Specific objectives

1. To analyze the existing situation of dairy production status in the country and study area as well.

2. To identify the partners involved in the milk value chain and their role to improve on the milk
business.

3. To assess the existing milk value chain and their operation.

4. To identify the strength, weakness and potentials of steps to be taken in milk value chain.

Result and discussion

Result

During our survey we find the government has recently approved National Dairy Development Policy
(2064) with the main objectives of: 1. Increasing milk production and productivity in rural areas 2.
Commercialization of dairy production with competitiveness and expansion of collection, transportation
and processing industries 3. Product diversification to cater internal demand, import substitution and
export promotion and 4. To make available quality milk and milk products to the consumers

To achieve the objectives the following guiding policies have been recently envisaged.

• Making dairy enterprise as main basis for rural poverty alleviation by bringing milk produced in rural
areas to urban markets.

• Resource centers will be developed by involving cooperatives, farmer's groups and entrepreneurs to
improve productivity through breeding and conservation and selection of local breed.

• Animal health and disease prevention program will be effectively launched.

• Promotion of Animal insurance

• Provide low interest rate to buy more milk animal

• Development of nutrition package, suitable pastures technology for production improvement during
dry season.

• Encourage the farmers to produce more milk in dairy production potential area

• Milk collection and chilling centers will be established to promote dairy farming in areas having road
access.

Governmental sector

DDC is a fully state owned corporation, initiated for the advancement of the farming communities
economically and has flourished with an annual collection over 60 million litres of milk from more than
200 thousand milk producers through 1200 milk cooperatives spread out in 45 district. Except KMSS, the
DDC plants are running below capacity. KMSS’s capacity is over utilized by 63 per cent. The KMSS plant is
being excessively used because of higher demand for processed milk in the Kathmandu Valley. Due to
the over-capacity utilization of KMSS (the largest plant), the DDC’s overall capacity utilization has been
pulled-up a little more than its total processing capacity.

Capacity and products of DDC milk plant

Capacity Estd Products Chilling District

Schemes MPCCs
Center Covered

KMSS, Balaju 15000 lit/hr 2037 BS Pasteurized milk, Butter, Ghee, 281 30 7
 (75000lit/shift) Flavoured milk

BMSS 5000 lit/hr 2030 BS Standard and full cream milk,

126 11 4
,Kanchanbari Butter, cream, ghee, SMP

5000 lit/hr 2032 BS Pasteurized standard and

whole milk, flavored milk,
HMSS, Hetauda butter, ghee, yoghurt, ice 167 8 3
cream, paneer, lal mohan and
peda.

1000 lit/hr   Pasteurized standard and

LMSS, Butwal whole milk, ghee, yoghurt, 63 6 4
rasbari.

1000 lit/hr   The Mid-western MSS is

currently running as a chilling
NMSS, kohalpur center with the arrangements 40 3 4
being made to convert it to a
processing plant.

    Yak cheese, Kanchan,

Mozerella, Paneer, ghee,
MPSS, Lainchor 49 14 8
Yoghort, Icecream, Jeera Mohi,
Gundpak

JMSS, 1000 lit/hr    Pasteurized standard and

25 7 6
Dhalkewar whole milk and yoghurt.

DMSS, Atariya 1000 lit/hr    Pasteurized milk, Butter, Ghee,

24 5 2
kailali Flavoured milk

TOTAL       791 63 34

Private sector

The private dairies’ combined milk processing capacity (including large and medium mechanized dairies
and small and cottage dairies) is estimated to be 568,000 liters/day. The private sector dairies are
running below their capacity as shown by the capacity utilization of some large mechanized private
dairies. The available information, on the whole, around 50 per cent (334,000 liters/day) of the total
capacity is being utilized in the private sector. Under NDA there are 135 dairy industries including small ,
medium and large industry and Under DIA there are 24 dairy industries and under Himalayan cheese
production organization there are 22 dairy.
Category of Private Dairies in Nepal

S. N. Type of Industry Daily Processing Capacity Number

1 Large Above 30,000 liters/day 4

2 Medium 10,000 liters – 30,000 liters/day 6

3 Small 1,000 liters- 10,000 liters/day 26

4 Cottage Below 1,000 liters/day 215

Total     251

Capacity Utilization of Some Prominent Private Dairies in Nepal

Name of dairy Capacity Present handling Present capacity

liters/day utilization (%)
liters/day

Sitaram Gokul Milks 80,000 35,000 43.75

Himalaya Dairy 80,000 20,000 25.00

Sujal Milks 75,000 35,000 46.66

Chitwan Milk(closed) 150,000 100,000 67.00

Nepal Dairy 80000 30000 37.5 

Total 465000 220000  

Milk powder plant

Under DDC in biratnagar first powder milk plant was established which is producing 500 metric ton of
powder milk .A new powder plant (Chitwan milk, Thimura) in the private sector with the capacity of
150,000 liters/day has been started production since 2010 but due to availability of raw milk it is utilizing
only 50% of its capacity .Sujal dairy established on investment of 27 carore is estimated to producing 7
metric ton of powder milk.

Discussion

Nepal produces 1.9 million litres milk per day, whereas the demand is 2.4 million liters, the Domestic
production is currently unable to cater to the demand in the market, DDC has been importing almost
20,000 liters of fresh milk from Patna of India along with milk products along with milk powder. Milk
collection of all dairies, including DDC, has decreased in recent days also because of the increasing
consumption of milk in the local market itself. Dairy farmers have said that the existing government
policies are an obstacle to the growth of the domestic dairy industry and are pushing the country
towards dependency on dairy products with other nations. Dairy industries is not able to operate at full
capacity and the nepali products are not getting good market as well Cost of production is high in term
of dairy industry as it is strictly prohibited to raise and slaughter cattle for the purpose of meat
production. various obstacles of dairy industry are Milk holiday as well as Lack of trained manpower
along with Lack of diversification of milk products as well as Low quality of raw milk. In current situation
most of the dairy are unable to fully operate due to lack of raw milk availability and thus they cannot
utilize their full capacity of the milk plant. In 2009 chitwan milk plant was established as largest plant
which is to be closed soon, Chitwan Milk has an installed capacity of 150 tons of milk powder and 50
tons of dairy products daily. However, it has not been able to operate at full capacity due to lack of
availability of raw milk .The plant used to receive 100,000 liters of milk daily from Dairy Development
Corporation (DDC) and 19 private dairies. Since it fell on hard times, it has been buying only 25,000 liters
of milk. Likewise, the number of employees has shrunk from 200 to 80. Its monthly turnover has
plunged to Rs15 million from Rs110 million previously. The government has not shown any interest in
promoting dairy products, so the company is struggling to survive.” He added that proper coordination
was needed between DDC and the private company to promote the dairy. The chairperson said that the
government should stop the import of powder milk in order to promote domestic industry. “Besides,
customs duty and electricity charges should be waived completely to save the factory. Proper policies
should be made by governmental bodies to uplift such industries which contribute major percentage in
GDP of Nepal.