1. Dairy, Rice & Meat Exports Challenges & Opportunities Agriculture Export Development Seminar 28 March 2011 Ahsan Afzaal Ahmad General Manager Marketing Engro Foods Limited

2. Significance of Milk Pakistan 5 th largest milk producer 56.6 mil animals and 36.6 bil liters milk 10+ million farming families Staple food of 175+ million people 11% contribution to GDP – Milk Rs 341 bil – Wheat Rs 150 bil – Cotton Rs 100 bil – Rice Rs 71 bil

3. Tradable Milk 18.9 Bio Farmer Retention 11 Bio useless 6.7 Bio Liquid Milk 13.3 Bio Yogurt 2.4 Bio Sweets 3.2 Bio Unprocessed 12.1 Bio Processed 1.2 Ambient 0.716 Powder 0.415 Chilled 0.045 36.618.913.31.2 Billion Liters % Milk Production Flow

4. Key Dairy Challenges Quantity – Supply-demand deficit of 4 bil liters by 2015 Quality – High TPC reducing shelf life – Adulteration Cost – Drastic increase in farm gate prices (+15% from 2006) – Shrinking processor margins

5. Milk Quality Implications Major hurdle for export opportunity and value addition Average TPC in Pak 3+ mil/ml vs 50k in Middle East Shelf life 3 month vs 6 month in Middle East Adulteration

6. What Needs to be Done Prioritize milk shed areas for investment Incentives on chillers infrastructure investment Minimum pasteurization law Incentives for corporate dairy farming Improved breeding and farming practices Better fodder management Regulatory framework to encourage quality

7. Milk Global Opportunity In a growing world, milk is the new oil Increasing demand-supply gap leading to high prices and diminishing dairy stock piles Rising incomes – China, India, Middle East Asia has replaced Europe as largest consumption zone Reducing subsidies and tariff controls Value addition

8. Rice Opportunity & Challenges Pakistani rice possesses superior cooking characteristics Exports of 1 million tons of Basmati rice annually – predominantly Super Basmati Despite superior quality, it sells at discount Key challenges are: – Low quality parameters enforcement for export Capacity building of regulators Adequate technology – Reliance on single variety Expedite R&D for new high yield varieties (farm & milling) – Inadequate paddy drying infrastructure (aflatoxin) Farmer education on harvest time to control moisture Incentives to encourage drying units Engro procuring paddy directly from farmers, extensive agri services provided, launch seed distribution in 2012

9. Meat Opportunity & Challenges Recent acquisition of a Halal meat company in North America (Al-Safa) Understand market and develop alliances Currently meat can not be exported from Pakistan to North America (quality & certification) Expand business into grains and fruits Focus on Middle & Far East and Central Asia