Setting the scene The Kyrgyz dairy industry is:

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Diane Gray
7 years ago
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1 Raise of food standards: new challenges for the Kyrgyz dairy industry Based on the results of work in Chui, Naryn and Talas Provinces during the elaboration of a joint FAO-EBRD dairy sector study and the design of the IFAD-funded investment Access to markets from September 2015 through June 2016 Inna Punda, Agribusiness Specialist, FAO Investment Centre 19 October 2016, Bishkek Setting the scene The Kyrgyz dairy industry is: 17% of GAO 11% of agrifood exports USD 73 Million-worth market Net exporter g of dairy a day for 6 million of Kyrgyz 380 thousand of milk producers 1.6 million tonnes of raw cow milk per year 45 dairy plants 65 thousand tonnes of dairy products (in milk equiv.) Important for the economy, but also rural development and environment/biodiversity conservation 1

variety) Since May 2014 the competition became tougher 3 Sales of dairy products, billion KGS 3 4 4 5 5 +65% 2010 2011 2012 2013 2014 2015 Export

2 млн.usd тыс. тонн Opportunities Used and lost Informal marketing channel (40% of sales) is shrinking Modern retails dictates its standards (+convenience and variety) Since May 2014 the competition became tougher 3 Sales of dairy products, billion KGS % Export milk flows 11% of agrifood exports or $12 million. but - 80% of exports is liquid milk for further processing (value addition).border closure damaged national dairy industry Экспорт, USD Экспорт, тонн

3 млн.usd тыс. тонн Dairy processor. Can t plan. Irreversible changes after border closure: decreased output, lost export markets still great potential: cheese-making, organic, wealth of pastures and efficient management mechanism, compact landscape, close to big markets, non-cattle milk Dairy products output, thousand tonnes, in milk equiv and what do we bring in? $11 million whereby 46% are yoghurts and other fermented drinks, 35% are powder and condensed milks (of quantities) Subsidized products, but most importantly not always clearly identified and labelled (i.e. vegetable fats) Импорт, USD Импорт, тонн

Производство 20052006200720082009201020112012201320142015 Импорт Экспорт lagging behind on raw material 98% of cow milk is produced by farming households.

4 4 000 Growth point: cheese A vision of consumption growth? Cheese produced for export sold locally Потребление сыров Производство Импорт Экспорт lagging behind on raw material 98% of cow milk is produced by farming households. In most of the cases, this is only in spring and summer, in winter there is virtually no liquid milk Собрано молока-сырья (тыс. тонн) million tonnes of milk per year BUT: Almost all the milk is produced by smallholders 800 thousand cows with low genetics Real yields << official data Low commercialization rates Rough competition for raw milk compromising public health собрано 10%

5 Dairy plants starve for raw milk stringent biosecurity, better productivity of animals and impeccable food safety must be assured Compete = comply To be competitive : optimize the cost of production + improve quality «Food safety» TR EAEU 021/2011 «Milk and dairy products safety» TR EAEU 033/2013 «Safety of packaging» TR EAEU 005/2011 «Labelling of food products TR EAEU 022/2011» 5

6 Please meet the farmer Need knowledge in simple form on: Feed production Feeding Breeding Hygiene 98% - households, 3-10 heads of cattle, largely selfconsumption Rudimental knowledge on dairy farming Not aware of the TR requirements Genetics is a results of the natural selection Inadequate feeding Lacking trust towards the buyer (trader) Disconnected from markets (remote areas) Please meet the processor Work in one team: marketing manager, technologist and milk procurement Needs of upgrade: HACCP Modernization (facilities and equipment) Plant-driven MCC network Service Centres Hundreds and thousands of suppliers Mainly households, but some have potential to become farmers Processor can t develop without its suppliers, invest in farmers Should educate discipline and create incentives for quality (premium price) 6

7 Powder milk Powder milk imports to Kyrgyzstan (tonnes) Robust VC = robust linkages Loyal supplier is a developing supplier incentives 1. Responsible agribusiness can Перечень easily стандартов lose its suppliers unless direct linkages are established 2. Government has to assure the compliance with the technical regulation in force by all processors and milk traders! knowledge Raw milk control 7

8 Time to act! To comply with the technical regulation the entire VC needs to be upgraded 1. Dairy plants struggle with insufficient quantities of quality raw milk 2. Final products safety and quality is the responsibility of the processor, not of milk trader 3. Direct link plant-supplier (farmer, household) is crucial Growth Requirement s to raw milk Compliance of processors Smallholder + dairy plant = sales up Educating loyal supplier MCC advisory feed 8

9 Value chain upgrade Official state bodies, i.e. State Veterinary and phyto-sanitary Service, Gosstandard of Kyrgyzstan Establish and undertake accreditation of a laboratory Conduct TR compliance inspection regularly and efficiently (along the entire VC) Apply TR requirements to imported foodstuff Suggest revision of TR on labelling of dairy produts The time has come Inputs Rehabilitate pedigree farms Improve feed base, provide households with feed Rehabilitate pastures farms plants Improve knowledge on dairy farming Understand its role in the VC and TR requirements Design and implement HACCP Ensure adequate milk collection Ensure adequate control over milk quality (at farm level and plant lab) 9

10 Thank you for your attention Data used in this presentation have been provided by the National statistics committee of Kyrgyzstan and the Global Trade Atlas (foreign trade data) 10

Long-distance transportation and hygienic quality improvement of raw milk

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