proceedings of the workshop on the regional exchange network for market orient dairy development sec...

7/7/12 Proceedings of the Workshop on the Regional Exchange Network for Market Orient Dairy Development

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SECTION III : STRATEGIES FOR SUSTAINABLE DEVELOPMENTOF MILK PRODUCTION, PROCESSING AND MARKETING IN

DEVELOPING COUNTRIES.

MARKETING OF DAIRY PRODUCTS UNDER A CHANGING ECONOMICENVIRONMENT: THE CASE OF ZIMBABWE

Ms M. Matanda14

Abstract

The marketing of agricultural products including dairy products in Zimbabwe has beencharacterized by a complex pattern of regulations and institutional involvement. In Zimbabwe theprocessing and distribution of milk was under a monopolistic parastatal the Dairy Marketing Board(DMB) which has been recently commercialised and is now Dairy Zimbabwe Limited (DZL). Themarketing of dairy products with no or little value added was tightly controlled. The introduction ofthe Economic Structural Adjustment Programme (ESAP) has resulted in reduction and in somecases removal of regulatory control in dairy processing and marketing. The removal of regulatorycontrol has been both a blessing and a curse to participants in the industry in that it opened up theindustry for participants to operate the way they want but it also exposed the industry to foreigncompetition. As a result of operating in a controlled environment the local dairy sector wascommodity and production oriented instead of being market driven and consumer oriented which isline with most global food industries. A market led orientation focusing on variety, nutritionalfactors, food safety and consumer awareness issues need to be addressed in Zimbabweanagribusiness in the dairy sector.

Consumer orientation calls for adoption of a strategic marketing approach where dairy producers.processors and marketers combine the 4 Ps in the most optimal way so as to meet consumerneeds. The availability of information and of regional exchange network becomes desirable andnecessary as the regional exchange network could facilitate searching, screening and monitoringof exchange processes in regional markets.

1.0 Introduction

The highly regulated marketing of agricultural products has been reviewed by economists policymakers and participants in the agricultural sector i.e. farmers, processors and marketers as one ofthe major problems facing the agricultural sector.

The Economic Structural Adjustment Programme (ESAP) policies are aimed at among otherthings improving efficiency and resource utilization, generating employment as well as developingan industry which is more responsive to consumer needs.



The deregulation of the Zimbabwean Dairy Sector was initiated in 1991 with the decontrolling of theproducer and consumer prices. In 1994 further ESAP provisions were instituted freeing the industryfrom decades of Government control.

The decontrolling of the dairy sector was viewed as the major impetus needed to vitalize thesector.

The decontrolling policies have resulted in varied impact on the marketing of milk and diaryproducts in the country. Dependency on a single marketing channel became a thing of the past asnew players (private dairies) entered the industry. Producers now have alternative markets and donot have to depend on a single purchaser, the Dairy Zimbabwe Limited (DZL) (see Figure 1).

To the Zimbabwean, the deregulation of the dairy sector has resulted in the importation of exoticdiary products. Suddenly the playing field has changed and the change has resulted in a highlycompetitive market place, making the local industry vulnerable. Production costs keep onescalating whilst market share figures keep creeping down and local produces have to find ways tosurvive this globalization of the market.

It is therefore imperative that the diary sector should try to look at ways of enhancing itscompetitiveness so as to ensure its survival.

14 Lecturer in Agribusiness, Management and Food Marketing,

Department of Agricultural Economics & Extension, University of Zimbabw e

Figure 1: Fluid Milk and Dairy Producers Marketing Channels in Zimbabwe

Historically, the complexities and significance of the marketing functions have mostly been ignored.The new economic environment calls for development of a market oriented dairy industry. Theadoption of a strategic marketing management approach in meeting consumer demands is indeednecessary.

2.0 Background Information

Milk production in recent years has been subject to substantial fluctuations, with supplies doublingin the 1980s to 250 million litres/annum. The drought, coupled with increased cost of productioninputs have been sighted as the factors which have the greatest negative impact on the dairysector.



Per capita milk availability is 25 kg and falls far below the 33 kg average for the SADC and PTAcountries. The range of dairy products sold in the country and the packaging used are given inTable 1.

The table above indicates that Zimbabwe has a fairly well developed dairy processing industry. TheDairy Zimbabwe Limited is the major processor. Cadbury Schweppes, Lyons Broke Bond andseveral indigenous dairy processors are also involved processing over 226 million litres of hole milkequivalent annually (Government of Zimbabwe, 1994).

3.0 Critical Factors in Marketing of Dairy Products

Milk is a highly perishable and complex product to handle due to the fact that it is a perfect mediumfor micro-biological contaminants. It however has the advantage that it is easily convertible intovarious diary products like cheese, yoghurt, butter oil and cream. The transformational atprocesses at times involve a series of sequential investment activities that are targeted at meetingspecific consumer demand (Jaffee, 1995). The value addition options also provide a way of dealingwith inter-market price differentiation occurring due to spatial factors.

Normally, fluid milk prices are lower as one moves away from the source due to the high bulkinessfor fluid milk (87% water) result in increases transfer costs i.e. handling and transportation costs.Less perishable products can have less transportation costs thereby making them cheaper awayfrom the source. The increased need for sophisticated specialized haulage system in transportingfluid milk make the issue of value addition options more lucrative for smallholder producers inremote areas.

Smallholder farmers could therefore diversify into value addition and convert raw milk intoprocessed dairy products. Market research and analysis however, has to be undertaken beforeextensive value addition processing is done.

Table 1: Dairy Products Manufactured in Zimbabwe

PRODUCT PACKAGING

Pasteurized Milk - Plastic bottles

- Plastic sachets

Cultured/Sourced Milk - Plastic sachets

Sterilized Milk - Plastic bottles

UHT - Plastic sachets

Butter

- Foil paper

- Tinned

- Plastic canisters

Skimmed Milk Powder

- Clear plastic packets

- Tinned

- Foil packets

- Paper

- Paper tins

Ice cream

- Plastic cup and canisters

- Paper

- Paper tins

Yoghurt - Plastic cup



Cream- Plastic sachets

- Plastic cups

Cheese - Clear plastic

Flavoured Milk- Plastic bottles

- Plastic sachets

Cheese spreads - Plastic cups

Flavoured powder (chocolate, creamsoda,strawberry)

- Tinned

Cheese Food - Clear plastic paper

Chocolates - Paper

Ice cream - Plastic cups & containers

Detailed analysis of returns to value addition is needed so as to determine the marketing marginsthat could accrue to various members of the marketing chain.

The other problem that faces producers and processor is that in higher income market segments,as income increase the demand for dairy products decreases see table 2. Innovative marketingstrategies are therefore, needed to promote demand by introducing new products that are natural,nutritious but have low fat content. Development of specific brands and specialty products targetedat niche markets instead of bulk commodities is important for this market. The most feasiblestrategic behaviour of individual dairy producers and processor or small holder farmers should bethe provision of high quality products so as to gain market margins by performing specific valueaddition functions. The consumer, globally and in Zimbabwe looks beyond the basic food and thegeneric milk.

Table 2: Expected Changes in demand as per capital income increases

Increased Demand Decreased Demand

Poultry Red meat

Fish Eggs

Fruits Dairy production

Vegetables

Health, variety, convenience, nutritional factors and food safety are variables the consumer seeksfor in food. The impact of production processing activities on the environment as well as thewelfare of animals are also increasingly becoming important to the consumer. Table 3 gives thevarious issues participants need to take cognisance of so as to come up with a relevant andacceptable product offering in dairy product marketing.

Zimbabwean dairy processors and distributors have already found these factors to be important asthey are loosing market share to dairy imports from France, South Africa and the Netherlandswhich focus on above concerns. Foreign salt free cheese and low fat yorghurts are beingsuccessfully marketed in Zimbabwe.

Irrespective of market segment served by the dairy processors, there are some basic issues allparticipants in the dairy industry have to take not of the following:

Smell/OdourTasteTexture



FlavourSight

These factors are at most times determined at the downstream end of the production chain i.e.inputs into dairy could determine above factors. it important for breeders, processors and otherdairy production marketing chain to know the preference of consumers in respect to these factors.No matter the packaging on distribution network and customer services offered if the basicpreferences above are not met the product will not sell. Informal interviews carried out by the writerin Harare (November 1995) established the following issues:

a. Packaging

Zimbabwean packaging of dairy products was regarded on average as poor, unattractive andlacking in imagination. The packaging of cheese, fresh cream were picked up as typical examplesof a poorly packaged product vis-a-vis imported brands.

b. Taste and Sight

Local producers were viewed as having less innovativeness in the introduction of new flavours ofdairy products i.e. sugar-free ice-cream and fat-free yoghurt. Local cheese varieties were alsoregarded as too salty.

c. Convenience

Some imported dairy products were regarded as offering more convenience to the consumer i.e.sliced cheese from South Africa.

d. Food Safety

Due to better packaging some imported products were viewed as being safer from micro-biologicalcontaminants than local products in poorer packages. The packaging of most brands ofZimbabwean cheese products was viewed as poor.

e. Health Consciousness

The lack of varied brands of sugar free, low fat content and fat free dairy products was regarded asa weakness of the local dairy processors as they were not catering fully for the health consciousconsumer.

Table 3: Variables the Dairy Sector Needs to take Note of in Dairy Production andMarketing

Variable Source of the Issues That Needs Addressing

Food Safety - Free of microbiological contaminants

- Additives and Preservatives

- Antibiotic residues

Convenience - Packaging (size, type of material)

- Suitability for use to target market

-Targeted product design i.e. fridge free margarine UHT milk, milkflavoured drinks

Nutrition -Focus on health concerns by focusing on health concerns i.e. lowfat, salt free, fat free etc. and nutritionally modified food are becomingimportant.



Environmental Safety - Critical for export market and high income groups and joint ventureswith foreign dairy processors.

Consumer Awareness -Education on how food moves from paddock to the table and how toprepare and store certain foods.

4.0 Conclusion

The above issues indicate that food consumption patterns are changing in Zimbabwe. There isneed for constant market research so that the dairy industry can develop focused marketingstrategy to develop and satisfy individual consumer needs in target markets through the provisionof quality reliability and variety. There is also need for promotional activities of utilization andbenefits of dairy products.

References

Baker, M. (1992). Marketing: An Introductory Text. MacMillan Education, Ltd. London.

Dahl, D. and Hammond, J. (1977). Market and Price Analysis. McGraw Hill, Inc.

Government of Zimbabwe - Support for Deregulation of the Dairy Industry May (1994). ConsultantReport for Ministry of Lands, Agriculture and Rural Development

Jaffee, S. and J. Morton (1995). Marketing Africa's High Value Foods: A Comparative Experience ofan Emergent Private Sector. The World Bank, Washington.

Kilmer, R. and W. Armbruster (eds) (1987). Economic Efficiency in Agricultural and FoodMarketing. lowa State University Press.

Kotler, P. and G. Armstrong (1981). Principles of Marketing Practice. Hall International Editions.Englewood Cliffs.

Discussion

Question:It appears that marketing specialists can make significant contribution todevelopment of the dairy sector, but why do not they avail information totechnocrats?

Answer:

The changing economic environment has brought in new changes, previously dairytechnocrats could serve in organisations without collaborating with specialists fromother fields. The new economic order calls for collaborative approach betweenproduction and marketing specialists.

Comments:The issue that there is limited demand in rural areas could be a fallacy theaggregate of demand of rural population is very big and needs specialconsiderations.

Comments:In India the high income group consume 10%, the middle group 80% and the lowincome group 10%. There is therefore need to develop marketing strategies for allthe market segments.

Question:Have you undertaken any consumer surveys to access the acceptance of specificdairy products?

Answer:No, until recently, the dairy industry has been a very closed industry and consumerstudies done were classified information. So little comprehensive research has beendone on consumer behaviour.

Comments:

As a result of the monopolistic structure of the industry the DMB ignored consumerneeds. The entry of new milk processing companies, has resulted in a change ofthis attitude.



Question: Is it possible to process and still have an affordable product for the rural poor?

Answer:

There is need to put emphasis on appropriate milk processing techniquestechnology whilst techniques, tapping of indigenous knowledge systems or dairyprocessing could help in reducing costs and making products acceptable to theconsumer.

THE GROWTH OF PRIVATE DAIRY ENTERPRISES IN NEPAL:CHALLENGES AND OPPORTUNITY

Tek B. Thapa15

Abstract

The contribution of milk in the national GDP is over 5% and nearly 50% of the livestock GDP. Thusthe growth of dairy sector has a vital bearing on the overall development of the country. Above70,000 dairy farmers deliver milk, and above three thousands people are engaged in the milkprocessing industry in both rural and urban areas. The Dairy Development Corporation is themajor actor in the Nepalese dairy industry, it has four market milk plants, one skimmed milkpowder plant, one product plant and nine small cheese plants. Private sector participation ishowever on the increase and more than fifty small, medium and large scale dairies are operating.A 100,000 litres per day market milk plant is under construction in the Kathmandu valley. Tencottage scale yak cheese plants are managed by the private sector producing around 70 tonsannually. Thousands of people are engaged in production and marketing of indigenous dairyproducts like Ghee, Chhurpi, Khoa, etc. The industry has made significant contribution in ruralincome and employment generation, and subsequently rural poverty alleviation.

The acute shortage of trained manpower is the major constraint hindering the growth of this sector.In particular private sector is worst affected. To promote this sector, a National Dairy TrainingFacility equipped with a pilot dairy plant should be established to organize, regulate and provideneed oriented training programs.

Beside this, the National Dairy Development Board (NDDB) needs strengthening and the decisionto restructure the Dairy Development Corporation (DDC) could help in promoting private dairybusiness. Local capabilities of the Nepal Dairy Science Association and Nepal Private DairyAssociation should be fully exploited and strengthened.

15 Chief-editor of Nepal Dairy Science Association, and currently w orking as Dairy Processing and Marketing Advisor in the Dairy

Enterprise Support component of ATS Project funded by US AID.

1.0 Introduction

At present, livestock contributes 31 percent to the total agricultural GDP of the country. Milk is byfar the most important livestock commodity (nearly half of livestock GDP), with meat being next,much of which is a by-product of the milk subsector (APP 1995). Average per capital annual milkconsumption amounts to about 45 liters. Annual milk production is about 876,000 tons which isover 5% of GDP at current market price (HMG 1990). The new constitution of the Kingdom of Nepal(1990) put emphasis on the commercialization of the agricultural sector.

Presently the government is also putting emphasis on free market economy, and private sectordevelopment.

The country has a population of 21.3 millions, a population growth rate of 2.3%, urban population is14%, per capita GNP is estimated at US $ 180, GDP growth is 2.9% per annum, and inflation rateis at 8.2%.



The total milk production from cow and buffalo is presented in Table-1.

Table 1: Total Milk Production in Nepal in 1992/93.

Species Population Milk Production (MT) % share in Production

Cattle 6,237,231 260786 29.75

Buffalo 3,072,682 615808 70.25

Total 9,309,913 876594 100

2.0 Status Of The Dairy Industry

Accelerated growth of the dairy sector is essential to the overall growth of the agriculture sector.Poverty alleviation and enhancing of women's participation are also the major objectives of dairydevelopment in Nepal. The growth of the dairy sector calls for increased participation of the privatesector in production, processing and marketing. The status of the public and private sectors isseparately dealt with briefly below.

2.1 Dairy Development Corporation

Dairy Development Corporation (DDC) dominates the formal dairy sector. DDC operates fourmarket milk plants and one mini-product plant with total pasteurization capacity of 31,000 litres perhour (LPH). A pilot skimmed milk powder (SMP) plant of 2,000 LPH (176 kg SMP/hour) has been inoperation for last one year, with output averaging three tons. DDC also operates one cow milkcheese and one buffalo milk cheese plant producing 2,500 and 1,800 litres per day respectively.

Yak cheese has been produced in Nepal for over 40 years. It is marketed primarily to foreigntourists visiting Nepal and in 1994 DDC expatriates living in Nepal. These are nine yak cheesefactories in five districts producing an estimated 76 tons of yak cheese but these are facingclosure. In the last three years private producers of yak cheese have also emerged and at least 10private yak cheese factories are in existence producing an estimated 47 metric tons of the 1994total production.

Approximately 4,000 individuals are entirely dependant on earnigs from yak cheese (excludingKathmandu based marketeers). Industry revenue and foreign exchange earnings for 1994 areestimated to be Rs. 31,981,175 (this includes the value of butter produced with yak cheese)(Colavito 1994).

In the 1993/94 farming season DDC collected 39.87 million liters of fresh milk through 395 MilkProducers Associations and 382 Milk Producers Co-operatives, and produced 56.97 million liters ofmarket milk, 1 million kg of butter, 0.7 million liters of yoghurt, 497 mt of ghee, 165 mt of yak andother cheeses and etc. DDC has employed one thousand three hundred and twenty one people tomanage the entire operation; out of which only 55.6% are technical staff.

2.2 Private Sector Dairy Enterprises

About fifty cottage, medium and mechanized dairies are in operation under private sectorownership and management. Nearly fifty percent are located in the capital city, Kathmandu valley.Most of the private processors operate at cottage scale ranging from 400 to 3000 liters per day(LPD). Small scale entrepreneur operate business starting 100 to 1000 LPD, whereas mediumscale operate between 1000 to 3000 LPD. The dairies with the facility of HTST pasteurization,packaging and cold storage are described as mechanized dairies. At present, there are only fourwith total per hour processing capacity of 10,000 LPH. A 100,000 LPD market milk plant is underconstruction and installation in Kathmandu city. It is expected to be the largest private sector dairyplant in Nepal. However, many more entrepreneurs are exploring the possibility of establishing



additional dairy plants to produce high value dairy products like cheese, processed cheeses, driedmilk products and etc. There are also increasing opportunities for joint venture participation with theNepalese partners. Each day nearly 130,000 liters of pasteurized milk is marketed in Kathmanducity, out of which the contribution of private sector is around 25%.

2.3 Indigenous dairy products production

Private entrepreneurs also process and convert surplus milk into concentrated milk product likekhoa for household use, and for marketing to the nearby urban centers. In the mid and westernNepal, raw ghee used to be collected by the ghee refineries from the hills and was processed,packed and exported to India. In the last decade these ghee plants have ceased operating.

In remote or inaccessible areas, private entrepreneurs process milk into durable products likechhurpi (dried hard casein product with <10% moisture) and ghee (clarified butterfat). Thoughaccurate production figure for indigenous dairy products are not available, chhurpi marketing isreported to be around 40 mt (1 million liters LME) in Kathmandu city alone (Neupane, 1995). Morethan 500 entrepreneurs are reported to be producing chhurpi specially in the remote hilly andmountainous region of Nepal.

3.0 Major Problems Faced By Private Sector Dairy Enterprises

The major constraints faced by the private sector are:

lack of regular dairy training program and training facility within the country;lack of conducive policy promoting the private sector dairy business;weak quality control and enforcement mechanism; andno specific financing program for promoting private dairy enterprises (not simple, straightforward and high interest rate).

If the problems are to be prioritized, the single most problem is lack of trained manpower and dairytraining facility (dairy research and training) in Nepal. A dairy training institution can help eliminatemost of the problems related to product quality, product diversification, appropriate technologydevelopment and export marketing of Nepalese product like yak cheese.

Other problems needing prompt attention are:

i. limited diversification of dairy products;ii. lack of promotional campaigns for milk and milk products; andiii. lack of sufficient knowledge of the farmers in cooperative management, cooperative

development and technical and business management.

4.0 Actions Needed To Facilitate Private Sector Movement

The acute shortage of trained manpower has affected the private sector dairy industry.Entrepreneurs lack proper knowledge of managing dairy business efficiently.

Some of the opinions expressed by private dairy entrepreneurs are presented in the box below:

Mr Lila Dhar Sharma, one of private dairy entrepreneur who presented a paper in arecent workshop on “Assessing the priority needs of private sector dairy enterprises inNepal” made the following remarks on human resource development;

“To produce milk is not a very big thing, however preservation and value addition arevery vital. We can have a separate ministry for the sports, but why can not we have aschool for dairy science and technology? Dairy industry is quite large. There are morethan 800 dairy cooperatives, 60–70 private dairies, around 20 yak cheese plants, 5 city



milk plants, more than 500 Chhurpi makers, many more are coming up. Does it notjustify to establish a dairy training center to provide training to the lower and mediumlevel manpower? Thus an institution to impart training in dairy science and technologyshould be established to meet the manpower requirement of dairy processingindustry”.

If government wants to liberalize the economy and promote the private sector, some of theconstraining acts, bylaws and regulations should be amended with subsequent change in thementality of decision making bureaucrats. Thus, to impart training in milk processing and productmanufacturing, a dairy training school should be established.

Decision on mode of Restructuring of Dairy Development Corporation should not be delayedany more.Potential entrepreneurs are needing support in assessing feasibility, preparing dairy plantlayout, selection of equipment and machineries and finally in operation and management ofdairy plant.Technical support in product diversification, market studies, to produce consumer anddemand led high value dairy products.Development of appropriate technology to the benefit of small and medium scale dairyentrepreneurs.Strengthen Private Dairy Association, which can lobby and pressurize the governmentresolving common problems.The quality monitoring and inspection mechanism should be strictly enforced.Incentive/premium pricing should be encouraged.Existing acts/regulations to be amended to promote the private sector growth.Private sector should have access to donors funds/support program.

5.0 Professional And Private Entrepreneurs Associations Formed

Private dairy entrepreneurs have joined hands together in forming the Nepal Private DairyAssociation which was formally established in April, 1995. Currently around 22 private dairies aremembers of the association.

Similarly, an association of Nepalese dairy professionals called Nepal Dairy Science Associationhas been functional for the past three years. Both associations have been instrumental in creatingawareness on relevant areas of the dairy industry through workshops, talk program, publication ofreview and research papers in various international forum like International Dairy Congresses,symposium etc. and Newsletter like Dairy Science Newsletters for the benefit of industries andprofessionals.

6.0 On Going Dairy Development Projects

Basically two projects namely the Dairy Enterprise Support Component of ATS Project funded byUSAID and NDDB strengthening project funded by DANIDA are in operation. In addition DANIDA issupporting milk quality improvement program for DDC and private dairies.

6.1 Dairy Enterprise Support Program

The project goal is to promote the “Increased Contribution of private sector to Income Growth in theDairy sector”. The end of project outcome will result in the “Sustained increase in private sales ofcash crops, specifically fresh and powdered milk, cheese, ghee and other dairy products, byprivate dairies, entrepreneurs and MPAs”. The program supports the private dairy enterprises andfarmers cooperatives through technical assistance, training and services on demand (feasibilityand market studies). The program is concentrating its activities in the following four major areas;Skill development, improved marketing, institutional strengthening and dairy sector policy studies.



These activities are implemented in close consultation and liaison with NDDB, and coordinatedwith Nepal Private Dairy Association (NPDA), Nepal Dairy Science Association (NDSA), DOAD,DOF, farmers' group and other organizations as and when required, and monitored periodicallythrough the establishment of base line and appropriate monitoring and evaluation systems.

6.1.1 Achievements Made So Far

a. Skill development

The main purpose of this activity is to enhance knowledge/skills of the farmers and the extensionworkers in dairy production, processing and marketing.

Training organized;

Dairy entrepreneurs training in dairy processing;Farmers training in: dairy animal feeding and seed production from stylo; andPublication of field manuals on each of the above subjects for the use of the farmers, dairyentrepreneurs, dairy technicians and the extension workers.

Similarly, training in animal health for AHW is under way.

b. Improved marketing

The main purpose of this activity is to increase private sector participation in dairy production,processing and marketing.

c. Various workshops organized:

i. To encourage participation of Milk Producers Cooperatives in dairy processing andmarketing in Butawal, Nepal, a workshop on “Options for Milk Processing and Marketingthrough MPCSs/MPAs in Butwal” was organized.

ii. “Berseem and Stylo Seed Production and Marketing in Nepal” was organized.iii. “Sanitary Milk Handling and prospects of Product Diversification in the Private Sector Dairy

Processing in Nepal”iv. “Assessing the priority needs of private sector dairy enterprises in Nepal”, in joint

collaboration with Nepal Private Dairy Association.

d. Various studies conducted:

i. To promote yak cheese production and marketing in Nepal, a cheese sector study wascarried out in September 1994. The study recommended that

dairy technology volunteers should be recruit from international agencies to work withcheese (to support the cheese producers in research and training);training for cheese makers, and cheese training facility within the dairy training center;and

tax systems for yak cheese production and marketing should be rationalised.

ii. To promote processing and marketing of high value dairy products, a study on “DairyProducts Diversification” has been carried out. The study made following two sets ofrecommendations:

enhancing market access, such as products and sales promotion, qualityimprovement, supply management and distribution network, packaging and review ofgovernment industrial policy, export/import regulations, and review of Food Actgoverning the minimum quality requirements of dairy products; and



Production Support such as: physical facilities, improved technology, human resourcedevelopment, raw materials supply, government policy on milk pricing and providingdonors support to private sector.

iii. Similarly, to examine the feasibility of establishing a dairy plant in Butawal a study isunderway. This activity will identify feasible type and size of dairy plant that could beestablished in Butawal.

iv. To promote marketing of dairy products “Campaigns” preparation is underway. Once it iscompleted advertisements for various dairy products will be carried out through radio, TV,posters, leaflets, news papers etc.

e. Institutional strengthening

With the initiative and technical support from DESC, Nepal Private Dairies Association has beenestablished, and is functional.

6.2 DANIDA's Support Program:

National Dairy Development Board (NDDB) strengthening project is in operation. In addition,DANIDA is also assisting DDC and private dairies to safeguard the raw milk quality at collectionpoints and subsequent stages of handling, and supporting dairy farmers through dairycooperatives.

7.0 Conclusion:

The contribution of the dairy sector is significant in the national economy by generatingemployment at producers, processors and marketeers levels, thereby facilitating the flow of urbanmoney to the rural milk producers, greatly helping in rural poverty alleviation. The acute shortage oftrained manpower is the major constraint hindering the growth of dairy industry especially within theprivate sector.

To strengthen the Nepalese dairy industry, following issues should be attended in priority;

Establishment of National Dairy Training Facility equipped with a pilot dairy plant that canorganize regular and need oriented training programs. Regular operation costs are to be metby commercial processing and marketing of dairy products by the pilot student's dairy.Existing institutions like Kathmandu University have expressed interest attaching dairytraining program if a pilot dairy plant is funded.

Appropriate technology development and dairy research can be carried out if this type offacility is established.

NDDB is at the infantile stage, it should be fully strengthened to plan and coordinate totaldairy development activities in the country.Decision on DDC restructuring could clear a way for future dairy development plans andprograms.Local capabilities of Nepal Dairy Science Association and Nepal Private dairy Associationshould be fully exploited, and these institutions should be strengthened.

REFERENCES:

APP (1994) Draft 20 Year Agriculture Perspective Plan, Livestock Sector. Prepared by NationalPlanning Commission/HMG/N/ADB Manila.

Asiaweek (December, 1995) Vital Signs.



Colavito, L.A. (1994). The Yak Cheese Industry of Nepal: An Industry Analysis and Strategy forFuture Development, study conducted by DESC/ATSP.

DDC (1995) An Introductory Bulleting on Dairy Development Corporation.

DESC (1995) Proceedings of the Workshop on “Assessing the Priority Needs of Private SectorDairy Enterprises in Nepal (October 18–19, 1995) Organized by Dairy Enterprise SupportComponent/Atsp in Collaboration with Nepal Private Dairy Association.

DESC (1995) Six Monthly Report (January 15– July 15, 1995), Dairy Enterprise SupportComponent/ATS Project, Nepal.

HMG (1991), HMG/DANIDA Ten Year Dairy Development Plan 1990–2000.

Neupane, N. (1995) A Report on High Value Dairy Products Diversification Study, conducted byDairy Enterprise Support Component/ATSP.

Upadhaya, R.M. and Thapa, T.B. (1995). Policy Constraints/Facilitation of Private SectorInvolvement in the Yak Cheese Sub-Sector of Nepal. Paper presented at the consultativemeeting organized jointly by Agro-enterprise Center/FNCCI/USAID, Ministry of AgricultureWinrock International (November 21–22, 1995) in Kathmandu, Nepal.

Discussion:

Question: What is the level of dairy imports to Nepal?

Answer:The quantities fluctuate but more Skimmed Milk Powder (SMP) is imported duringthe dry season.

Comment: Some participants had queries on consumer acceptance of buffalo milk.

Comment: The people in Nepal prefer buffalo to cows milk as it had more fat.

Question: How does the National Dairy Development Board help the dairy industry?

Answer:The NDDB was in infant stage and it needs strengthening before it can offer effectivehelp to the private sector, the NDDB however, has the mandate to promote privatesector dairy industry in Nepal.

INTERNATIONAL LIVESTOCK RESARCH INSTITUTE ILRI'SRESEARCH TO SUPPORT MARKET ORIENTED SMALLHOLDER

DAIRY DEVELOPMENT WITH PARTICULAR REFERENCE TOEASTERN AND SOUTHERN AFRICA

W. Thorpe16

Abstract

The presentation outlined the research of the International Livestock Research Institute (ILRI), aglobal institute within the Consultative Group for International Agricultural Research, which wasestablished in January 1995. It absorbed the resources and programmes (ILRAD) and theInternational Livestock Centre for Africa (ILCA). ILRI's mandate is to carry our strategic andapplied international public-good research on livestock to the benefit of poor people in developingcountries. (Slide 1)

SLIDE 1:

ILRI'S RESEARCH TO SUPPORT



MARKET ORIENTED SMALLHOLDER DAIRY DEVELOPMENT

with particular reference to EASTERN and SOUTHERN AFRICA

- ILRI, its MANDATE and PROGRAMMES- ILRI's DAIRY SYSTEMS RESEARCH- SOME RESULTS FROM EAST AFRICA

STRATEGIC and APPLIED INTERNATIONAL PUBLIC-GOOD RESEARCH

The institute's six research programmes (Slide 2) include Production Systems Research whichhas a major sub-programme on “Market Oriented Smallholder Dairy” (MOSD).

This is supported by and interacts with two strategic programmes “Utilization of Tropical Feeds”and “Livestock Policy Analysis” which target dairy systems (Slide 3). The MOSD research islargely field based and is implemented through ecoregional consortia in Sub-Sahara Africa withexpansion into Latin America and Asia planned for 1996 (Slide 4).

The research takes a systems approach (Slides 5 & 6) tackling policy and technical issues within aconceptual framework covering the consumption, marketing, processing and production sub-systems of the dairy sector (Slide 7). Selection of research sites across the spectrum of dairydevelopment (Slide 8), reflecting variation in market orientation, crop livestock interaction andproduction intensity, will allow cross-site comparisons and the interpolation and extrapolation ofresults. Important products are research methodologies for analysing dairy systems that identifypolicy, socio-economic and technical constraints and highlight development opportunities (Slide 9).

16 International Livestock Research Institute, Nairobi, Kenya

SLIDE 2:

INTERNATIONAL LIVESTOCK RESEARCH INSTITUTE (ILRI)

- Production Systems Research

- Utilization of Tropical Feeds

- Livestock Policy

- Conservation of Biodivesity

- Animal genetic resources

- Forage genetic resources

- Animal Health Improvement

- Development of disease control technologies

- Implementation of disease control technologies

- Genetics of disease resistance

- Strengthening NARS

- Training

- Information/Publishing

- Networks

SLIDE 3:

SUPPORTING STRATEGIC RESEARCH PROGRAMME

- UTILIZATION OF TROPICAL FEED RESOURCES

:NUTRIENT PARTIONING FOR MILK, REPRODUCTION ANDLIVE-WEIGHT



:MATCHING NUTRIENT REQUIREMENTS AND FLUCTUATINGFEED SUPPLY

- LIVESTOCK POLICY ANALYSIS

: TECHNICAL CHANGE - THE ROLE OF CREDIT

:DETERMINANT OF COMPETITIVENESS OF DAIRYPRODUCTS

: DETERMINANTS OF DEMAND FOR DAIRY PRODUCTS

SLIDE 4:

PRODUCTION SYSTEMS RESEARCH

ON-GOING : SYSTEMS ANALYSIS and IMPACT ASSESSMENT

: LIVESTOCK PRODUCTION IN TESETSE-AFFECTED AREAS

: MARKET ORIENTED SMALLHOLDER DAIRY

: DESERT MARGINS - ARID and SEMI-ARID WEST AFRICA

: MOIST SAVANAHS - HUMID/SUBHUMID WEST AFRICA

: HIGHLANDS of EAST and CENTRAL AFRICA (ASARECA)

STARTING :LATIN AMERICA - LEGUMES AND DUAL PURPOSE SYSTEMSCENTRAL AMERICAN HILLSIDES: HUMID/SUB-HUMID FORESTMARGINS

PLANNED : SOUTHERN AFRICA

SLIDE 5:

RESEARCH OBJECTIVES AND ACTIVITIES

i.CHARACTERIZE DAIRY SYSTEMS AND UNDERSTAND THEIREVALUATION

ii.IDENTIFY CONSTRAINTS TO, AND PRIORITIZE OPPORTUNITIES FORIMPROVING DAIRY SYSTEMS;

iii.IDENTIFY POLICIES THAT FOSTER A CONDUCIVE OPERATIONALENVIRONMENT FOR THE DAIRY SECTOR; AND

iv.DEVELOP AND TEST METHODOLOGIES, TOOLS AND TECHNOLOGIESAPPLICABLE WIDELY BY NARDS.

SLIDE 6:

DAIRY SYSTEMS

-

THE PRODUCTION AND PROCESSING UNITS AND MARKETINGCHANNELS DELIVERING DAIRY PRODUCTS TO A CONSUMPTIONCENTRE (E.G. NAIROBI), AND THE POLICY AND SOCIO-ECONOMICENVIRONMENTS WITHIN WHICH STAKEHOLDERS AND THEIR INPUTSUPPLIERS FUNCTION

-SUB-SYSTEMS: PRODUCTION; PROCESSING; MARKETING;CONSUMPTION

SLIDE 7:



Slide 8: Research Sites, Characteristics And Linkages

RegionAEZ Site Market

orient.Crop × Liv.interaction

Productionintensity

IARCcollaborators

ECAfCool highlands Kenya* +++ +++ +++ ICRAF-AHI

Ethiopia* ++ +++ ++

WAf

Humid/sub-humid Nigeria* ++ + + IITA-MS

Sub-humid Ghana +++ + + (CARNET)

Sub-humid/semi-arid

Nigeria* ++ ++ + IITA; ICRISAT

Mali ++ +++ + (CARNET)

Semi-arid/arid Senegal ++ + + (CARNET)

LAmsub-humid/semi-arid

Various +/+++ +++ +/++ICRAF; CIMMYT;ICRISAT

LAmHumid Peru ++ + +

CIAT-Forestmargins

Humid/sub-humid C. Rica ++ + ++ CIAT-CA Hillsides

Asia IRRI; ICRISAT

* ILRI inter-dusciplinary team

SLIDE 9

CONCEPTUAL FRAMEWORK AND RESEARCH METHODOLOGIES

- UNDERPINS DESIGN OF SYSTEMS and RELATED RESEARCH by

- ILRI's lbadan, Addis and Nairobi teams and their partners

- proposals for: Southern Africa SACCAR

Latin America CIAT

African Highlands ICRAF



- RESEARCH METHODOLOGIES for CHARACTERISING SUB-SYSTEMS

- CONSUMPTION Mullins et.al. 1994/95

Field tested in Dar-es-Salaam with FAO Mulins

- MARKETING Jabbar, Tambi, Mullins

- PRODUCTION Rey, Agyeman et.al.

CARNET/IDRC workshop: Ghana, Mali, Nigeria, Senegal

- RESEARCH METHODOLOGY for SYSTEMS TYPIFICATION Shapiro et.al.

The component research projects carried out in Eastern Africa were oulined and their linkages withnational and regional organisations and projects were explained (Slide 10 & 11).

SLIDE 10

ECO-REGIONAL - HIGHLANDS OF EAST AND CENTRAL AFRICA (ASARECA)

ETHIOPIA

: FOOD/FORAGE INTER-CROPPING

: CROSSBRED DAIRY COWS FOR TRACTION (+ FAO WORKSHOP)

: DISEASES OF INTENSIFICATION

:SOCIO-ECONOMIC AND BIOLOGICAL FACTORS AFFECTING DAIRYPRODUCTION

: MILK PROCESSING TECHNOLOGIES

SLIDE 11:

ECO-REGIONAL - HIGHLANDS OF EAST AND CENTRAL AFRICA (ASARECA)

KENYA (+ UGANDA + ?)

: POLICY, SOCIO-ECONOMIC AND TECHNICAL CONSTRAINTS OFDAIRY

PROB. LINKAGES TO FAO TICK AND TICK-BORNE DISEASESPROJECT

: FORAGE LEGUMES FOR DAIRY AND NATIONAL R.M. (ICRAF)

In Southern Africa, a regional project of dairy systems research has been prepared with SACCARand is under consideration by donors for funding (Slide 12). It and the related research in EasternAfrica, along with ILRI's current Cattle Research Network (CARNET) provide excellentopportunities for effective linkages with the proposed regional dairy network.

SLIDE 12

EASTERN AND CENTRAL AFRICA

THROUGH ASARECA'S ICRAF-led AFRICAN HIGHLANDS INITIATIVE BENCHMARKSITES - KIBALE, KAKAMEGA/MASENO, EMBU, GINCHI, etc.

SOUTHERN AFRICA

PROPOSAL WITH SADC/SACCAR

- 1992/93 REVIEW AND PLANNING WORKSHOPS

- 1994 PROPOSAL PREPARED/REVISED

- 1995 SACCAR BOARD APPROVAL



SUBMISSION TO DONORS

The presentation concluded by emphasising the importance of addressing client needs. Resultsfrom dairy consumption and marketing studies in Mombasa, Kenya, and Dar-es-Salaam,Tanzania, highlighted the contrast between consumer preferences and their current consumptionpatterns, the result of the failure of domestic, local supply to satisfy demand for dairy products(Slide 13, 14 & 15).

Similarly, research and development projects must identify and address priority issues throughoutthe dairy system and act to meet the unsatisfied demand for the policy options and technologicalinnovations required to foster the development of domestic dairy sectors in Eastern and SouthernAfrica.

SLIDE 13

SLIDE 14



Slide 15

Comparison of Consumer Preferences vs Consumption for Sample Households

Discussion:

ILCA and ILRI are moving into other areas other than cattle production research in



Comments: ILCA and ILRI should also focus on goats and buffaloes. The dairy goat and buffalotechnology is regarded as superior to cows in some regions.

Question:The smallholder dairy sector does not have access to ILRI research work. How caninformation be made available to this sector?

Answer:

Research and work done by ILRI is demand driven by countries in Southern andWest African Regions. National Institutes have access to information on ILRI andhave the mandate to distribute information in specific countries. The suggestednetwork could help im ensuring better information extension and establishment oflinkages.

Comment:A follow-up on information utilization should be done by research organisations toensure the information is effectively utilized.

Comment:Bi-annual follow-up is done but there is little feedback from intended consumers asresponses are rarely forthcoming. The issue of information utilization needs furtherassessment.

proceedings of the workshop on the regional exchange network for market orient dairy development sec...

Business

marketing of dairy products

dairy processing

local dairy sector

zimbabwean dairy sector

market oriented dairy

marketing of milk

dairy marketing board

food marketing