Identifier
Created
Classification
Origin
09LAHORE177
2009-09-02 07:18:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Lahore
Cable title:  

U.S. DAIRY IN PUNJAB: A $34 MILLION SUCCESS STORY

Tags:  ECON EAGR EAID ECIN EINV ETRD PGOV PREL PK 
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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
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RUEHLH/AMCONSUL LAHORE 5316
UNCLAS SECTION 01 OF 02 LAHORE 000177 

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAGR EAID ECIN EINV ETRD PGOV PREL PK
SUBJECT: U.S. DAIRY IN PUNJAB: A $34 MILLION SUCCESS STORY

UNCLAS SECTION 01 OF 02 LAHORE 000177

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON EAGR EAID ECIN EINV ETRD PGOV PREL PK
SUBJECT: U.S. DAIRY IN PUNJAB: A $34 MILLION SUCCESS STORY


1. (SBU) Summary: Sweetwater International's Punjab dairy
operation demonstrates how private business can lead economic
development in Pakistan without government assistance. The
firm's methods might provide a replicable model for modern milk
production in the region. Acting Principal Officer (A/PO) and
Econoff observed Sweetwater's progress during an August 1 tour
of an existing 100-animal model dairy farm in Lahore, and a
1,000-head dairy under construction in Okara District. Company
officials said the enterprise represented a $34 million
investment. By applying scientific management to its entire
production chain, Sweetwater representatives claimed the dairy
can yield 50 lbs of milk per animal per day, two to three times
the typical dairy averages in Pakistan. The company's
willingness to share best practices with others and invest
heavily in human resources can make a lasting contribution to
Punjab's agricultural development. End Summary.

- - -
AHEAD OF THE HERD
- - -


2. (SBU) Sweetwater International is a Utah-based company
established to provide on-farm water and soil management
systems. In a March 31 meeting, Sweetwater Pakistan Country
Manager Ahmed Iqbal Saeed told Econoff that the company had seen
an opportunity to use its products to enhance dairy output by
dramatically improving the quality of feed. The firm decided to
start with a demonstration farm of 100 animals to test methods,
solve problems, and raise capital from local investors for a
larger facility. Even at 100 head, the model farm ranked among
the largest modern cow dairies in the country.

- - -
"COWS ARE THE LAST THING YOU NEED IN A DAIRY"
- - -


3. (U) Saeed explained that to achieve optimal milk production,
one must carefully manage all the other inputs, from the
nutrient content of the feed to a physical environment for cow
comfort. "Cows are the last thing you need in a dairy," he
said. As a pioneer in Pakistan's milk production industry,

Sweetwater had to create domestic sources for most of its needs.
Whenever possible, the firm partnered with local vendors and
helped them manufacture to sufficient standards. Sweetwater
transferred the technology of their own proprietary irrigation
filtration pumps to fabricate them in country. It built a small
laboratory for testing water, soil, milk, and feed crops. The
company also designed a unique shed for cow comfort and waste
management. The only imported system in the dairy is the
milking and chilling apparatus, which is from Swedish based
DeLaval, which also provides maintenance.


4. (SBU) Producing quality feed presented the biggest hurdle.
Saeed admitted Sweetwater had not had a lot of success
contracting that out. Sweetwater tried collaborating with local
farmers who offered assurances of working in accordance with the
company's specifications, but Saeed said, "the lab tells us they
aren't." In the end, the firm decided it needed to grow its own
corn and sorghum, and make its own silage. In doing so, it
brought relatively advanced farming techniques to Punjab
including furrow irrigation, specific measurements for the
spacing of plants, and machinery for bagging silage and
preparing pre-mixed feed - equipment that Sweetwater claims are
the only ones of their kind in the country. Sweetwater's
approach dramatically reduced the consumption of water, improved
crop yields and nutrient value, and enhanced soil quality. No
longer just a dairy, Sweetwater runs some of the most
progressive cropland in the province.

- - -
INVESTING IN PEOPLE
- - -


5. (U) "We want to treat our whole organization like we treat
our cows: very carefully," said Sweetwater Chairman Franklin
Johnson. Because Pakistan's milk production industry is so
fragmented, Sweetwater knew it would have to train all of its
own workers for an industrial operation. In 2006, with the

LAHORE 00000177 002 OF 002


model farm just getting started, Sweetwater initiated its own
Dairy Management Seminar and internship program for animal
scientists and business graduates. Sweetwater offers jobs to
those who complete the course, and prove capable of working on a
farm. The need for training went all the way down to the
farmhands who work the animals and the crops. Only a handful of
full-time employees are foreigners, and they are tasked with
training Pakistani hires for the future. The dairy is capital
intensive where it makes sense but labor is cheap in Punjab, so
some activity that is automated in modern dairies, such as
placing and removing milking cups on teats, is still done by
hand.

- - -
FINALLY, THE COWS
- - -


6. (SBU) The traditional milk animals of Pakistan are local cow
breeds and the water buffalo. The buffalo is well adapted to
the climate but has limited production potential; moreover, as
Johnson put it, "we don't know anything about buffalo dairy
farming, so we stuck to what we know." Sweetwater settled on a
Holstein-Sahiwal cross, purchased locally. The Sahiwal is a
domestic breed acclimated to the Punjab heat, while the Holstein
is famed for milk yield. The cows are put on a careful diet
well before preparing them for calving and lactation. After
successfully building a herd of 100 head for the model dairy,
Sweetwater has now accumulated some 800 head for the larger
dairy. The model dairy manager said they have already achieved
their target annualized average of 50 lbs of milk per animal per
day, despite the challenge of keeping the cows comfortable in
the Punjab heat and humidity. Johnson and Saeed said that
government dairy and livestock officials who visited the model
farm refused to believe the production figures.

- - -
"WE ARE HERE FOR THE LONG HAUL" - NO NEED FOR GOVERNMENT
- - -


7. (SBU) Sweetwater claimed that the firm and local investors
will have contributed $34 million to the Punjab economy after
completion of the 1,000 animal dairy. Johnson argued that the
investment made sense because "we are here for the long haul."
He added that the company's Board of Directors was pleased with
their progress. Sweetwater has offered general training for
dairy farmers, sometimes coordinated by the Small and Medium
Enterprise Development Authority (SMEDA) Dairy and Livestock
Sector division, but on the whole Saeed remarked that the firm
prefers to "keep a low profile in Pakistan." Sweetwater has
little or no contact with federal or provincial officials
responsible for the dairy industry. Saeed and Johnson shrugged
them off as not particularly helpful, and irrelevant to
establishing a commercially competitive business.

- - -
COMMENT: PRIVATE SECTOR INVESTMENT LEADS THE WAY
- - -


8. (SBU) Comment: Sweetwater's progress is indeed impressive,
but it remains to be seen whether the firm's approach is viable
on a larger scale. Nevertheless, Sweetwater has already
introduced better farming practices and enhanced the human
capital of Lahore and Okara districts. The firm has pioneered
an important emerging industry, and made a meaningful
contribution to Pakistan's agriculture sector. Johnson proposed
that their model farm could be the basis of a self-contained
dairy kit to use as a rural development project, perhaps
organized as a village cooperative, and deployed in Afghanistan
or targeted districts in Pakistan. Sweetwater was willing to
share their techniques and technology with aid organizations,
and to assist with on-site training. This kind of strategic
corporate social responsibility demonstrates the multiplier
effect that successful private enterprise can have on overall
development and poverty eradication efforts, and Sweetwater
might be a valuable partner for future U.S. assistance programs
in the region. End Comment.
CONROY