Dairying in Asia: Strategic opportunities, challenges and the response Vinod Ahuja Livestock Policy Officer Food and Agriculture Organization of the UN Regional Office for Asia and the Pacific Bangkok

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

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 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 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 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

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