt everything that you and Munir mention. Shopping, the driver waiting under the shade, the pepis bottles, new cars, razor phones, hopeless poverty. All this would go even deeper when I would hear the driver talk about his two year old daughter and see a rare light in his eyes.

  20. Pervaiz Munir Alvi says:
    November 3rd, 2006 11:47 am

    Ambreen Ali: I have read you piece. The guilt weighs very heavily on collective soul of our nation. Some time I wish there was a peoples revolution in Pakistan. A redistribution of wealth. Then again I am too cowered to even lift a finger for the down and out. I am too comfortable over here in the USA. I just write blogs. Knowing myself, if I was living in Pakistan I probably would be spending all of my time trying to get rich and accumulating wealth. Developing ‘connections’ and asking my friends for favors for self gains. Just like my friends.

  21. Roshan Malik says:
    November 3rd, 2006 12:19 pm

    Sridhar,
    Our dairy policy went through various policy shifts. In seventies the government sponsored pasteurizing plants while World Food Program provided skimmed milk which was pasteurized and supplied in bottles. But bottled milk could not attract the consumers.

    In early eighties government eliminated import duties on UHT milk treatment plants. Most of the UHT plants could not run on capacity utilization as there was poor supply chain and weak distribution. With the passage of time they established collection centres. Since 1994-95 the UHT milk supply has increased from 78 million tonns to 360 (app) tons in 2003-04.

    Of course the price of UHT treated milk is very high as compare to milk supplied by Gawala (milkman). But the government and the private sector is encouraging UHT treated milk to consumer because of food safety and investment issues.

    Owais,
    No doubt we are ‘khud kafeel’ in per capita milk, but distribution issue is not being tackled particularly with reference to supply of milk to urban poor. Almost 25% of the milk in urban household is consumed by the children.

    Yes India and Pakistan have export potential for dairy products but there comes the farm subsidies issue by the rich countries like USA and EU. Their subsidized dairy products are undermining the world dairy prices. Therefore we are unable to compete in global dairy market.

  22. British Pakistani says:
    November 4th, 2006 12:00 pm

    It breaks my heart looking at that pic of the old grandma :(

    May Allah ease the pains of all those suffering

  23. MQ says:
    November 4th, 2006 4:34 pm

    If everyone just prays for the “grandma” and does nothing else then I am afraid they will be putting Him in an embarrassing corner.

  24. November 5th, 2006 12:39 am

    This, from Dawn today, shows the recent increase in prices of necessary goods.

  25. ahmed says:
    November 5th, 2006 12:41 am

    May God Almighty, who is the Lord of all Creation AND the God of all things Big and Small, have pity on our fatted souls, and forgive us our sins, the counted and the uncounted.

    MEA CULPA… MEA MAXIMA CULPA

  26. Roshan Malik says:
    November 5th, 2006 1:18 am

    Adil,
    I would only say that our president claims to be well verse in ‘Musharranomics’
    ‘SUB THEEK HAAIII’!!!!!

  27. MQ says:
    November 5th, 2006 9:12 am

    Adil’s price chart reminds me of Habib Jalib who once wrote during Ayub Khan’s days:

    SaaTh (60) ropay mun hai aaTa
    Us par bhi hai sunnaaTa
    Gohar, Adam aur Dawood
    Banay haiN Birla aur Tata

  28. November 6th, 2006 9:17 pm

    I thought of making this a new post altogether. And maybe it should be. But at the least I wanted to share this with you and I do earnestly hope people will ponder upon this.

    According to the Sindh Chief Minister, as reported in the Daily Times (7 November, 2006):
    Rs 7,000
    What a government primary school teacher earns a month

    Rs 1,500
    What a private school primary teacher earns a month

    1,300
    Number of closed schools that need to be reopened

    1,200
    Number of new schools being opened

    406
    Number of colleges in Sindh

    Rs 2 billion
    Funds given to districts for education

    Now think again, please, about that Rs. 5000 note and the meaning of Lakh Patti!

  29. Samdani says:
    November 6th, 2006 11:31 pm

    Private primary school teacher… Rs. 1500 per month!!!!!

    What sort of a private school would that be… and how in God’s name can one live on that. Anywhere!

  30. CDiamente says:
    July 8th, 2007 1:04 pm

    I am trying to ascertain how much money is necessary to live in Lahore, Pakistan. I am going to present this information to my church to see if I can interest anyone there to sponsor a Pakistani family.
    What is the cost in US dollars for:
    1 pound of Beef
    1 pound of Lamb
    1 pound of Sugar
    1 Loaf of Bread
    1 dozen Eggs
    1 pound of Cheese
    1 gallon of Milk
    1 head of Lettuce
    1 pound of Tomatoes
    1 pound of Onions
    1 month rent in moderate priced 1 bedroom apartment
    1 month gas/electric rates for same 1 bedroom apartment
    1 doctor’s visit for a child’s vaccinations
    1 doctor’s visit for a child’s dentist cavity filling

    What organization can a family contact to sponsor a Pakistani child to come to the US as a foreign exchange student?

    If anyone can help me I would appreciate it! Thank you in advance for considering my lengthy request.

    Christina D

  31. Adil says:
    January 28th, 2008 11:58 am

    i am stunned to know this facts , although the denomination of the highest currency note as compared to the average vage of a pakistani teacher or labour or anyone really gives a horrible ppl
    well they say the economy is on boom !!!!!!!!! i dont know what that means
    does it mean that thinking of money for daily utilities is so big for an average pakistani is a booming idea, and his mind goes boom like thats just an impossible task
    May God help us and wake us to our concious so we can realize what we are supporting , and who we are supporting
    and what we are doing to the poor of pakistan by not doing or even saying anything , not asking for change and going towards positive
    i m speechless now
    Adil Umer, UK

  32. March 10th, 2008 3:55 pm

    [...] Image linked from Pakistaniat.com [...]

  33. Watan Aziz says:
    November 1st, 2010 10:44 pm

    Our educated chattering classes …. spend their time pontificating about global geopolitics, the power politics of our would-be-saviors (both those in power and those waiting to come back to power), the intricacies of conspiracy theories about ‘hidden hands’ and not-so-hidden motives, and trying to read the ‘real’ story ‘between lines’ even as they ignore the stark realities of the lines themselves. Of course, for others there is always the option to belch out slogans reeking of pious religosity or self-righteous modernity.

    So, now we have a good definition of the “gitter-mitter” crowd!

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