Livestock accounts for nearly one-third (29.8 percent) of the country's agricultural domestic products (AGDP) and dairy products account for about two-thirds of livestock sector. The average growth of milk production in last decade was 2.6 percent a year. Around 950,000 families depend on this sector. In Kathmandu valley alone, the dairy sector gives employment to 12,000 people.Dairy farming in Nepal is dominated by small farmers, so the cost of production is generally 15 to 20 percent higher than in India. There are both lean and rich seasons in milk production due to changing feed availability and the seasonal breeding patterns of cattle. So we have milk deficit of 150,000 liters a day in lean season and surplus of 40,000 liters in the current rich season.
Most dairy producers are using cheap powdered milk to increase their milk production, instead of buying fresh milk from farmers. This is because milk produced using milk powder is reported to cost Rs 30 per liter, while cost of fresh milk stands at around Rs 47 per liter.
The processing sector (public and private) in Nepal has limited capacity to absorb all the milk, especially during the flush season. When the milk processing plants are unable to accept all the milk offered by farmers, they ask farmers not to bring milk for sale once or twice a week. This is called milk holiday. "Milk Holidays" started in 1991/92 and the problem was temporarily solved by exporting milk to West Bengal for one and half years.
There is also informal trading of milk and milk products in border areas. The actual volume of this trade is difficult to ascertain. Such trading is mainly guided by the price factor, i.e. milk flows to the place where price is higher.
Consumption of milk and dairy products is part of Nepali culture. Dahi (curd), ghee, chhurpi, khoa and khoa-based sweets, Mohi and Khir are traditional commercial dairy products. But various brands of locally produced as well as imported milk products are sold in urban markets. Kathmandu valley is the main market of milk products.
Major milk products available in the market are imported Skim Milk Powder (SMP), Whole Milk Powder (WMP), infant milk formula, dairy whitener, cheese, butter, sweetened condensed milk, and ice cream; and locally produced cheese, butter, ghee, ice cream, paneer and yoghurt. Milk products from more than 20 countries compete in Nepali market.
The increasing inflow of varied milk products indicates that there is ample demand for the modern as well as traditional dairy products. The demand for dairy products in urban markets is expected to grow due to population growth and rising incomes. Growth of tourism is also likely to fuel the demand for modern dairy products.
Recently, the Ministry of Agriculture Development has requested the Finance Ministry to provide a subsidy of Rs 16.09 million to facilitate export of surplus milk to India. Furthermore, a proposal for exporting milk to Bihar is under deliberation. This approach is only a short-term solution. The government cannot continue to provide such heavy cash subsidies to export a single commodity for long. That is why ways should be devised to address surplus milk problem in sustainable manner.
Milk surplus in Nepal owes to low consumption. Hence, there could be promotional activities to increase milk consumption. The FAO recommends a minimum 91 liters of milk per person per year. The figure for Nepal is 58 liters per year. Thus there will be huge unmet demand for milk and milk-related products if our consumption increases. With increased population and changing food habits, demand for milk and milk products has been growing at four percent per annum. The target should be to increase this rate to five percent in three years.
Product diversification is another way of increasing consumption. Less than five percent of collected milk is converted to other dairy products and most processing industries depend on pasteurizing milk for immediate consumption. Therefore the share of processed milk products in the market should be increased to 15 to 20 percent.
The gap in milk production during lean and flush seasons needs to be narrowed. This can be done by making feed and fodder available at all times through greater use of technology. Dairy farming in Nepal is still dominated by non-commercial farmers, so our production cost of milk is generally higher than in neighboring countries. Efforts should therefore be made to reduce cost of milk production through the use of low-cost technologies.
There remains a big gap between the farmers' service needs and those delivered by government service providers, resulting in lack of knowledge among farmers regarding improved dairy farming and hence limiting their capacity to adopt new technology. Poor infrastructure and difficult access to market are also responsible for increased milk prices. Efforts should be made to address these problems
Existing custom duties aren't sufficient to discourage imports of low-quality milk powder. So the duties on imported powdered milk imports need to go up. Besides, VAT exemption on milk products can also help reduce the costs of milk and milk production. Lowering the price of dairy products is also a way to boost consumption.
Nepal cannot export milk and milk products in a sustainable way without support of importing countries which need to reduce tariffs and allow Nepali products to compete freely in their markets.
bhairabr@gmail.com
Related story
Democracy was saved but hope is all we have
-1200x560-1779450784.webp)
