FEATURES NEWS THE RISING NEPAL (DAILY)

By Tek Bahadur Thapa

MILK is one of the important component of farm produce which generates cash income on a twice-a day basis. No other farm produce generates income in such a manner. Thus, milk stands on a higher footing than other cash generating farm products. In general, Nepalese farmers have been receiving remunerative prices for milk. Unlike other agricultural commodities, milk prices has never fluctuated but is on a steady increasing trend. In the Nepalese society, milk is treated as a specially in the milkshed areas of Dairy Development Corporation and other private sector dairies.

Production

In the past, Nepal imported sizable amount of dried milk and butter oil to meet the liquid milk demand of urban areas specially Kathmandu valley. Realizing this problem, government came up with the number of interventions to enhance milk production to self-sufficiency through a number of livestock development project and programmes, milk processing and marketing facilities. These efforts and interventions led to the present level of milk production, and we are looking for a export market for milk.

At present, livestock contributes 31 per cent to the total agricultural GDP of the country. Milk is by far the most important livestock commodity (nearly half of livestock GDP), with meat next, much of which is a by-product of the milk subsector (APP 1995). Average per capita annual milk consumption amounts to about 45 liters. Annual milk production is about 1,028,000 tons which is above 6 per cent of GDP at current market price.

Dairy development has multiplier effect in the growth of other sectors too. Thus the growth of dairy sector has a vital bearing on the overall development of the country. Around 100,000 dairy farmers households produce and sell milk to the organised sector, and about ten thousand people are engaged in milk processing industry including rural enterprises, ancillary workers, porters, vendors, boothmen, etc.

Presently, the major problems faced by the dairy sector are: inadequate milk handling and conservation facility and lack of trained manpower to manage the dairy industry efficiently. Also no dairy training facility exist in the country to produce the manpower needed for the growing dairy industry.

The twenty-year Agricultural Perspective Plan (APP) envisaged the present annual growth rate of 2 per cent should rise to 10.4 per cent during 1994/95 to 1999/2000 period, followed by 6.1 per cent during 1999/2000 to 2004/05, during 2004/05 to 2009/10 and, finally 5.5 per cent during 2014/15 period. Thus, milk production is expected to jump four times from 0.871 million MT (1995/96) to 3.35 million MT (2014/15) in a span of twenty-years (APP). At this current level of production (1998), DDC is observing Milk Holidays (MH) in its milkshed areas for the last seven consecutive years during the flush production period, mostly due to arrest in expansion of its handling and processing facility. It has negative effect on the growth rate of milk production, which would adversely affect the achievement of APP set target. During 1998/99, DDC could not collect around 6 million litres of fresh milk (maximum 50,000 litres per day during peak flush period) from its milkshed areas.

The milk processing facilities are gradually growing in the country, however, existing processing capacities are not enough to process the total milk available. The organised sector handles only 90,500 MT of milk annually which represents only 9 per cent of the total production (1997/98), out of which DDC handles 65 per cent of milk. Annual milk handling is around 65,000 MT. Thus, Dairy Development Corporation (DDC) has maintained a dominant position in the formal sector milk processing. It operates its activities through its four market milk plants, one skimmed milk power plant, 6 yak cheese production units and four cow milk cheese production units scattered in 39 districts.

However, many more entrepreneurs are exploring the possibility of establishing additional dairy plants to produce high value dairy products like cheese, processed cheese, condensed and dried milk products and so on. There are also increasing opportunities for joint venture participation with the Nepalese partners. Each day nearly 225,000 litres of pasteurised milk is marketed in Kathmandu city, out of which the private sector’s share is around 35 per cent.

A high level delegation visited Silgurhi, India to negotiate liquid milk export opportunities with West Bengal. An MOU has been signed to export 2.7 million litres of chilled milk from Fikkal Chilling Centre on an annual basis, and this amounts to 225,000 litres of milk on a monthly basis. As per the agreement, Himul Dairy of Siligurhi and Jalpa Dairy Cooperative are buying chilled milk of minimum 3.2 per cent fat and 8.3 per cent SNF at IC Rs 9.30 or Nepalese Rs 14.88 per litre. After the MOU was signed in August, more than 6,000 litres of chilled milk has already been exported to West Bengal, India. This export agreement has helped to partly ease the Milk Holidays problem.

Possibilities to export milk to Calcutta or convert some of the surplus into skimmed milk powder in the neighbouring dairy plants of India, and bring back the same powder in the country for the dry period use are also being attempted. Higher raw milk price in Nepal has been a major hurdle to the export or milk conservation initiatives.

The first and foremost thing in commodity trading is the price. The seller wants to fetch maximum price for better margin, and the buyers want to buy at a lowest possible price. However, a compromise has to be reached at a point where both do not lose even if they do not gain or save. Raw milk procurement price is much higher in Nepal than in India. This is posing a serious constraints to export milk to India and elsewhere. The buyer is not ready to pay our cost price, thus a solution has to be evolved out to promote the export of liquid milk. Thus, who has to bear the difference in price? Farmers want their price. Dairies also would not like to lose either.

The government would not subsidise the loss or difference in the price. An amicable formula has to be evolved out to resolve this price deadlock situation.

Possibilities

There may be number of possibilities to solve this problem, but two simple ways out are; the farmers prices for exportable amount should be adjusted to the exported price or the prices as agreed by the buyers. Also, government has a policy to promote export, for this reason, government bears some of the cost in the form of export promotion/costs. In the same way, if government can bear the milk transportation cost; say for example from Biratnagar to Calcutta. This may greatly help to export liquid to Calcutta or Dhaka.

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