**Abstract**

 Pakistan is considered among the leading raw milk producing countries. Unlike the production systems in the developed countries, milk production systems in Pakistan represent smallholding with subsistence- or market-oriented-level farming followed by peri-urban or commercial-level farming. Historically, dairy sector has been owned and managed by the private sector. During the past two decades, new initiatives have been taken because of the active involvement of corporate private sector. These efforts have resulted in improvements like enlargement of herds and import of high-quality milk germ plasm, the productivity per animal, milk collection, processing and marketing, the supply of dairy inputs (machinery, equipment, feeds, semen, and elite dairy animals), and farmers knowledge, and skills on modern management practices. Conclusively, the dairy sector is performing at some sustainable level to meet the food requirements of the growing population and helping save a handful of foreign exchange. Yet, challenges like local replacements of high genetic potential dairy animals, health hazards of β-casein proteins, antibiotics and aflatoxins, and uneconomical operational costs facing the dairy industry in the near future need to be addressed. The main objective of this chapter is to identify the current trends in dairy industry of Pakistan and describe those factors, which can influence the sustainability and profitability of dairying in the near future.

**Keywords:** collection and processing, dairy inputs, food legislation, large peri-urban dairy farming, profitability, sustainability
