The milk production system in Pakistan is characterized by large numbers of small, geographically dispersed dairy producers who have marketable surpluses of milk but face diseconomies of scale in marketing it to demand centers in distant urban areas. The traditional middlemen who procure milk from rural areas close to the cities offer at best modest returns to the farmers. In the past couple of decades, two institutional developments have taken place in the milk processing sector. One is the penetration by large commercial dairy processing firms that procure milk from farmers, process it, and produce a range of milk products.
