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

2.
Setting the scene
The Kyrgyz dairy industry is:
 17% of GAO
 11% of agrifood exports
 USD 73 Million-worth market
 Net exporter
 200-250 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

3.
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
+65%

4.
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

5.
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 …

6.
… 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)

7.
Growth point: cheese

8.
… 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
 1.5 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

9.
Dairy plants starve for raw milk
… stringent biosecurity, better productivity of animals and impeccable
food safety must be assured

10.
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»

11.
Please meet the farmer
Need knowledge in simple
form on:
 Feed production
 Feeding
 Breeding
 Hygiene
98% - households, 3-10 heads of cattle, largely self-
consumption
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)

12.
Please meet the processor
Work in one team: marketing manager, technologist and milk procurement
 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
Needs of upgrade:
 HACCP
 Modernization (facilities and
equipment)
 Plant-driven MCC network
 Service Centres

13.
Powder milk

14.
Robust VC = robust linkages
Loyal supplier is a developing supplier
Перечень стандартов
1. Responsible agribusiness can
easily 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!

15.
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

16.
Smallholder + dairy plant = sales up

17.
Value chain upgrade
 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
Official state bodies, i.e. State Veterinary and phyto-sanitary Service,
Gosstandard of Kyrgyzstan

18.
The time has come

19.
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)