Sunday, 29 January, 2023

21st World Milk Day Nepali Dairy Sector: A Critical Review

Tek Bahadur Thapa

World Milk Day is being celebrated every year on June 1 since 2001 as introduced by Food and Agriculture Organisation of the United Nations (FAOUN). The Day provides an opportunity to highlight the importance of milk and pertinent issues and activities related to the milk industry. Nepal has also been celebrating the World Milk Day since 2011 to inform the public about the similar themes. This write-up aims to make a brief review of Nepali dairy sector and its contribution to the health of people and economy of nation.
Dairy sector is one of the key drivers of the national economy. Milk brings back the urban money to the villages at least once a day and makes the rural economy vibrant. It is women heads of families that own and manage the money earned by selling milk, thereby improving the livelihood conditions of the rustic people. Dairy industry involves several processes and activities such as milk collection, dairy cooperative management and dairy inputs service provider chain, which generate jobs for a large number of people. Dairy value chain connects farmers to the consumers through a series of value chain of stakeholders like processors and marketers.

Global dairy scenario
In 2019, world milk production was 852 mill MT. India was the highest producer (196 mill MT) followed by the USA (99 mill MT) and Pakistan (47 mill MT) respectively, according to FAO Market Review 2020. According to the Global Dairy Platform, dairy sector is a large, transformative global force making significant impact on economies, societies and individuals. Around one billion people of the world have their livelihoods supported by the dairy sector. Around 600 million people work in 133 million dairy farms around the world. Nearly 10 per cent of the world population directly depends on dairy farming. Around 852 million tonnes of milk are produced by the dairy sector annually (FAO 2020). Milk is among top five agricultural commodities in terms of both quantity and value.
Nepal produced 2301,000 MT of milk during 2076/77 fiscal year and per capita availability comes around 78 litres (216 ml/day) based on the population estimate of 2020. However, Nepal has to increase the per capita availability of milk to 91 litres (around 250 ml per person per day) to meet the minimum nutritional requirement as recommended by FAO/WHO.
Public sector Dairy Development Corporation (DDC) is trying hard to survive itself while the private sector industries, except for one or two, are just following the DDC trend of processing milk to produce packet milk, yoghurt, butter, paneer, etc. There is not much market innovation to compete the imported dairy products. Imported milk products are gradually occupying the market shares in the high value segments. Demand-led high value dairy products are not much produced by the private sector. Nepal has good prospect for producing variety of cheeses. Chhurpi is one of the leading dairy products being exported to western countries. In the last five years, import of dairy products, including skimmed milk powder stood at between Rs 1.48 billion to Rs 2.44 billion although only 17 per cent of total milk production was processed.
National Dairy Development Board (NDDB) is the apex dairy policy framing body which has responsibility to promote the dairy development but NDDB is itself struggling to sustain due to very large and ineffective board structure, frequent change of executive director, and inadequate budget and technical staff. Department of Livestock Services (DLS) is duplicating the dairy activities, with poor coordination among the related agencies. Likewise, there has been shortage of trained manpower in the government, public and private sector at a time when more than 50 dairy technology and dairy safety management graduates and post-graduates are unemployed and looking for jobs.
Major issues pertaining to the sector include milk quality standards and its effective compliance, lack of seriousness and compliance of farmers and industries collecting quality milk, uncontrolled use of neutralisers, poor milk cold chain network, poorer implementation of dairy policy and code of conduct, growing imports of milk products and so on. Prevalent milk quality standards need immediate amendments. Due to this, dairies are compelled to buy milk with lower percentage of milk solids.
Despite a number of issues and constraints, there are lots of opportunities in the dairy sector. Diversified and value-added dairy products are in demand, and there is a prospect for diversification for the demand-led products like cheddar cheese, Gouda cheese, soft cheese, cream cheese, yak cheeses, etc. Consumers want long-life milk products.

COVID-19’s impact
With the onslaught of COVID-19 pandemic, dairy sector suffered huge losses because of the stockpile of skim milk powder, butter and cheese, and reduced milk sales. Remedial measures discussed and recommended last year were construction of milk powder stores and deep-freezing stores for long-term butter storage around Kathmandu or near the major production areas. This year also the second wave of COVID-19 has hit the sector. There should be preparedness and strategy to cope with the shocks of pandemic and its possible wave in the future.
To revamp the dairy sector, there is a need for restructuring of NDDB that is not able to effectively function due to political interferences, low budget and limited technical staff. It is better to convert the existing board to Dairy Development Department under the Ministry of Agriculture which can focus on dairy industries and quality management.
National Dairy Development Board has developed a five-year dairy development plan (2077/78 BS– 2081/82 BS), with budgetary requirement of R 4.93 billion. A mega donor-funded dairy project is needed to implement this plan. FMD free certification is needed from OIE (World Organisation for Animal Health) to be qualified to export the dairy products abroad.

(Thapa is the chairman Nepal Dairy Science Association and former senior dairy advisor to FAO.)