dairying in asia: strategic opportunities, challenges and the response vinod ahuja livestock policy...
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Dairying in Asia: Strategic opportunities, challenges
and the response
Vinod Ahuja
Livestock Policy OfficerFood and Agriculture Organization of the UN
Regional Office for Asia and the PacificBangkok
The context• Rapidly growing share of Asia in the
global dairy production. Emergence of East Asia as an important contributor and the share expected to grow in the foreseeable future
• Consumer demand outpacing the production leading to increased dependence on imports
• Declining growth in global milk production but Asia defying the trend
• Tremendous potential for consumption growth
• Reasonable productivity growth since the early 80s but the productivity still below potential
Milk productivity across major regions of the world
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1961 1971 1981 1991 2001 2007
Kg
/an
imal
/yea
r
Asia
Africa
Europe
North America
Oceania
World
Milk productivity: Asia and the World
0
200
400
600
800
1000
1200
1961 1971 1981 1991 2001 2007
Kg
/an
imal
/yea
r
Asia
World
The context
• Poor technical efficiency of milk production
• Poor sector organization imposing disproportionate transaction costs on producers
• Cost competitiveness at the production level under threat due to increasing feed shortages and growing imports of feed
• Continuing presence of trade and production limiting diseases and poor infrastructure limits the ability of dairy producers to respond to emerging opportunities
Small producers most important in this process of transition but need institutional and policy support
Poor R&D targeted towards smallholder needs
High prevalence of under-nutrition and underweight children
Enormous growth in the number of milk producing animals putting severe pressure on natural resources and environment
Distribution of milk animals across major regions of the world
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1961 1971 1981 1991 2001 2007
Asia Africa
Europe LAC
North America Oceania
The context
Where do we go from here?
We may draw inspiration from Einstein . .
. . . or build on our own experiences
Some lessons learnt from Asian Dairy experience
• Supportive national and regional policies are critical• Policies that create space for growth and protect domestic
industry from unfair competition• Policies such as certification that enhance trust and reputation of
products coming from small producers• Policies such as tax breaks for private sector that motivate them to
invest in enhancing farm • Policies that target promotion of models linking small producers to
large markets. Some of these include cooperatives, contract farming, dairy development zones, milking stations, producer companies, joint ventures, etc
• • •
Some lessons from Asian dairy experience. .
• Demand side enabling environment and supply side facilitating factors are both equally critical
• Price controls can be counterproductive but quality based pricing can spur investment in quality enhancement
• Investment needs to be supported by technical and managerial training for entrepreneurial dairy producers
• Producer institutions can make a big difference in lowering the barriers to market access for small producers
• Women participation in decision making has tremendous positive benefits
• School milk programs have multiple benefits
• Guaranteed collection of milk at pre-specified time and place (within the village). This requires organizational models that are able to optimize necessary coordination along the supply chain
Some lessons from Asian dairy experience. .
• Successful smallholder dairy models have minimized transactions costs of milk collection, processing and marketing so as to return a larger share of the value to primary producers.
• Transparent and simple methods to measure milk quality and simple easy to understand pricing formulae linking farm gate milk price to milk quality
• Transparent record keeping and easy access to records of physical and financial transactions at the level of PMOs
• Professional management of processing and marketing function such as product branding, pricing, and composition of product portfolio, and
• Producer participation/representation in decision making at all levels of the value chain to ensure their interests are protected
Learning lessons is a continuing process . . .
. . . but it must lead to ‘action on the ground’
Enhancing market access for small producer
School milk programs
Experience sharing and networking to promote
cooperation and promotion of shared interests
Active leadership and participation of women
at all levels
Minimizing adverse natural resource and environmental consequences
Technical and managerial
capacity building
Investment in productivity enhancing measures
The action agenda
The partners
FAO
CFC
APHCA
National Govern-ments
Milk producers
Dairy Asia Network
Project funding
TCP on School
milk
Project implementation
support and leadership
Elements of the CFC proposal
• Country coverage• Thailand, Myanmar and Bangladesh
• Three components• Milk Production Enhancement • Milk Marketing Enhancement• Capacity Building and Information
Dissemination • Duration: 4-5 years
• Budget : USD 2.5-2.7 million
Elements of the FAO TCP proposal
• Country coverage• Thailand, Myanmar and Bangladesh
• The components• Review of school milk programmes• Design and/or strengthen school milk programmes with
a targeting of schools in more rural areas • Assess alternative and innovate funding options for
financing school milk programs• Link the development of these local programmes with
opportunities for smallholder dairy participation • Support the development of SMEs for manufacturing
and packaging range of semi value-added dairy products
• Duration: 2 years
• Budget : USD 450,000-500,000
Elements of the APHCA proposal
• Country coverage• All APHCA countries
• The components• Creation of an information and knowledge network• Creation of a demand driven dairying group with a
membership base that included dairy firms, dairy institutions, producer organizations, dairy research organizations, and other concerned regional and international partners
• Duration: 4-5 years
• Budget : Approx $25,000 per year
All three proposals complement each other yet retain their independence
Thank you very much for your attention