Dairy support scheme - Nepal

Project tittle: Dairy support scheme - Nepal
Project started up in 2013.

In Nepal as in many other developing countries, the production of milk is mainly in herds of 1-5 cows per farm. Quality of feed is poor, milking is done by hand and the produce is sold directly on the local market or transported to the nearest dairy company. The process of milking by hand and transporting the milk in warm conditions without cooling is a huge hygiene problem. The result is low yields and poor quality. However the demand for processed milk products is increasing due to growth of purchasing power in the middle class. The dairy companies serving this market are phasing problems with getting the required volume and quality of raw milk.

Project is a bottom of the pyramid (BOP) approach. Idea is to set up an efficient dairy farm surrounded by a structure to support the small holder producers in the area. The local partner, Thopal Cooperative in Dhading, Nepal is an agricultural cooperative with 237 small farmers. Each with a few cows or buffaloes. Together with a Danish dairy farmer the project aims to improve the yield and quality for the producers. 

The business setup is to introduce a collection center to supply with knowledge, inputs to the producers and to market the milk in common. The Danish partners and the cooperative will own the collection center together in a JV. All is delivered in a business scheme where the payment for the services is paid through the milk. The business idea is that the project will do contracts with the small scale farmers (satellites) about delivering services pack (knowledge, organization) and that they will pay with the value of the milk. Thus the project is certain on getting payment. The project support scheme has to collect and buy the milk from the satellite farmers and sell to the dairy company with a margin.