On December 8 and 9, a Dairy Expert Roundtable Meeting on “Competitive Dairy Value Chains in Southeast Asia” was held in Muak Lek, Thailand. In this regional meeting, participants from six countries in Southeast Asia discussed how the relatively small dairy value chains could be more competitive and sustainable.

1. Dairying in Asia:
Opportunities, challenges and some lessons
Vinod Ahuja
Livestock Policy Officer
Food and Agriculture Organization of the UN
Regional Office for Asia and the Pacific
Bangkok

2. Growth in global dairy
production:
400
1995 2007
350
Million tonnes
300
250
200
150
100
50
0
Developed Countries Developing
Countries

3. With Asia leading the way
200
1995
150 2007
100
50
0
Asia LAC SSA MENA

4. Consolidating its global
position in milk production
800
Asia Rest of the world
700
600
500
Million tonnes
400 36%
300
200
100
0
1995 2000 2005 2009
20%

5. Within Asia
300
250 South Asia East Asia
South East Asia Central Asia
200 Western Asia
21%
150
100
63%
50 66%
0
1995 2000 2005 2009

6. Main contributors . . .
300
%
250 26
India Pakistan China Others
200
16%
150
14%
100 37
%
50 44%
46%
0
1981 1991 2001 2009

7. But wide range of growth rates . . .
Sri Lanka
Mongolia
Nepal
Indonesia
Pakistan
India
Thailand
Philippines
Bangladesh
China
Vietnam
0 2 4 6 8 10 12 14 16
CAGR (percent, 2001-09)

8. Consumption constantly
outpacing production
25
Asian dairy imports
20
Million tonnes
15
10
5
0
1990 1995 2000 2005 2007

9. Million tonnes
D
ev
0
50
100
150
200
250
el
op
Pa e
ki d
M sta
on n
go
lia
In
di
N a
Sr ep
consumption growth
i L al
an
ka
K
o
Yet tremendous room for
Th re
ai a
la
nd
C
M hi
ya na
nm
Vi
B et ar
an N
gl am
ad
es
h

10. What about productivity?
Milk productivity across major regions
of the world
10000
Asia
9000
Africa
8000 Europe
North America
7000 Oceania
World
g n a er
K /a im l/y a
6000
5000
4000
3000
2000
1000
0
1961 1971 1981 1991 2001 2007

11. Wide variation across countries
3000 Thailand
2500
2000 Vietnam
g/animal/year
1500
Pakistan
K
1000 India
China
500
Sri Lanka
0 Bangladesh
1961 1971 1981 1991 2001 2009

12. Huge opportunities for
Productivity gains
Quality gains
Substituting imports
Spreading risks, improving competitiveness
Protecting environment through
mixed/integrated farming
Nutrition, income, jobs . . .

13. Changing production and market
landscape
Continuing strong positive outlook for global dairy industry
but increased volatility in international prices
Rapidly declining common resource base and growing feed
costs
Increasing environmental concerns and enforcement
Increased consumer demand for food safety, convenience,
quality
Growing intensity and pressure to intensify and scale up
livestock systems for higher outputs per unit of land/
water/labour
Despite rapid growth and scaling up smallholder continue to
produce over 90 percent of local milk marketed in Asia

14. How do small producers feature in
various countries?
India: 70 million households have dairy cattle, 52 million
linked to smallholders (13 million to coops).
China: 2 million dairy farms in 2005 with farms < 20 cows
accounting for 65% of milk production.
Philippines: 13,000 families engaged in smallholder dairy
with employment of 17,000.
Pakistan: 55 million smallholders
Mongolia: 2 million farmers in 2006 (80% hold dairy cattle).
Sri Lanka: 70% of 3.5 million smallholder own dairy cows.
Bangladesh: 80 million households are smallholder dairy
farmers.
Smallholder dairy critical to rural sectors

15. Where do we go from here?

16. Lessons learned case studies and regional
strategy and investment plan for
smallholder dairy development in Asia

17. What are some of the models?
Philippines: Dairy Development Zones (targeted development based on priority
indicators).
Pakistan: Haleeb case (private sector linkages to smallholder holders)
India: Anand model linked to Operation Flood activities.
Thailand/Bangladesh: strong role of cooperatives (supported by development
interventions)
Sri Lanka: an example of very limited support for dairy until recently
China: Inner Mongolia/Heilongjiang-examples of third part milk collection stations; dairy
barns, private sector investment linkages to smallholders.
Vietnam: strong dairy development through government support (down to local levels)
supported by privatization of markets
Mongolia: total cow to consumer approach; strong socio-cultural aspects, each link in
dairy chain has to be sustainable and profitable; generic branding/marketing

18. Year-to-year growth (%)
0
1
2
3
4
5
6
00-01
Bangladesh
01-02
02-03
03-04
04-05
05-06
06-07
07-08

19. Year-to-year growth (%)
India
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

20. Year-to-year growth (%)
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Pakistan
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

21. Year-to-year growth (%)
0
1
2
3
4
5
6
00-01
Sri Lanka
01-02
02-03
03-04
04-05
05-06
06-07
07-08

22. Philippines
6
1995: Creation of national dairy authority
5 1995-2000: Experimentation with large
commercial dairy farms
Year-to-year growth (%)
4 2001: Launch of dairy zone model
3
2
1
0
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

23. Year-to-year growth (%)
-16
-14
-12
-10
-8
-6
-4
-2
0
2
4
6
Mongolia
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

24. Year-to-year growth (%)
-6
-4
-2
0
2
4
6
8
10
12
14
Thailand
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

25. Year-to-year growth (%)
China
0
5
10
15
20
25
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

26. Year-to-year growth (%)
0
5
10
15
20
25
30
Vietnam
97-98
98-99
99-00
00-01
01-02
02-03
03-04
04-05
05-06
06-07
07-08

27. What are some general lessons?

28. Some lessons from FAO studies
It is important to carefully target smallholder dairy development
interventions (Philippines). Same is true of pro-poor, social programmes
need to be carefully targeted and are usually only sustainable if linked to
remunerative markets (Bangladesh)
Governments have to careful about interventions in the sector, including
pricing policies (Pakistan) and dairy cow loan schemes (Bangladesh,
Vietnam, Mongolia)
In some cases, Governments need to be concerned about monopoly
power of processors (floor pricing for milk might work in this situation)
(China)
Government investment in large operations usually does not work
(Philippines)
School milk programmes, when implemented with a focus on
smallholders, can support dairy development (as well as generating long
term demand for dairy products) (Thailand, Philippines)

29. Some lessons from FAO studies
Industry institutions and smallholder groups (associations, cooperative
etc) can have a pivotal role in supporting dairy development (India,
Philippines, Thailand)
Creative and carefully thought out linkages with private sector (which
includes technical assistance, financial support) can allow smallholder to
move up into a different marketing chain (Philippines, Pakistan)
Smallholders need an accessible and affordable complete package of
support services (animal health, breeding, extension, finance, etc) to
produce milk competitively (Bangladesh, India, Mongolia).
Milk quality and attractive product branding/presentation are pre-
requisites for persuading modern urban consumers to switch from
imports to milk produced by local smallholders (China, India, Mongolia,
Philippines)
Low tariff regimes facilitating importation of cheap dairy products have
hampered development of local dairy industry

30. Key strategic pillars
Human resources
and knowledge
Productivity and
management
competitiveness
Market linkages
Enabling environment

31. FAO-CFC-APHCA partnership
Project National
implementation Govern-
support and ments
leadership Dairy Asia
Network
Milk
FAO APHCA
producers
TCP on
School CFC Project
milk funding

32. 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 years

33. Elements of the FAO proposal on
school milk
• 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
value-
range of semi value-added dairy products
• Duration: 2 years

34. Elements of the APHCA proposal on
Asia Dairy Network
• 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 years

35. Thank you