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Report on COMP-NDDB 2017

i N.E.P.C. Research-2017

Final Report on Study on Cost of Milk Production

Submitted to:

National Dairy Development Board

(NDDB) Haiharbhawan, Lalitpur

Submitted by

N.E.P.C. Research Pvt. Ltd P.O.Box 2444, Mid Baneshwor, Kathmandu

Tel: +977-01-4465942, Fax: +977-01-4465942

Email: [email protected]


ii N.E.P.C. Research-2017

Table of Contents

CONTENTS PAGE

Study Team ........................................................................................................................... iii

Abbreviations and Acronyms ................................................................................................. iv

A. Executive Summary ...........................................................................................................v

1. Background ........................................................................................................................1 1.1 Introduction...........................................................................................................................1

1.2 Rationale for the Study...........................................................................................................2

1.3 Objective & Scope of Work....................................................................................................2

2. Methodology ......................................................................................................................3 2.1 Desk study for secondary collection ........................................................................................3

2.2 Meeting with related stakeholders ...........................................................................................3

2.3 Tools design and finalization ..................................................................................................3

2.4 Training to Field Researchers (FRs) ........................................................................................3

2.5 Survey sampling ....................................................................................................................3

2.6 Primary data collection...........................................................................................................4

3. Limitation of the Study........................................................................................................6

4. Result and Discussion .........................................................................................................7 4.1 Overview of the Dairy Sector in Nepal ....................................................................................7

4.2 Milk-Pricing System in Nepal .................................................................................................7

4.3 Producer's survey ...................................................................................................................8

5. Conclusion and recommendations ...................................................................................... 21 5.1 Conclusion .......................................................................................................................... 21

5.2 Recommendations................................................................................................................ 22

Annexes: .............................................................................................................................. 24

Annex: 1 Cost of milk production/lactation per animal ............................................................ 24 Annex: 2.1 Household Survey Questionnaire in Nepali ....................................................................... 29

Annex: 2.2 Key Informant's Survey Checklist/Questionnaire in Nepali ................................................ 34


iii N.E.P.C. Research-2017

STUDY TEAM

Team Leader

Subas Chandra Dhakal

Researchers

Ramesh Prasad Mainali

Sony Lamichhane


iv N.E.P.C. Research-2017

ABBREVIATIONS AND ACRONYMS

AI Artificial Insemination

CDCAN Central Dairy Co-operative Association of Nepal

CFUGs Community Forest User Groups

CLDP Community Livestock Development Project

DCIP Dairy Cattle Improvement Project

DDC Dairy Development Corporation

DLP Department of Livestock

DMPCU District Milk Producers Co-operative Union

DoC Department of Cooperatives

FAO Food and Agriculture Organization

GDP Gross Domestic Product

GoN Government of Nepal

HH Household

KII Key Informant's Interview

MoAD Ministry of Agriculture Development

MPC Milk Producers Co-operative

NARC Nepal Agriculture Research Council

NDDB Nepal Dairy Development Board

NEPC Nepal Environment Protection center

NPC National Planning Commission

SMP Skimmed Milk Powder

SNF Solid Non Fat

TS Total Solids


v N.E.P.C. Research-2017

A. EXECUTIVE SUMMARY Cash income is one of the motivational factor among the entrepreneurs and frequest turnover of the cash is motivationg accleration apparatus. Milk is one of the livestock product that generate cash twice a day and transfer that cash from richer to poor. Due to awareness on the importance of health among the people, milk consumption trend is increasing day by day. Per capita milk availability is 65.1 liter and minimum requirement is 91 liter (FAO standard). Milk production is not encouraging and daily 3 lakh deficit in fluid milk is matter of shame. Millions of capital is draining out from the country in importing milk and milk products. Rays of hopes are sprouting among the youths as immediate cash earning enterprize.

Overall objective of this study was to assess the milk production cost and recommend appropriate price of

raw milk to be purchased by the processors. They specific objectives were: assess the fixed (animal, sheds

and other infrastructure) and variable costs (breeding, feeding, care, management, disease management)

for milk production, assess the cost for collection and transportation up to the milk collection and chilling

center and recommend appropriate price for raw milk.

The study was articulated with both qualitative and quantitative research methodology and collection of

both primary and secondary information. Desk study for literature review, consultative meeting with

concern stakeholders, survey tools preparation, training to Field Researchers (FRs) were done before field

survey. Five districts covering all three ecological and five development regions were selected

purposively to catch the dairy potential area. Within the district stratified random sampling procedure was

undertaken to select the MPCs and farmers in the MPCs. Sampling frame was footed on MPC and from

each districts two MPCs were selected for primary information collection. Dairy farmers were randomly

selected from among the members and nonmembers who delivered milk to the selected MPC. A total of

200 dairy farm HHs were interviewed in the survey.

Questionnaire/ checklist used in the past was collected and adjusted and get approval from the NDDB

before administering to the sample HHs. Primary information was collected using structured survey

schedule as administered to the dairy farmers while semi-structured check list was used to collect

information from the Key Informants.

Major Findings

1. Statistical information on Nepalese Agriculture- 2014/15, MoAD, total milk production was

1724823 Mt out of which 1153838 is from buffalo and 468913 Mt from cow. There were a total of 5133139 buffaloes and 557669 cattle, whereas total milking cattle was 1025947 and milking buffaloes were 135164 and they produced 1167154 milk. Dairy sector contributed nearly 33 percent of the AGDP and 8 percent of total GDP

2. Dual axis method of fixing the rate for milk comprised of fat and SNF content of the milk. A minimum level of fat (3%) and SNF (8%) has been fixed to purchase raw milk is standard practice used by the formal sector while price based on the fat content and lump sum method is also practiced.


vi N.E.P.C. Research-2017

3. Agriculture was the major source of income of 41.5 percent respondents, 16.5 had business, 16 percent had wages and 15.5 percent had foreign employment and 10.5 percent had service as major source of income.

4. Out of respondent who have agriculture as major source of income (N= 83), 40.96 percent had livestock, 22.89 percent had cash crop, 13.25 percent had cereal and 12.05 percent had fruits as major HH income source of agriculture commodity.

5. Only 30.0 percent respondents cultivated forage including 7.5 percent from Panchthar followed by 6 percent each from Sindhupalchowk and Banke and 5 percent from Kanchanpur district. Those respondents who cultivated forage, 60 percent cultivate both legumes and non-legumes while 33.33 percent cultivated non legume and 6.67 percent cultivate improved legume forage.

6. It was found that 64.35 percent respondents have lactating cows and 35.64 percent have lactating buffalo in the survey districts. Out of them, 62.28 percent had improved cow and 32.87 percent had improved buffalo.

7. There was a total of 422 matured animals in respondents HHs of the survey districts. Out of them 64.45 percent were cow and 35.33 percent were buffalo. In an average respondents HH had 1.38 lactating animals. Productivity of cow was 2826 liter while that of buffalo is 2189 liter per lactation. Average lactation period was 286 days in case of cow and 242 days in buffalo.

8. Major cost of milk production was feed and feeding that accounted to 46.53 percent, care and management accounted to 41,16 percent, interest of loan accounted to 6.71 percent, depreciation accounted to 2,32 percent and 1.32 percent accounted to health care.

9. Average milk production cost was Rs. 48.8 per liter including Rs. 42 per liter in case of cow and Rs.56 per liter in case of buffalo. It was found that 49.0 percent HHs use the milk for both HH consumption and sale while 45.0 percent told that they sale the milk produced and 6.0 percent told they use for HH consumption only.

10. Nearly two third (63.0 percent) respondent HHs prefer selling milk to MPCs followed by 13.5 percent to tea shop, 10.5 percent to private dairy, 9.5 percent to vendors and only 3.5 percent to neighbor. Nearly two third (63.5 percent) respondents could sale their milk in less than 20 minute, 31.0 percent required up to 1 hour and still 5.5 percent required to spend more than 1 hour to sale the milk.

11. Nearly one third (28.09 percent) respondents HHs suggested to subsidize in the inputs, followed 26.55 percent suggested for market guarantee of the milk. 22.94 percent suggested to provide free extension service for low cost milk production, 15.72 percent suggested to increase milk price.

Recommendations

Transformation of dairy occupation to enterprise and farmers to entrepreneurs. This could be done anchoring the grass to glass approach, commercial orientation with the development of technology or importing appropriate in compliance to Nepalese soil in reducing cost of milk production. Technology to minimize the major expenditure items viz. feeding, breeding, disease prevention and control shall be done articulating with training, coaching, demonstration and exposure to similar context.

Lack of high productive animal is prominent discouraging factor and the live animal cost is extremely high. Establishment of resource center for production of breeding stock and make available to the farmers in cheaper rate could be government’s golden gift to the farmers so that the current productivity nearly 8.87 liter per day could be increased up to at least 15 liter per day. Resource


vii N.E.P.C. Research-2017

center shall be establish either by government or in Public Private Partnership (PPP) with appropriatre quality control mechanism.

Breeding improvement programmes from the very beginning and AI mission in the later stage are not could be implemented effectively than the current situation. Despite the high cattle number, the productive population is very less (nearly 10%) that could be improve by administering sexed semen. Government should extend its eye to provide such semen to the dairy farmers in subsidized rate anchoring with highly AI and reproduction professionals.

The banks and financial institutions are keeping silence on the government’s policy on subsidizing the loan interest in the agriculture sector. They could do more in financing the dairy sector by taking confidence the farmers, but the progress is not in accelerated position. Equally important for financing is footed on the assurance of extension services to the farmers to encourage them in financing. Department of Livestock Services (DLS) should be able to provide required services to safeguard the banker’s finance whereas DDC and private sector processors followed by the MPCs should in government’s witness guarantee the sale of milk.

Dairy farmers are to be inform on the economic benefit of the forage cultivation and reduce the competition between the human and animal feed. Simultaneously, concentrate feed raw materials production campaign should be launched specially for maize, wheat, pulses, oil seed and others. Preservation of the green forage, by-products of the crops and wastages of the human food could also be an instrument to reduce the feeding cost. Forage mission shall be integrated with forage pellet production scheme.

Effective disease prevention and control mechnism shall be instrumental to save the farmers from triple level loss. Vaccination campaign, dewarming, disinfestation, disinfection campaigns along with reduction of unlimited use of medicines programmes should be conducted regularly. It is equally important to monitor the quality of vaccine, medicine available in the market and their access and availability and strong penalty system should be provision for supply substandard vaccine and medicine.

Though the Code of Practice (CoP), Good Manufacturing Practice (GMP) are in place, implementation is poorly administered and geeting quality milk is impossible in current context. Premium price for quality milk shall be offered to the farmers grading the milk in different categoriy. Also there is high variation in milk production between the season. Adjustment in the pricing policy in flush and lean season could bring the positive change in increase milk production.

At the current situation dairy farmers are getting good price for their milk but the processed milk

price is high. This price shall be reduce by creating environment to run the processors of their full

capacity. The dairy processors should sphere their profit to the extension services and establish their

own milk production pocket area that could be instrumental for steady and quality milk availability.


1 N.E.P.C. Research-2017

1. BACKGROUND

1.1 Introduction

National Dairy Development Board (NDDB) as an apex body in dairy sector development in Nepal,

undertake study on cost of milk production in regular basis and forward the findings with recommend to

the Ministry of Livestock Development (MoLD) for necessary action and to Dairy Development

Corporation (DDC). DDC examines the consumer price, compared with production cost and forward the

opinion to MoLD for approval. MoLD evaluates these reports and fixed the producers and consumer's

price. It is also a common practice of private dairies following DDC punctuation. Common practice as

said by the NDDB and DDC is that out of total price 2/3rd goes to the farmers and 1/3rd to the

processors.

Traditional milk production under mixed farming system is still predominantly operating in Nepal with small non-commercial holdings. Due to traditional farming system, the cost of milk

production is high as compare to neighboring countries. However, organized commercial dairy farming is increasing with start of the larger (more than 20 cattle/farm) as well as medium sized (6-20 cattle/farm) dairy farms. This increment in farm obviously increases production of milk and milk products which may be consumed in the nearby market of the farm area.

It has been realized that, the demand of milk and milk product is extremely higher than the demand

especially for fluid milk. One of the reason for it is said that the farmers are not getting appropriate price

of milk compared to the increased cost in raw materials while on the other hand the consumers are saying

that, they milk price is very high and is beyond their purchasing capacity.

This is associated with lack of farmer awareness with regards to hygienic milk production which causes

loss of income along the milk chain. Due to lack of a comprehensive policy that provides standards to be

complied with during milk production, the quality of milk in Nepal has remained a big issue. The basic

reasons are attributable primarily to the lack of hygiene and inadequate sanitation at the production level,

since major milk producers are small, marginal and poor, living at the subsistence level.

Though, dairy sector in Nepal is gradually growing and in take off situation towards commercial orientation looking at the tremendous opportunities for improving livelihoods, problems are still rotating. On the other hand with rapid urbanization and increased income, the demand for milk and milk products are increased since last decade. Even with the constant population growth rate of 1.4% per annum at present, the annual milk production has to be increased at least by 9% from 3.4% at present to meet the requirement of 250 gm/day as recommended by WHO by the year 2020. Because of changing food habit as well as higher purchasing power, demand for modern dairy products such as pasteurized milk, cheese, butter, ice cream etc. and traditional milk products including ghee, yoghurt, paneer, and different types of milk-based sweets are increasing tremendously in urban areas. Currently, around 300 to 400 thousand liters of fluid milk is deficit daily against installed capacity of dairy industries during lean season. In contrasst, the country is importing milk and milk products of billions of rupees annually.



Government of Nepal has policy to support and encourage farmers through subsidies, affordable and

accessible veterinary service, cattle insurance, easy loans with lower interest rate, improved cattle supply

etc but it is not enough. These activities are in a certain way being provided by the Milk Producer’s

Cooperative (MPCs), DDC and private players; however it is limited and accessible only to few

producers.

1.2 Rationale for the Study

NDDB is an apex body formed by the government of Nepal in 1992 for holistic dairy sector development of the country with policy. Functions and duties of NDDB includes formulation and

recommendations on policies on import and export of good necessary for production and promotion of milk and milk products, acceleration of the implementation of approved policies;

formulation and recommendation on pricing policy of milk to Government of Nepal; encouragement to development of dairies through the medium of co-operatives; monitoring, evaluation and review of dairy development; and registration of dairy industries.

It is said that, there is extreme gap between the demand and supply of milk and milk products.

This demand and supply gap may further widened with rapid urbanization, changing food habits and improving economic status. Presently, the real figures on import of milk products such as Skim Milk Powder (SMP) to reconstitute into fluid milk and other dairy products are also

lacking. This is attributed to high production cost and hence low level of attraction on milk production among the farmers. However, gradual commercialization of dairy animal farming has

been coming up to fill the gap of fluid milk deficit and reducing the cost of production. The cost of production of milk relates to many factors and therefore the milk price cannot be determined in isolation. Money that farmer receives for their milk is their most immediate concern, yet little seems to be known about the calculations and factors that go into determining farm-gate prices. The current pricing systems have drawn much flak thus; scientific pricing policy has to be rollout to improve and

encourage development of this sector. The present study is therefore being commissioned to assess

the production cost and suggest the NDDB for necessary action.

1.3 Objective & Scope of Work The overall objective of the study is to assess the cost of milk production and recommend appropriate price of raw milk to be purchased by the processors. Following are the specific objectives:

Assess the fixed (animal, sheds and other infrastructure) and variable costs (breeding, feeding, care, management, disease management) for milk production

Assess the cost for collection and transportation up to the milk collection and chilling center Recommend appropriate price for raw milk



2. METHODOLOGY

2.1 Desk study for secondary collection

Visiting to different daily related agencies and websites, reports, research papers, proceeding, articles,

policies, programmes in relation to dairy sector development, research tools prepared by different

agencies including NDDB in the past in relation to cost of milk production within the country and abroad

was collected. The collected materials were reviewed in regards to milk production practice, pricing

system of raw and pasteurized milk and milk products, cost of milk production, milk marketing, and

demand and supply situation in Nepal and across the globe.

2.2 Meeting with related stakeholders Few relevant stakeholder organization and scholars in dairy sector in Nepal were visited and hold meeting with them with special reference to cost of milk production and cost items in broader sense. Department of Livestock Services (DLS), National Dairy Development Board (NDDB), Dairy Development Corporation (DDC), Central Dairy Cooperative Association of Nepal (CDCAN), National Agriculture Research Council (NARC) and other private dairies and their authorities were met and hold discussion. Mission, vision, and goal, objectives, working principles, strategies and activities of NDDB, DLS and DDC was discussed and come consensus on the milk production variables and most significant variable that is associated to milk production. The discussion was fruitful to design/ adjust the survey tools.

2.3 Tools design and finalization

Following to the desk study and consultative meeting and discussion with relevant stakeholder

organizations and scholars, two sets of tools were prepared, one set each for qualitative and quantitative

data collection. Semi structured checklist was prepared for qualitative and structured questionnaire was

prepared for quantitative data collection. The prepared checklist and questionnaire was presented to

NDDB and incorporating the feedback, tools were finalized and get approval from NDDB for field

survey.

2.4 Training to Field Researchers (FRs) With the purposed of facilitating and easy data collection from the field with different stakeholders, one-day training was organized for RFs. Functional training on the objective of the study, methodology (sampling, sample section and logistics) and reporting perspectives followed by sample selection, household selection, data collection technique, sampling frame and quality control of the data collection and process of data collection was provided.

2.5 Survey sampling

a) Sampling frame

Sampling frame was designed to represent all development reasons and districts pertinently the milk

pocket areas in all ecological regions. While framing the sample Milk Producer's Cooperatives (MPCs)

were footed at village level as primary respondent dairy farmers HHs.



Table: 2.1 Sampling Frame of the Study

Ecological regions Development region District No of MPCs

Mountain CDR Sindhupalchowk 2

Hill EDR Panchthar 2

Hill WDR Baglung 2

Terai MWDR Bardiya 2

Terai FWDR Kanchanpur 2

Total 10

b) Sample size Stratified random sampling technique was followed to select the respondent HH. Twenty each HHs from

each MPC was selected for HHs survey and 3 (three) Key Informants were interviewed for qualitative

data. Table 2,2 explain on the sample size.

Table: 2.2 Sample size for survey

SN Districts MPCs HHs Key Informants

1 Panchthar 2 40 3

2 Sundhupalchowk 2 40 3

3 Baglung 2 40 3

4 Banke 2 40 3

5 Kanchanpur 2 40 3

Total 10 200 15

c) Key informant interview

Responsible officials in District Livestock Service Office (DLSO), MPCs, school teachers/ social

workers/ tea shop owner were taken as key informants. Three KII from each districts was done for study.

2.6 Primary data collection

After the arrival of the research team to the district, they visited to DLS and MPCU to get the information

on the location of MPCs in order to follow the sampling frame and sample selection. With having detailed



information on the MPCs MPCs were selected for survey. Using the approved structured and semi-

structured survey tools data was collected from the field lying with in the sampling frame and sample

size.

2.7.1 Household survey

Using the approved structured questionnaire HHs survey was conducted. Households were selected

randomly among the selected MPC share members. A total of 200 dairy farmers were interviewed as

specified in the sampling frame and sample size.

2.7.2 Key Informant’s Interview (KII)

Key informants were among others DLSO, MPCs, tea shop owner, social workers and activists. Using the

approved semi structured checklist interview was done with 15 key informants as agreed in the proposal.

2.7.3 Onsite observation

The study team during data collection process, observe the survey site from the view point of dairying,

dairy production, dairy animal rearing practices, animal holding, milk collection, animal and milk

handling practice, sanitation of the animal and shed, feed, forage/fodder availability and others.

2.7.4 Quality assurance of the data collected

Strategic process were applied for quality assurance of the data collection as follows:

a) Experts field visit

FRs were backup by the field visit of team leader. All the FRs were deployed in Bhaktapur district to

understand the data collection process and in presence of team leader. Team Leader firstly administer the

questionnaire which was observed by the FRs. The queries of the FRs were collected and answer by the

team leader. This process increase the confidence among the FRs for data collection. The problems faced

by the FRs during the information collection was solved instantly in the field. It was also provision to

report NEPC’s head office in Kathmandu if any problems/issues raised during data collection and solution

was granted by telephone.

b) Consistency

Team leader randomly check 10 percent filled questionnaire by the FRs and assure that the data collection

was done properly. In case, the inconsistency observed, FRs were asked to clarify and in extreme fault

FRs were asked to recollect the data from the field. There was no significant faults in data collection.



2.7.5 Data cleaning and entry

Data entry was done after checking the consistency, cleaning and made ready for data entry in computer.

Entire study team sit together during data cleaning and coding and confirm that the information is correct.

2.7.6 Data analysis

Data analysis was done addressing the objectives and scope of the work. Dummy tables were prepared

before data analysis. The data were compiled in the dummy tables and followed by cross tables as per

required basis. Analyzed data was reviewed and analyzed by the team leader and assure for compliance in

accordance with the objectives. Wherever appropriate quantitative data was backup by the qualitative

after triangulating the information. Analysis was done using mixed presentation and interpretation in

tables, graphs, charts.

2.7.7 Report writing

After triangulating the analyzed qualitative and quantitative data, it was arranged and organized in line

with the objective and scope of the study and placed in sequential order. Draft report was submitted to

NDDB for review, comments and suggestions. After incorporating the comments and suggestion from

NDDB final report was prepared and submitted.

3. LIMITATION OF THE STUDY

Due to budgetary constraint, small sample size was taken and could not cover dairy pocket areas

There is no farm record system and farmers are to relay on the recall methods and hence more time was taken to collect the data



4. RESULT AND DISCUSSION

4.1 Overview of the Dairy Sector in Nepal

Based on the information collected from Statistical information on Nepalese Agriculture- 2014/15, MoAD, total milk production was 1724823 Mt out of which 1153838 is from buffalo and 468913 Mt from cow. There were a total of 5133139 buffaloes and 557669 cattle, whereas total milking cattle was 1025947 and milking buffaloes were 135164 and they produced 1167154 milk. It was stated that, only 10 percent of the cows and 25-30 percent buffaloes were improved breed. The cow breed included Jersey, Holstein, Brown-Swiss, Ayrshire and Sahiwal and their cross-bred cows; whereas the buffaloes included local, improved such as Murrah and their crosses.

Table 4.1: Nepal dairy sector at a glance

Total dairy animal 12409480

Cattle 7244743

Buffaloes 5167737

Milking cattle 1025947

Milking Buffaloes 135164

Milk (mt.) 1724823

Cattle Milk 557669

Buff Milk 1167154

Source: Statistical information on Nepalese Agriculture- 2014/15, MoAD

Contribution to AGDP (Source: 2014-2034) 33% (nearly one third)

Dairy sector contribution to GDP (Source: 2014-2034) 8%

Consumption per capita (liter) (Source: 14th national plan Nepal ) 66.7

Distribution of milk

Formal 20%

Informal 30%

HH retention 50% Source: DIA-MOAD, 2014/015

Based on the above table, Nepal is importing considerable amount of milk and milk products. These products included, milk and cream powder, butter, butter oil, milk and cream liquid, modify whey, cheese and others. Dairy sector contributed nearly 33 percent of the AGDP and 8 percent of total GDP.

4.2 Milk-Pricing System in Nepal

4.2.1 Dual Axis Pricing (Fat and SNF system)

The trend of rearing improved breed and their cross breed cattle and buffaloes is increasing year after year and number of cows has been increasing to replace buffaloes. Nepalese farmers are realizing that the cost of milk production from buffalo is bit higher compared to cow and hence despite high fat content of buffalo milk, farmers are preferring cow since the 1980s.

Normally farmers are rearing buffalo and cows and there is no practice of collecting milk separately of

cows and buffaloes. Due to this reason it has been difficult to fix the different rate for different kinds of



animal. This situation demanded for a more scientific method for payment of milk, which gave rise to the

dual axis payment system.

Dual axis method consisting of fat and SNF is applied to calculate the milk price and there should be

minimum of 3% fat and 8% SNF of the raw milk. This system is justified by the government as payment

is done on the amount of total solids (fat and protein) present which is co-related with the yield of the

milk products that can be derived from it. This method has been accepted and practice since long time

back.

4.2.2 Milk Pricing by Co-operatives

Government owned DDC and Private Dairies purchase milk from the dairy co-operatives on the basis of

Fat, SNF and TS. TS have been provisioned to cover the overhead cost of the cooperative incurred during

collection and delivery of raw milk. Dairy cooperatives purchased milk from the members and non-

member farmers on the basis of fat and SNF, however, practice of purchasing only based on the fat

content and lump sum basis is also practiced. This practice is common in the areas in Sindhupalchowk

among the survey district where buffalo milk is common that have high fat content. Following are

additional benefits have been offered by the co-operatives to their members.

Share some portion of the amount received for TS with the member farmers.

Member farmers are entitled to get the bonus from the profit made by the co-operatives.

Provide the farmers with other facilities like loans, cattle insurance, other inputs such as feed and medicine supply, AI services, and veterinary services at a subsidized cost.

In some instances, cooperatives demanded different technical and financial support from the private dairies as a pre condition to provide their milk withdrawing from DDC.

4.3 Producer's survey

4.3.1 Number of respondents by district

According to table 4.2 below, a total of 200 milk producing farmers HHs and 15 key informants were interviewed during the survey. The HH respondents were evenly distributed 20 percent each from five selected district where as out of 15 key informants 13.33 percent from Sindhulalchowk, 26.67 percent from Banke and 20 percent from other districts.

Table: 4.2 Number of respondents by district

District HH Percent KII Percent

Panchthar 40 20.00 3 20.00

Sindhupalchowk 40 20.00 2 13.33

Baglung 40 20.00 3 20.00

Banke 40 20.00 4 26.67

Kanchanpur 40 20.00 3 20.00

Total 200 100.00 15 100.00 Source: Field Survey- 2074



4.3.2 Major source of income of the respondents

Table 4.3 below describe on the major sources of income of the respondents. It was confirm that 41.5

percent HH had agriculture as major source of income followed 16.5 had business, 16 percent had wages

and 15.5 percent had foreign employment and 10.5 percent had service as major source of income.

Table: 4.3 Major source of income of the respondents

Source of income

Panchthar Sindhupalchowk Baglung Banke Kanchanpur Total %

N % N % N % N % N % N %

Agriculture 15 7.50 14 7.00 18 9.00 19 9.50 17 8.50 83 41.50

Service 6 3.00 3 1.50 4 2.00 3 1.50 5 2.50 21 10.50

Business 8 4.00 6 3.00 7 3.50 5 2.50 7 3.50 33 16.50

Wages 4 2.00 10 5.00 6 3.00 7 3.50 5 2.50 32 16.00

Foreign employment 7 3.50 7 3.50 5 2.50 6 3.00 6 3.00 31 15.50

Total 40 20.00 40 20.00 40 20.0

0 40 20.0

0 40 20.00 200 100.00

Source: Field Survey- 2074

4.3.3. Agricultural income of the respondents who have agriculture as major income source

Table 4.4 below explains the major source of agricultural income of the HHs who told agriculture as major source of income. Out of them 40.96 percent said that livestock, 22.89 percent said cash crop, 13.25 percent said cereal and 12.05 percent said fruits as major HH income source of agriculture commodity.

Table: 4.4 Agricultural income for the respondents who have agriculture as major income source

Major source of income

Panchthar Sindhupalchowk Baglung Banke Kanchanpur Total

N % N % N % N % N % N %

Livestock 6 7.23 7 8.43 8 9.64 7 8.43 6 7.23 34 40.96

Cereal 1 1.20 0 0.00 2 2.41 4 4.82 4 4.82 11 13.25

Horticulture/fruit 2 2.41 2 2.41 3 3.61 2 2.41 1 1.20 10 12.05

Cash crop 6 7.23 4 4.82 2 2.41 4 4.82 3 3.61 19 22.89

Poultry 0 0.00 1 1.20 3 3.61 2 2.41 3 3.61 9 10.84

Total 15 18.07 14 16.87 18 21.69 19 22.89 17 20.48 83 100.00




4.3.4 Land holding of the households

As per Table 4.5, 34.5 percent respondents had 10-20 ropani, 26.0 percent had 5-10 ropani, 24.4 percent

had 1-5 ropani and 6.0 percent had more than 30 ropani land. Land holding is more in Kanchanpur and

Banke while less land holding in Sindhupalchowk district.

Table: 4.5 Land holding of the households

Land holding

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

> 30 ropani 2 1.00 3 1.50 2 1.00 3 1.50 2 1.00 12 6.00

20-30 Ropani 3 1.50 2 1.00 7 3.50 2 1.00 4 2.00 18 9.00

10-20 Ropan 14 7.00 12 6.00 10 5.00 16 8.00 17 8.50 69 34.50

5-10 Ropani 11 5.50 12 6.00 9 4.50 11 5.50 9 4.50 52 26.00

1-5 Ropani 10 5.00 11 5.50 12 6.00 8 4.00 8 4.00 49 24.50

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00




4.3.5 Practice of forage cultivation

Forage cultivation practice is not common in the survey district as only 30.0 percent respondents said that

they cultivated forage (table 4.6). Cultivation practice was more in Panchthar (7.5 percent) followed by

Sindhupalchowk and Banke (6 percent each) Kanchanpur (5.0 percent HHs).

Table: 4.6 Practice of forage cultivation

Forage

Cultivation


N % N % N % N % N % N %

Yes 15 7.50 12 6.00 11 5.50 12 6.00 10 5.00 60 30.00

No 25 12.50 28 14.00 29 14.50 28 14.00 30 15.00 140 70.00

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00


4.3.6 Type of forage cultivated

As mentioned in table 4.7, those respondents who cultivated, 60 percent cultivate both legumes and non

legumes while 33.33 percent cultivated non legume and 6.67 percent cultivate improved legume forage.

Forage cultivation is not the priority of farmers as they perceived that forage can be collected from the

rises and bonds of the cereal, horticulture and other crop cultivated land and most of them felt that

cultivation of forage is loss in income.



Table: 4.7 Type of forage cultivated

Forage type


N % N % N % N % N % N %

Legume 1 1.67 1 1.67 1 1.67 1 1.67 0 0.00 4 6.67

Non legume 6 10.00 4 6.67 2 3.33 4 6.67 4 6.67 20 33.33

Mixed 8 13.33 7 11.67 8 13.33 7 11.67 6 10.00 36 60.00

Total 15 25.00 12 20.00 11 18.33 12 20.00 10 16.67 60 100.00 Source: Field Survey- 2074

4.3.7 Number of HH having lactating animal

It was found that 64.35 percent respondents have lactating cows and 35.64 percent have lactating buffalo

in the survey districts. It was also found that 62.28 percent had improved cow and 32.87 percent had

improved buffalo. Improved cows were more in Panchthar (17.3 percent) followed by Sindhupalchowk

and Banke (12.11 percent each) and Kanchanpur (10.38 percent). Improved buffalo was more in Banke

(10.38 percent) followed by Baglung (7.96 percent), Kanchanpur and Sidhupalchowk (7.27 percent each)

Practice of rearing buffalo was not common in Panchar. For details see table 4.8 below:

Table: 4.8 Number of lactating animal of the respondents

Type of animals

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

Improved cow 50 17.30 35 12.11 30 10.38 35 12.11 30 10.38 180 62.28

Improved buffalo 0 0.00 21 7.27 23 7.96 30 10.38 21 7.27 95 32.87

Sub Total 50 17.30 56 19.38 53 18.34 65 22.49 51 17.65 275 95.16

Local cow 0 0.00 1 0.35 2 0.69 0 0.00 3 1.04 6 2.08

Local buffalo 0 0.00 3 1.04 5 1.73 0 0.00 0 0.00 8 2.77

Sub Total 0 0.00 4 1.38 7 2.42 0 0.00 3 1.04 14 4.84

Total 50 17.30 60 20.76 60 20.76 65 22.49 54 18.69 289 100.00

Cow 50 17.30 36 12.46 32 11.07 35 12.11 33 11.42 186 64.36

Buffalo 0 0.00 24 8.30 28 9.69 30 10.38 21 7.27 103 35.64




4.3.8 Total matured animal of the respondents HHs by district

According to table 4.9, a total of 422 matured animals in respondents HHs of the survey districts. Out of

them 64.45 percent were cow and 35.33 percent were buffalo. More cow were from Panchthar (20.14

percent) followed by Sindhupalchowk (11.85 percent), Banke (11.37 percent) and Kanchanpur (10.9

percent). On the other hand comparatively more matured buffaloes were in Banke (10.66 percent),

followed by Sindhupalchowk, Kanchanpur and Baglung (8.29 percent each) and no buffalo in Panchthar.

Table: 4.9 Total Mature animals in the respondent HHs

Type of animal

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

Cow 85 20.14 50 11.85 43 10.19 48 11.37 46 10.90 272 64.45

Buffalo 0 0.00 35 8.29 35 8.29 45 10.66 35 8.29 150 35.55

Total 85 20.14 85 20.14 78 18.48 93 22.04 81 19.19 422 100.00


4.3.9. Average number of lactation animals by districts

Average number of lactating animals is described in table 4.10. In an average respondents HH had 1.38

lactating animals. More number was found in Banke (1.63) followed by Sindhupalchowk (1.4),

Kanchanpur (1.28), and Panchthar (1.25).



Table: 4.10 Average number of lactating animal per HHs

Type of

animal

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

Cow 50 1.25 35 0.88 30 0.75 35 0.88 30 0.75 180 1.5

Buffalo 0 0.00 21 0.53 23 0.58 30 0.75 21 0.53 95 1.19

Total 50 1.25 56 1.4 53 1.33 65 1.63 51 1.28 275 1.38


4.3.10. Milk production and productivity of animal by lactation

According to table 4.11 below, productivity of cow was 2826 liter while that of buffalo is 2189 liter per

lactation. By district, cow milk production per lactation was more in Panchthar (3142 liter) followed by

2765 liter in Banke, 2755 liter in Sindhupalchowk, 2530 liter in Kanchanpur per lactation. Similarly,

productivity of buffalo milk was more in Banke (2208 liter per lactation) followed by 2197 liter in

Kanchanpur, 2189 liter in Baglung and 2162 liter in Sindhupalchowk district.

Table: 4.11 Production and productivity of animal daily

Districts

Total Number

Total milk production

(Lits)

Productivity

(Lis)/lactation

Cow Buffalo Cow Buffalo Cow Buffalo

Panchthar 40 0 125670 0 3142 0

Sindhupalchowk 20 20 55100 43248 2755 2162

Baglung 20 20 52440 43776 2622 2189

Banke 20 20 55290 44160 2765 2208

Kanchanpur 20 20 50600 43947.2 2530 2197

Total 120 80 339100 175131 2826 2189


4.3.11. Average lactation period

Average lactation period was 286 days in case of cow and 242 days in buffalo. Lactation period of cow

was more in Panchthar (295 days) followed by 290 days in Sindhupalchow, 285 days each in Baglung

and Banke and 275 days in Kanchanpur. In case of buffalo, more lactation period (243 days) in Banke,

followed by 242 days in Sindhupalchowk, 241 days in Baglung and 240 days in Kanchanpur district.



Table: 4.12 Average lactation period of dairy animals

Districts

Lactation period

Cow Buffalo

Panchthar 295 0

Sindhupalchowk 290 242

Baglung 285 241

Banke 285 243

Kanchanpur 275 240

Average 286 242


4.3.12 Fixed and variable costs of milk production Table 4.13 elaborates on the total fixed and variables costs incurred in milk production. From the survey, it was found that major cost accounted to feed and feeding (46.53 percent) followed by 41,16 percent accounted to care and management, 6.71 percent accounted to interest, 2,32 percent accounted to depreciation and 1.32 percent to health care. Feed and feeding cost was more in buffalo (47.26 percent) while care and management cost was more in cow accounted to 41.81 percent. Breeding cost was 0.33 percent for both cow and buffalo.

Table: 4.13 Fixed and variable costs (NRs) of milk production

SN Cost items Cow Percent Buffalo Percent Total Percent

1 Breeding 46800 0.33 32400 0.33 79200 0.33

2 Feed and feeding 6493540 46.02 4635128 47.26 11128668 46.53

3 Health care 202100 1.43 114000 1.16 316100 1.32

4 Care and management 5900700 41.81 3944700 40.22 9845400 41.16

5 Depreciation 344500 2.44 210500 2.15 555000 2.32

6 Interest 884000 6.26 720000 7.34 1604000 6.71

7 Insurance 240000 1.70 150000 1.53 390000 1.63

Total 14111640 100.00 9806728 100.00 23918368 100.00




4.3.13 Costs per liter of milk production

Table 4.14 highlighted on the cost of per unit milk production in the sampled districts. Average milk

production cost was Rs. 48.8 per liter (cow milk Rs.42 and buffalo Rs.56 per liter). From the data it was

clear that milk production cost was more in Kanchanpur (Rs. 52 per liter) and in all other district except

Panchthar Rs. 50 per liter and Rs. 36 per liter in Panchthar. Low production cost in Panchthar is due to

forage based and dominated by cow.



Table: 4.14 Cost of milk production

Districts

Total milk

production (Lits) Rate (Rs)

Total price (Rs)

Total Expenditure (Rs)

Cost per liter

(Rs)

Avera

ge

cost

(Rs)

Cow Buffalo Cow Buffalo Cow Buffalo Cow Buffalo Cow Buffalo

Panchthar 125670 0 46.15 0 5799671 0 4548600 0 36 0 36

Sindhupalc

Howk 55100 43608.4 47.03 53.9 2591353 2350493 2376695 2489325 43 57 50

Baglung 52440 43958.4 48.25 54.21 2530230 2382985 2359150 2416400 45 55 50

Banke 55290 44712 48.17 54.33 2663319 2429203 2475630 2475630 45 55 50

Kanchanpur 50600 43584 47.96 53.95 2426776 2351357 2422945 2422945 48 56 52

Total 339100 175863 237.56 216.39 16011349 9514037 14183020 9804300 42 56 48.8


4.3.14 Use of milk produced by the HHs

Table 4.15 shows the use of produced milk by the respondent HHs. It was found that 49.0 percent HHs

use the milk for both HH consumption and sale while 45.0 percent told that they sale the milk produced

and 6.0 percent told they use for HH consumption only. Use of milk only for HH consumption

insignificant (1.5 percent each) in Banke, Kanchanpur and Sindhupalchowk. More sale only was in Banke



(12.5 percent) 11.0 percent in Baglung 10.50 percent in Sindhupalchowk and 9.5 percent in Panchthar.

Both sale and HH consumption was more in Kanchanpur (12.5 percent) followed by Baglung (11.0

percent), Panchthar (10 percent) and Banke (7.5 percent).

Table : 4.15 Use of milk produced

Uses


N % N % N % N % N % N %

HH consumption 1 0.50 3 1.50 2 1.00 3 1.50 3 1.50 12 6.00

Sale 19 9.50 21 10.50 16 8.00 22 11.00 12 6.00 90 45.00

Both 20 10.00 16 8.00 22 11.00 15 7.50 25 12.50 98 49.00

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00


4.3.15 Preferred sales place of milk produced by the HHs

According to table 4.16, 63.0 percent respondent HHs prefer selling milk to MPCs followed by 13.5

percent to tea shop, 10.5 percent to private dairy, 9.5 percent to vendors and only 3.5 percent to neighbor.

Preferred selling to MPCs was more in Panchthar (16.0 percent) followed by Baglung (13.5 percent),

Banke (12.0 percent), and Kanchanpur (10.0 percent).

Table: 4.16 Preferred sale place (Multiple answer)

Place

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

Tea shop 4 2.00 6 3.00 7 3.50 5 2.50 5 2.50 27 13.50

Neighbor 1 0.50 0 0.00 2 1.00 1 0.50 3 1.50 7 3.50

MPC 32 16.00 23 11.50 27 13.50 24 12.00 20 10.00 126 63.00

Private dairy 0 0.00 6 3.00 1 0.50 7 3.50 7 3.50 21 10.50

Vendors 3 1.50 5 2.50 3 1.50 3 1.50 5 2.50 19 9.50

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00


4.3.16 Time spent to sale milk (up to the delivery point) Table 4.17 elaborates the time to be spent for milk sale/delivery up to the selling point. It was found that 63.5 percent respondents could sale their milk in less than 20 minute, 31.0 percent required up to 1 hour and still 5.5 percent required to spend more than 1 hour to sale the milk. Respondents HHs from Sindhupalchowk required more time to sale milk while none of the respondents required to spent more than 1 hour.



Table: 4.17 Time spent to deliver the milk (up to the delivery point

Time

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

< 20 minute 27 13.50 23 11.50 26 13.00 27 13.50 24 12.00 127 63.50

30 min- 1 hr 10 5.00 13 6.50 12 6.00 13 6.50 14 7.00 62 31.00

> 1 hr 3 1.50 4 2.00 2 1.00 0 0.00 2 1.00 11 5.50

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00


4.3.18 Pricing system of the milk

Table 4.18 below describes on the pricing system of raw milk. Dual Axis Pricing (Fat and SNF system)

was practiced in 86.0 percent respondents while 3.50 percent respondent HH follow fat content and 7.50

percent follow in lump sum basis. Out of 86.0 percent respondents 19.0 percent each from Panchthar and

Baglung,

Table: 4.18 Pricing system of the milk

Pricing system

Panchthar

Sindhupalchowk

Baglung

Banke

Kanchanpur

Total

N % N % N % N % N % N %

Fat 0 0.00 6 3.00 0 0.00 0 0.00 1 0.50 7 3.50

Fat + SNF 38 19.00 29 14.50 38 19.00 37 18.50 36 18.00 178 89.00

Lumpsum 2 1.00 5 2.50 2 1.00 3 1.50 3 1.50 15 7.50

Total 40 20.00 40 20.00 40 20.00 40 20.00 40 20.00 200 100.00


4.3.22 Things to be done to increase the milk production and collection According to table 4.21 below, 28.09 percent respondents HHs suggested to subsidize in the inputs, followed 26.55 percent suggested for market guarantee of the milk. 22.94 percent suggested to provide free extension service for low cost milk production, 15.72 percent suggested to increase milk price. Other suggestions were establishing chilling center and form new MPC/collection center at strategic locations and implement promotional activities.



Table 4.21 Things to be done to increase the milk production and collection

Particulars

Panchthar Sindhupalchowk

Baglung

Banke

Kanchanpur

Total %

N % N % N % N % N % N %

Forming new

MPC/collection

center 0 0.00 2 0.52 1 0.26 1 0.26 1 0.26 5 1.29

Establishing

chilling center 2 0.52 3 0.77 4 1.03 2 0.52 1 0.26 12 3.09

Subsidize in the

inputs 28 7.22 12 3.09 19 4.90 23 5.93 27 6.96 109 28.09

Free extension

service for low

cost milk

production 18 4.64 16 4.12 19 4.90 17 4.38 19 4.90 89 22.94

Increase milk

price 14 3.61 13 3.35 16 4.12 11 2.84 7 1.80 61 15.72

Market guarantee

of the milk 23 5.93 21 5.41 25 6.44 15 3.87 19 4.90 103 26.55

Promotional

activities 2 0.52 0 0.00 2 0.52 3 0.77 2 0.52 9 2.32

Total 87 22.42 67 17.27 86 22.16 72 18.56 76 19.59 388 100.00




5. CONCLUSION AND RECOMMENDATIONS

5.1 Conclusion

There is gap between demand and supply of milk and milk product. The gap is being filled by import

from different countries. Despite the efforts made by different government, non-government and private

sectors organization to increase production and productivity, result is not yet been achieved positively. It

is estimated that nearly 3 lakh liter milk per day across the country is deficit. Consumer price of milk is

increasing in marathon style and beyond the purchasing power of low income people as cost of milk

production is increasing and large mass of the farmers frustrated and reaching to the position to change

the occupation.

Although government of Nepal signed in WTO framework, commercialization of dairy farming is not

taking accelerated pace, technology transfer for economic production is not yet been reached to the

farmers premises. Farmers are not getting quality breed, breeding services, feeding, care management,

animal health care services and market is still insecure. Efforts for saving the farmers livelihood and

integration of enthusiasm, morale are not yet been ineffective.

Despite the government policy to provide subsidy in interest of the loan and insurance premium, banks

and financial institutions are showing silence and reluctance to finance in the dairy sector/ livestock

sector. Government’s efforts to make ready for forage cultivation is not been effective despite of

operation of forage mission, due to this reason feeding materials are not available in required quantity and

is the quality of forage is not good. Due to price hike in every sector, labor, services, veterinary

medicines, live animal, breeding technology and equipment/tools has been increased and sometimes not

available when it is required. Neither marketing nor pricing system of raw milk is producer and consumer

friendly nor are the processing industries feeling comfortable with tax, power supply and import, export

policy.

Milk production could be the royal opportunity to make vibrant rural economy and become the pool

between the people in rural and urban area partnership in economic growth. Establishing the healthy

relationship between the value chain actors, dairy business could be able to draw urban capital to rural

area. Struggling with extreme adverse situation, farmers are rearing dairy animals of their own foot and

supplying milk to the consumers through Milk Producer's Cooperatives (MPCs) and milk processing

factories. Government support to provide relief against pain of the farmers could be instrumental to retain

them is the occupation.

There is no way against reducing cost of milk production to thrive safely the dairy occupation that could

be achieve by commercialization, utilization of proven new technology (either technology development or

technology import) and transferring the occupation to enterprise. It is also equally important to share the

benefit out of business judiciously among actors in the value chain and create awareness among the

consumers on the importance of quality of milk and sensibility of processors and producers on the

consumer rights and public health.



Small and marginal farmers are plentiful and poorest of the population, attempts should be made to

increase livestock and especially milk production by assisting them in every possible manner.

Government’s eye is yet to be intensify on it to implement the policy seriously and correct in the

loopholes that protect the dairy farmers. One cannot undermined the contribution of dairy sector as it has

generated rural employment, assure cash income and narrow down the deficit trade between urban and

rural area. Dairy cooperatives has been the means to unite the farmers and working as means to market.

This opinion could bring the farmers to produce more milk and retain the youth in the village.

Strengthening of these MPCs capacity to become service transfer and input supplier shall be breakthrough

for the development of this sector. Moreover, they are also in awkward position to bridge the farmers and

processors due to lack of resources and poor bargaining capacity due to sharp perishable commodity.

Until now, milk marketing is far from formal sector. Around 15-20% of the total milk produced comes

into the formal processing market, nearly 23% of the processed milk is converted to various dairy

products and 77% of the processed milk is consumed as fresh pasteurized milk. In such circumstances, it

is important to streamline the dairy farmers in formal sector and teaches them the possibility of cash

income.

Cost of milk production based on this report is NRs. 48.8 against NRs. 40 in India. This level of

production cost never compete with international market as per WTO framework. Prolonging this

situation could invite the day when the whole dairy sector will be collapsed. It is however, rays of hope

still remain that the milk production cost is the commercial farms is comparatively lower which is around

NRs. 36 per liter and still there is space to reduce this cost to NRs. 16 per liter provided reducing in

feeding, live animal and interest cost.

5.2 Recommendations

Transformation of dairy occupation to enterprise and farmers to entrepreneurs. This could be done anchoring the grass to glass approach, commercial orientation with the development of technology or importing appropriate in compliance to Nepalese soil in reducing cost of milk production. Technology to minimize the major expenditure items viz. feeding, breeding, disease prevention and control shall be done articulating with training, coaching, demonstration and exposure to similar context.

Lack of high productive animal is prominent discouraging factor and the live animal cost is extremely high. Establishment of resource center for production of breeding stock and make available to the farmers in cheaper rate could be government’s golden gift to the farmers so tha t the current productivity nearly 8.87 liter per day could be increased up to at least 15 liter per day. Resource center shall be establish either by government or in Public Private Partnership (PPP) with appropriatre quality control mechanism.

Breeding improvement programmes from the very beginning and AI mission in the later stage are not could be implemented effectively than the current situation. Despite the high cattle number, the productive population is very less (nearly 10%) that could be improve by administering sexed semen. Government should extend its eye to provide such semen to the dairy farmers in subsidized rate anchoring with highly AI and reproduction professionals.



The banks and financial institutions are keeping silence on the government’s policy on subsidizing the loan interest in the agriculture sector. They could do more in financing the dairy sector by taking confidence the farmers, but the progress is not in accelerated position. Equally important for financing is footed on the assurance of extension services to the farmers to encourage them in financing. Department of Livestock Services (DLS) should be able to provide required services to safeguard the banker’s finance whereas DDC and private sector processors followed by the MPCs should in government’s witness guarantee the sale of milk.

Dairy farmers are to be inform on the economic benefit of the forage cultivation and reduce the competition between the human and animal feed. Simultaneously, concentrate feed raw materials production campaign should be launched specially for maize, wheat, pulses, oil seed and others. Preservation of the green forage, by-products of the crops and wastages of the human food could also be an instrument to reduce the feeding cost. Forage mission shall be integrated with forage pellet production scheme.

Effective disease prevention and control mechnism shall be instrumental to save the farmers from triple level loss. Vaccination campaign, dewarming, disinfestation, disinfection campaigns along with reduction of unlimited use of medicines programmes should be conducted regularly. It is equally important to monitor the quality of vaccine, medicine available in the market and their access and availability and strong penalty system should be provision for supply substandard vaccine and medicine.

Though the Code of Practice (CoP), Good Manufacturing Practice (GMP) are in place, implementation is poorly administered and geeting quality milk is impossible in current context. Premium price for quality milk shall be offered to the farmers grading the milk in different categoriy. Also there is high variation in milk production between the season. Adjustment in the pricing policy in flush and lean season could bring the positive change in increase milk production.

At the current situation dairy farmers are getting good price for their milk but the processed milk price is high. This price shall be reduce by creating environment to run the processors of their full capacity. The dairy processors should sphere their profit to the extension services and establish their own milk production pocket area, that could be instrumental for steady and quality milk availability.



ANNEXES:

ANNEX: 1 COST OF MILK PRODUCTION/LACTATION PER ANIMAL District: Sindhupalchowk

SN Cost items Cow Buffalo

Qty Unit cost

Qty Unit cost

1 Semen/bull including technician service charge 2 195 2 205

2 Green forage/fodder (Kg per animal/year) 6120 2 7200 2

3 Straw (kg)/animal/year 1204.5 5.5 1642.5 5.5

4 Concentrates (commercial/conventional) kg/animal/year 1340

27 1367.5

27

5 Vitamin and mineral (gm)/animal/year 100 3 50 3

6 Vaccination /animal/year 2 25 2 25

7 Medical service (technical service including reproductive obstacles)/animal/year

3 250 2 200

8 Medicine cost/animal/year 3 150 2 150

9 Water, electricity/animal/year 12 200 12 300

10 Detergents (soap, acids, alkali etc)/ animal/year 12 100 12 100

11 Wage (care of animals and shed, feed and fodder collection and milk sale) /animal/year

360 125.00 360 125.00

12 Depreciation of tools for sanitation (shovel, rope, spade, bucket, can, etc) annual 20%

5 50 5 50

13 Depreciation of sheds (Annual 10%) 0.2 13000 0.2 13000

14 Interest on cost of purchasing animal (12%) 1 8400 1 8400

15 Premium of insurance 1 2000 1 1750

16 Other costs



District: Panchthar


Qty Unit cost

Qty Unit cost

1 Semen/bull including technician service charge 2 200 NA NA

2 Green forage/fodder (Kg per animal/year) 7300 2 NA NA

3 Straw (kg)/animal/year 1277.5 5 NA NA

4 Concentrates (commercial/conventional) kg/animal/year

1205

25.5 NA NA

5 Vitamin and mineral (gm)/animal/year 200 2 NA NA

6 Vaccination /animal/year 2 25 NA NA


4 300 NA NA

8 Medicine cost/animal/year 4 200 NA NA

9 Water, electricity/animal/year 12 200 NA NA

10 Detergents (soap, acids, alkali etc)/ animal/year 12 250 NA NA


360 125.00 NA NA


5 50 NA NA

13 Depreciation of sheds (Annual 10%) 0.2 15000 NA NA

14 Interest on cost of purchasing animal (12%) 1 3500 NA NA

15 Premium of insurance 1 2000 NA NA

16 Other costs NA NA



District: Baglung


Qty Unit cost

Qty Unit cost


2 Green forage/fodder (Kg per animal/year) 7200 1.5 8030 1.5

3 Straw (kg)/animal/year 1368.75 5.2 1569.5 5.2


1360

26

1390

26

5 Vitamin and mineral (gm)/animal/year 100 2.5 70 2.5



3 250 2 200





365 125.00 365 125.00


5 50 5 50




16 Other costs



District: Banke


Qty Unit cost

Qty Unit cost


2 Green forage/fodder (Kg per animal/year) 6935 2 7117.5 2

3 Straw (kg)/animal/year 1368.75 5 1576.8 5


1407.25

25

1412.5

25




3 280 2 200





365 125.00 365 125.00


5 60 5 60




16 Other costs



District: Kanchanpur


Qty Unit cost

Qty Unit cost

1 Semen/bull including technician service charge

2 195 2 195

2 Green forage/fodder (Kg per animal/year) 6935 1.8 7482.5 1.8

3 Straw (kg)/animal/year 1438.1 5 1642.5 4.5


1408.25 25

1427.5 25




3 200 2 200



10 Detergents (soap, acids, alkali etc)/ animal/year

12 90 12 50


365 125.00 365 125.00


5 65 5 65




16 Other costs



Annex: 2.1 Household Survey Questionnaire in Nepali

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Annex: 2.2 Key Informant's Survey Checklist/Questionnaire in Nepali

d'Vo ;"rgfbftf ;j]{If0fsfnflu k|ZgfjnL

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^= lzIffM

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b'Uw ljsf; ;:yfgsf k|ltlglw .

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