1. 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

2. 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

3. 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 3

4. The context
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

5. Where do we go from here? 5

6. We may draw inspiration from Einstein . .
. . . or build on our own experiences

7. 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 7

8. 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 8

9. 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 9

10. . . . but it must lead to ‘action on the ground’
Learning lessons is a continuing process . . .
. . . but it must lead to ‘action on the ground’ 10

11. The action agenda

12. Project implementation support and leadership
The partners
Project implementation support and leadership

13. 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

14. 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

15. 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

16. All three proposals complement each other yet retain their independence

17. Thank you very much for your attention17