Malnutrition worsens as “nutrition tax” bleeds the dairy sector

By: Hadia Mukhtar

Being the backbone of Pakistan’s national economy, Pakistan’s dairy industry stands devoid of strategic investments essential for improving labour productivity and existing quality. As the recent “nutrition tax” in the budget worsens the malnutrition crisis in the country, collaborated approach by all stakeholders is the need of the hour.

In the 2021 Finance bill, the dairy sector has seen a hike in the General Sales Tax (GST) rate from 10 percent to 17 percent on milk, cheese, yogurt, butter, flavored milk, tea-whitener, and cream. This move will lead to the price of these milk products skyrocketing resulting in an additional payment of Rs 5 billion by people residing in cities who use packaged products. The Pakistan Dairy Association elucidated the repercussions involved in increasing taxes in the form of fuelling inflation and playing with the health of the nation. It is because dairy plays a fundamental part in a nutritious diet that fosters a robust and energized build of the children in their growing years.

Such a decision to tax the dairy sector comes at a point when Pakistan is walking on a tightrope to ensure economic sustainability amid multiple challenges. These challenges include the Covid-19 economic meltdown in the country that has exacerbated the food and nutrition crisis and the resuming of IMF’s structural adjustment program (SAP) that pitches for increased taxation and curbs on public expenditure. 

Consequently, the dairy sector will receive further setbacks with this decision. It was already lagging due to a lack of modernization and the quality and quantity of yield produced. Industry insiders suggest that the recent policy shift will weaken the already sapped dairy industry by 15 billion rupees in the next three years and adversely impact people’s livelihood and their diet requirements.

Ramifications of the “nutrition tax”

The ramifications of this “nutrition tax” on milk, butter, cheese, and cream can be seen in the paralysis of the common man’s ability to access healthy and nutritious products. This measure will adversely impact the health of our young population and mothers who are the bedrock of a progressing society. 

More than that this decision stands at odds with the PTI government agenda that vowed to breathe life in the already depleting and under-performing dairy industry which could enable exports in the long run and ensure the wellbeing of our growing population. Thus, the decision to increase the taxes on the dairy sector is a contradiction from the PTI’s growth-driven objectives.

Dairy; an essential part of nutrition

According to the report by UNICEF report on “Nutrition”, a healthy diet with the optimal amount of nutrition is a bedrock of a child’s survival and development. Well-nourished children contribute effectively and positively to society’s wellbeing as a nutritious diet infuses in them the energy and resilience to combat diseases and unforeseen circumstances. Nutrient-dense dairy foods-milk, cheese, and yogurt are also a core part of healthy eating patterns and dietary guidance recommendations globally. According to the research by Food and Agriculture Organization (FAO), dairy products are the best way to help people across populations to meet the body’s requirements for calcium, selenium, riboflavin, and Vitamin B12. They play a significant role in strengthening bone health among children and adolescence in their formative age of growing. Also, among adults, they reduce the risk of osteoporosis.

The writer is a geopolitical analyst with a keen interest in international politics. She can be reached at [email protected]