Econometric Trends and Forecasting of Dairy Trade Dynamics in Pakistan: Evidence from Butter, Ghee, and Raw Milk (1961–2024)

Abstract

The dairy industry in Pakistan is an important player in agriculture and the country's economy. Still, there has been little effort to study the dynamics of international trade in Pakistan's dairy industry. This study examines the export and import dynamics of three important dairy products: butter, ghee, and raw milk in Pakistan, based on yearly statistics from 1961 to 2024. The secondary data used in this study were taken from FAO, PBS, SBP, and the Economic Survey of Pakistan. To carry out the time-series analysis, the Augmented Dickey-Fuller (ADF) unit root test was performed, while the Autoregressive Integrated Moving Average (ARIMA) model was employed to make predictions regarding future trading patterns. The ADF tests indicate that the time series became stationary after the appropriate differencing procedure and can therefore be used for ARIMA estimates. The analysis shows that Pakistan's dairy trade patterns have fluctuated over the past six decades. The forecasted figures show an improved trend for dairy trade in general, with butter and ghee expected to perform better compared to raw milk exports in the future. The results show that Pakistan holds much promise in terms of becoming a bigger player in the international dairy market. It can achieve this by developing its dairy industry through improving its cold chain facilities, encouraging innovations, and adopting a sound trading policy.