Smallholder dairy production and marketing—Opportunities and constraints

The dairy sector in the South Asian countries of Bangladesh, India, Nepal, Pakistan and Sri Lanka is characterised as follows: by small-scale, widely dispersed and unorganised milch animal holders; low productivity; lack of assured year-round remunerative producer price for milk; inadequate basic infrastructure for provision of production inputs and services, and for procurement, transportation, processing and marketing of milk; and lack of professional management. Other important characteristics of the dairy sector in these countries are the predominance of mixed crop–livestock farms and the fact that most of the milch animals are fed on crop by-products and residues, which have a very low opportunity cost. In addition, dairy development policies and programmes followed in these countries, including those relating to foreign trade, are not congenial to promoting sustainable and equitable dairy development. Low productivity of milch animals is a serious constraint to dairy development in all the countries under review. This is due mostly to low genetic potential of the milch animals, and inadequate and inappropriate feeding and animal health care. The productivity of dairy animals in all five selected countries could be increased substantially through crossbreeding of the low yielding nondescript cows with high yielding selected indigenous purebreds or suitable exotic breeds in a phased manner and by better feeding, disease control and management. The cattle breeding policy should also provide for the production of good quality bullocks to meet the draft power requirement of agriculture. Upgrading of nondescript buffalo through selective breeding with high yielding purebreds should be given a high priority in all areas where buffalo are well adapted to the agroclimatic conditions. While fixing procurement price, producers’ interest should receive the utmost attention. The producer price should at least cover the long-run average cost of milk production and provide a reasonable mark-up. 88 South–South Workshop * The authors of this paper are grateful to the authors of the India (Kurup 2002), Bangladesh (Saadullah 2002), Pakistan (Raja 2002), Nepal (Joshi and Tarak Bahadur 2002) and Sri Lanka (Bandara 2002) country papers, prepared for this South–South Workshop, for allowing them to draw upon their papers and to anonymous reviewers for their valuable comments on an earlier draft of the paper. However, they alone are responsible for the views and opinions expressed in the paper and for errors of omission and commission, if any, in the paper. Dairy plants, cattle feed factories, technical inputs and services should be managed professionally and run as commercial enterprises and not as social welfare schemes. The role of governments in these countries should be to direct, co-ordinate and regulate the activities of various organisations engaged in dairy development, to establish and maintain a level playing field for all stakeholders and to create and maintain a congenial socio-economic, institutional and political environment for smallholder dairy development. On the whole, the smallholder dairy sector has high potential to be a dependable source of livelihood for the vast majority of rural poor in the South Asian countries. The AMUL model of small-scale dairy production and marketing, as evolved and refined over the last 50 years in India, offers an appropriate strategy for promoting sustainable, equitable and gender-sensitive smallholder dairy development in not only South Asian countries but also in all other developing countries of the world. The model needs to be replicated in these countries, with adaptations being made to suit the peculiar conditions of each specific country. The new world trade regime ushered in by the World Trade Organization (WTO) poses several challenges and opens up many opportunities for smallholder milk producers in South Asian countries. There is need for these countries to enhance their competitive economic advantage in dairy products in terms of both quality and cost. Furthermore, it is high time that the South Asian governments formulated and announced comprehensive dairy development policies for each of their countries. These should form an integral part of their national development policies and due consideration should be given to their direct and indirect effects on other sub-sectors of the economy and vice versa.