In a major contradiction to the promises made by Prime Minister Imran Khan for a citizen-friendly budget for the upcoming fiscal year 2021-22, the government has snatched away one of the most important things for the growth of children, and that is, dairy.
Despite assurances to improve the dairy sector and continuous requests by the dairy industry to make the dairy industry a zero-rating sector of the economy, the incumbent government has taken a 180 degree turn and the taxes increased from 10 percent to 17 percent for the upcoming fiscal year 2021-22.
Named ‘nutrition tax’, the increased tax would act as a burden on the poor population that is already being crushed by the rampant inflation in the country.
The finance bill presented on 11th June has hit the dairy sector with a hike of 7% in sales taxes from the existing 10%, on milk and dairy products such as butter, cheese, cream, fortified milk powders, tea whiteners, etc, making it difficult for the common man to access healthy and nutritious dairy products.
According to data, milk and other dairy products make up roughly 26 per cent of the kitchen budget, meaning that this price hike would impact the daily lives of consumers the most. Pakistan produces roughly 59.7 billion tons of milk annually, which has an informal market size of $34 billion.
However, the loose milk quality is sub-par due to it being unregulated and unchecked, and the adulteration has a negative impact on health. Estimates show that roughly 20 percent of loose milk is wasted because proper cold chain refrigeration systems and distribution facilities aren’t available. This implies that almost 10 million tons of milk that has the potential to provide nutrition to 4 million children daily is wasted.
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This shows that the milk industry is at a huge loss, with no pasteurizing mechanisms in place in the loose milk industry, leading to lower shelf life and a lot of it being wasted before it reaches the end-user.
The high VAT will impact the prices and thus the demand side of the milk industry will be impacted as the dairy products would become unaffordable for the already inflation-stricken poor of Pakistan.
The most impacted sectors due to the application of the VAT of 17 per cent include the cream industry with an impact of Rs700 million; the fortified dairy powders industry will also be impacted by Rs700 million.
Furthermore, the 17 percent VAT would impact the yogurt industry by Rs400 million, the flavored milk market by Rs700 million, and Tea cream market by Rs1500 million.
The adverse impact of the tax would not be borne by the big corporates but the consumers as the producers will pass the tax burden onto the people and the prices of the products would increase for the already inflation-stricken poor.
Nutritional Impact
Other than the monetary loss, there is an economic cost, which is in the form of lack of nutrition among the children, who are the most vulnerable to such a policy.
According to UNICEF, “Nearly 10 million Pakistani children suffer from stunting.” The UNICEF report on Pakistan’s nutrition says, “Only 38 per cent of children are exclusively breastfed for the first six months of life. As a result, more than half the children under five years of age are deficient in vitamin A, 40 per cent are deficient in both zinc and vitamin D, and nearly 62 per cent are anemic.”
The fortified products made especially for infants and their mothers are one of the best solutions for this and Pakistani children, especially those belonging to poor families need to eat right.
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The incumbent government along with UNICEF Pakistan is focusing its support on the 1,000-day nutrition “window,” during which children’s nutritional deprivations can be reversed.
Keeping this in View in September 2020, Imran Khan launched the Ehsaas Nashonuma program, a Health and Nutrition Conditional cash transfer program to focus on the health of children.
However such policy can be detrimental to the progress made by the Pakistani government.
Keeping this in mind, Pakistan Dairy Association has published a press release asking the government to “Stop Snatching Nutrition from Pakistani Children.”
The press release mentions that the recent irrational tax policies are forcing the dairy sector to operate at just 50 percent capacity. The press release also called upon the Prime Minister and the finance minister to come together to help the dairy industry be accessible, and profitable for the farmers, and help the industry fight malnutrition.
Thatcher, Thatcher, milk snatcher
A similar thing happened in the 1970s in the UK. In June 1971 Margaret Thatcher, the then education secretary in Edward Heath’s government, put forward her plan to remove the provision of free school milk for over-sevens at junior school. Although unpopular with many, and leading to the jibe “Thatcher, Thatcher, milk snatcher”, it became law in September.
Haddad says: “The abandonment of free school milk for over-sevens in 1971 and then for all in 1980 was not a good thing. In fact, the 1980-2000 period is called the ‘no nutrition standards era’ for school meals and represents an act of extraordinary self-harm.”
By 1980, she became prime minister of the UK and was able to complete the job with a new Education Act, not only removing free school milk from all children but removing minimum nutritional standards and the obligation for Local Education Authorities to provide comprehensive meals service.
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This continued until Tony Blair, who is applauded for the reintroduction of such nutritional value programs.
The merits or demerits of Thatcher’s policy aside, Imran Khan should not aspire to pass such an act in his government that makes milk expensive for the children in Pakistan, and thus continue to fight for the health of the future generations of Pakistan, for policies like the new VAT would be detrimental to his own goals.