Milk from buffalo is creating controversy in Pakistan as the country finalizes an agreement with China to export the product.

Much of Pakistan’s milk production comes from buffalo. And recently, Pakistani milk producer Fauji Foods Limited, which is owned by the military, agreed to an export deal with China’s Royal Group. The deal comes at time of rising inflation in Pakistan, sparking concerns about the impact the deal could have on supply and prices. It is also rekindling a longstanding debate over the military’s role in the country’s economy.

The first shipments of buffalo milk from Pakistan are expected to occur in early 2025. It is unclear how much milk Fauji Foods has agreed to export to China.

When compared to cow’s milk, buffalo milk is higher in protein, calcium and fat but lower in cholesterol. The cost of buffalo milk products tends to be higher, Islamabad-based dairy expert Abdul Sattar told VOA.

Pakistan typically suffers from seasonal milk shortages from April to October, due to low productivity and demand from a growing population, said Sattar. The price of buffalo milk is exacerbated by inflation and an 18% tax on packaged milk that went into effect in July of this year.

About 80% of the milk in Pakistan comes from small-scale farmers rather than large companies like Fauji Foods. This leads to concerns that the military may have sidelined these types of producers in the deal with China’s Royal Group.

The Pakistani military has not responded to VOA’s request for comment at time of publication.

Muhammad Asif Khan, president of the Livestock Farmers Welfare Association in Peshawar, expressed concern regarding Fauji Foods’ ability to meet Chinese demand, suggesting that the company might need to use milk from small-scale farms for export.

“It will be difficult for a sole company to meet the growing milk demand of the Chinese market. Alternatively, they would default on supply or procure milk from the small-scale dairy farms, which always have enough stock readily available,” Khan told VOA.

Khan argues that, despite being good for businesses involved in the export deal, this would dramatically increase the price of milk in the country.

Chinese interest in Fauji Foods

In addition to the buffalo milk deal, China’s Royal Group has also imported some 10,000 buffalo embryos from Pakistan’s Fauji Foods since June, and the two sides have plans to increase the sale to at least 300,000 embryos over the next 10 years.

In 2017, Chinese state-owned dairy giant, Inner Mongolia Yili Industrial Group, attempted to acquire a 51% stake in Fauji Foods. However, the Chinese company pulled away from the deal in 2019 without providing a reason. Fauji Foods stated the two sides were unable to complete negotiations before the established deadline.

Pakistani military’s economic dominance

The latest milk deal between the military-run Fauji Foods and China’s Royal Group has reignited concerns over Pakistani military’s control and influence over the economy.

Critics claim the military’s ability to leverage state resources, political influence and commercial infrastructure allows it to dominate local and international business.

“The military’s institutional strengths and advantages are well known. Backed by these strengths, the military’s commercial wings consistently employ unfair tactics to compete with other competitors, acquire commercial enterprises and secure contracts in a nontransparent manner,” Farhatullah Babar, a former senator affiliated with the Pakistan People’s Party, told VOA.

The military’s privilege in the market extends from military-directed subsidies to an ease of contract approval that circumvents established governmental processes.

Dr. Ayesha Siddiqa, a Pakistani military scientist and author of the book “Military Inc.,” told VOA that the military has had previous involvement in China’s agriculture industry, supplying meat to Chinese producers.

The Pakistani military has also been on the receiving end of Chinese products with more than 60% of Chinese defense exports going to the Pakistani military, according to a Mercator Institute for China Studies report.

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