Masters thesis

Role of Dairy Cattle in Rural Poverty Alleviation:
A Case of Tanahu, Nepal
A Thesis Submitted to
The Central Department of Rural Development, Tribhuvan University,
Faculty of Humanities and Social Sciences
In partial fulfillment of the requirements for the Degree of the
Master of Arts (M.A.)
in
Rural Development
Submitted By:
Shekhar Pokhrel
T.U. Reg. No. 1-2-18-35-2003
Exam Roll No. 282237 (067/068)
Central Department of Rural Development
Tribhuvan University, Kathmandu
Sept. 2013

i
Recommendation letter
The thesis entitled “Role of Dairy Cattle in Rural Poverty Alleviation: A
Case of Tanahu, Nepal” has been prepared by Shekhar Pokhrel under my
guidance and supervision. I hereby forward this thesis to the evaluation
committee for final evaluation and approval.
……………………………………….
Prof. Dr. Chandra Lal Shrestha
Central Department of Rural Development
Tribhuvan University, Kirtipur
Kathmandu
Date : 2013-09-09
(2070-05-24)

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Approval letter
The thesis entitled “Role of Dairy Cattle in Rural Poverty Alleviation: A Case of Tanahu,
Nepal” submitted by Shekhar Pokhrel in partial fulfillment of the requirements for the
Degree of Master of Arts (M.A.) in Rural Development has been approved by the evaluation
committee.
Evaluation committee
………………………..
Prof. Uma Kant Silwal (Ph.D.)
Head of Department and External Examiner
……………………
Prof. Dr.Chandra Lal Shrestha,
Supervisor
Date : 2013-09-10
(2070-05-25)

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Declaration
I hereby declare that the thesis entitled, “Role of Dairy Cattle in Rural Poverty
Alleviation: A Case of Tanahu, Nepal” submitted to the Central Department of
Rural Development, Tribhuvan University, is entirely my original work prepared
under guidance and supervision of my supervisor. I have made due
acknowledgements to all the ideas and informations borrowed from different sources
in the course of writing this thesis. The results of this thesis have not been presented
or submitted anywhere else for the award of any degree or for any other purposes. No
part of the content of this dissertation has been published in any form before. I shall
be solely responsible if any evidence is found against my declaration.
…………………………….
Shekhar Pokhrel
T.U. Regd. No.: 1-2-18-35-2003
Date: 4th
September, 2013

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ACKNOWLEDGEMENT
Initially, I would like to express my gratitude to the Central Department of Rural
Development for providing me an opportunity to prepare this dissertation entitled “Role of
Dairy Cattle in Rural Poverty Alleviation: A Case of Tanahu, Nepal”, which is under
taken for partial fulfillment for the Degree of Masters of Arts (M.A.) in Rural Development.
Especially, I would like to express my sincere gratitude to my supervisor, Prof. Chandra Lal
Shrestha (Ph.D.), Central Department of Rural Development, TU for his encouragement,
constructive and valuable guidance, shared knowledge and every day experiences
throughout the preparation of this dissertation.
I heartily express my gratefulness to Prof. Umakanta Silwal (Ph.D), Head of the Central
Department of Rural Development for his kind co-operation. I am also very grateful to all
the teachers of Central Department of Rural Development specially Mr. Ratnamani Nepal as
well as the staffs of TU central library and mini-library of CDRD.
I would like to thanks Dr. Ishwor Tiwari, Dr. Balkumar Shrestha, Mr. Baburam
Jammarkattel, Dr. Biswas Sharma, Dr. Saluna Pokhrel, Mr. Pratap Gurung for their valuable
support during my field work and report writing as well. At the same time; I express my
sincere thanks to the respondents as well as Mr. Ram Kunwar and Mr. Santosh Baral for
their assistance in the field work. I like to extend my thanks to Miss Pratima Panthee for her
frequent moral support to grounding this dissertation in time.
Last, but not the least, I would like to express sincere gratitude to my parents and my brother
Mr. Naresh Pokhrel for their constant encouragement for the study without which it would
have been impossible to accomplish this course and dissertation.
………………………
Shekhar Pokhrel

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ABSTRACT
The study entitled “Role of Dairy Cattle in Rural Poverty Alleviation: A Case of Tanahu,
Nepal” is an endevour to contribute to the milk production record and its marketing channel
in Tanahu district. This study is conducted to analyse the dairy cattle farming and its role in
poverty reduction in Tanahu district. The main purpose of the study was to assess the
average income of dairy cattle farmers, their motivational factors and the major problems
and prospects of dairy cattle farming and dairy industry of Nepal. Among 2200 dairy farmers
of Tanahu, 100 farmers were selected randomly by simple random sampling. Questionnaire
survey of the sample farmers were done with 28 questions that met the purpose of the study.
The per litre price of milk was surveyed and found out that 49 farmers get NRs 40 to 45 per
litre of milk and 26 of them get NRs 35 to 40. Whereas 23 of them get more than NRs 45 and
only 2 out of 100 farmers get NRs 30 to 35 per litre of their cattle milk. The monthly profit
obtained from selling fresh milk of cattle was also surveyed. Among 100 farmers, it was
found that 9 farmers have less than NRs 5000 monthly profit, 26 have 5000 to 10000, 24
have 10000 to 20000 whereas 14 farmers have monthly profit of more than NRs 20000.
Farmers were also asked about their future plans of commercialisation of dairy cattle
farming. Out of 100 farmers, 54 have plan of increasing the number of cattle, 30 farmers will
adopt new technologies of dairy cattle farming. Whereas 16 of the farmers said their main
strategy is to minimize the per litre cost of production of milk. Similarly while analysing the
problems of dairy cattle farming, among 100 farmers, 26 said the inadequate AI services as a
major problem whereas 42 farmers said the ineffective pricing policy of milk is the major
problem. Similarly 24 farmers said that the major problem for livestock development is the
poor access of government technicians all over the district and 3 of them said the strikes and
bandhs are the problems whereas 5 farmers said there is a critical shortage of improved
animals. In addition to this, the survey also explored out the famers’ views regarding the
future policies to be adopted for livestock and dairy development of Nepal. It was found that,
among 100 farmers, 45 suggested that there should be effective pricing policy of milk that
should favour the rural and marginalised farmers. Similarly 36 suggested that the AI policy
of Nepal should be made very effective and its access should be made to every corners of the

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country. Whereas 19 farmers said that the government should be responsible for the farmers
and it should provide the various types of subsidies to farmers in order to motivate them for
dairy cattle farming.
Focal group discussion was organized among the government, non-government, and private
sector as well as the leader farmers of the district. From the study, it was found that, most of
the dairy farmers are earning by selling milk to dairy cooperatives and are encouraged
towards it. There are a lot of opportunities in livestock and dairy development of Tanahu.
But its major hindrances are ineffective pricing policy of milk, poor access of AI services to
farmers, poor availability of improved breeds of cattle.the study concludes that the rural
farmers of Tanahu can uplift their livelihoods by dairy cattle farming if the entire enabling
environment is made favourable to them. The livestock and dairy sector of Nepal can be
tremendously developed which can ultimately upgrade the economic condition of country
and finally alleviate the rural poverty. This study is very useful for government sector in
budgeting the dairy related programs and it is also a good base for NGOs to implement dairy
and livestock related project in Tanahu and is a good and valid record for the farmers and
milk cooperatives

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TABLE OF CONTENTS
Chapter Title Page
Recommendation letter i
Approval Letter ii
Declaration iii
ACKNOWLEDGEMENTS iv
ABSTRACT v
TABLE OF CONTENTS vii
LIST OF TABLES ix
LIST OF FIGURES x
LIST OF ACRONYMS / ABBREVIATIONS xi
I INTRODUCTION (1-7)
1.1 Background of the Study 1
1.2 Statement of the Problem 5
1.3 Objectives of the Study 6
1.4 Significance of the Study 6
1.5 Limitations of the study 7
1.6 Organization of the study 7
II LITERATURE REVIEW (8-19)
2.1 Conceptual review 8
2.2 Poverty Alleviation program in Nepal 13
2.3 Policy review 15
2.4 Previous study 17
III RESEARCH METHODOLOGY (20-24)
3.1 Conceptual framework 20
3.2 Selection of Study Site 21
3.3 Research Design 21
3.4 Nature and Source of Data 22

viii
3.5 Universe / Population of study 22
3.6 Sampling design, sample size and sampling procedures 23
3.7 Data collection methods and tools 24
3.8 Data processing methods 24
IV
DATA PRESENTATION, ANALYSIS AND
INTERPRETATION (25-54)
4.1 Introduction to study area 25
4.1.1 Geographical setting 25
4.1.2 Political and administrative division 25
4.1.3 Population Statistics 25
4.1.4 Socio-Cultural Division 26
4.1.5 Occupational status 26
4.1.6 Land acquisition 27
4.1.7 Development Parameters 27
4.1.8 Livestock Data 28
4.2 Dairy cattle farming as an occupation 28
4.3 Present Status of Dairy Cattle Farming 31
4.4 Milk Marketing in Tanahu 36
4.5 Income and Expenses Status 40
4.6 Commercialization of Dairy Farming 47
4.7
Problems and Prospects of dairy cattle farming and dairy
industry 49
V CONCLUSIONS AND RECOMMENDATIONS (55-58)
5.1 Conclusion 55
5.2 Recommendations 56
REFERENCES
APPENDICES
Appendix A Questionnaire Survey

ix
LIST OF TABLES
Table No. Title Page
3.1 Milk producers Cooperatives of Tanahu District 23
4.1 Population Statistics of Tanahu 25
4.2 Population Distribution according to caste 26
4.3 Occupational status 27
4.4 Land acquisition 27
4.5 Development Parameters 27
4.6 Livestock Population 28
4.7 Occupational status of farmers before raising cattle 28
4.8 Years of raising cattle 29
4.9 Source of motivation 30
4.10. Cattle population 32
4.11 Lactating cattle population 33
4.12 Source of feeding Cattle 34
4.13 Production of milk per day 35
4.14 Basis of Milk pricing 37
4.15 Payment Interval of Milk 38
4.16 Market Demand Of dairy product 39
4.17 Price of milk 40
4.18 Monthly profit from sale of milk 42
4.19 Per litre cost of milk production 43
4.20. Annual income from milk products 45
4.21 Major Expenses Headings 46

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LIST OF FIGURES
Figure No. Title Page
3.1 Map of Tanahu District 21
4.1 Source of income before raising cattle 29
4.2 Years of raising cattle 30
4.3 Source of motivation 31
4.4 Number of cattle 32
4.5 Number of lactating cattle 33
4.6 Source of feed 34
4.7 Milk production per day 35
4.8 Milk Sale area 36
4.9 Basis of milk pricing 37
4.10. Payment Intervals of Milk 38
4.11 Market demand of dairy product 39
4.12 Market demand fulfilled by supply 40
4.13 Price per litre of milk 41
4.14 Farmers keeping farm records 41
4.15 Monthly profitfrom fresh milk 42
4.16 Farmers computing per litre cost of milk production 43
4.17 Per litre cost of milk production 44
4.18 Sale of milk product 44
4.19 Annual income from milk products 45
4.20. Major expenses headings 46
4.21 Strategy to minimize cost of production 48
4.22 Future plans of commercialization of cattle farming 49
4.23 Major problems of livestock and dairy development 51
4.24 Future policies for livestock and dairy development 52

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LIST OF ACRONYMS/ABBREVIATIONS
ADB Asian Development Bank
APP Agriculture Perspective Plan
AGDP Agriculture Gross Domestic Product
AI Artificial Insemination
AICC Agriculture Information and Communication Centre
BSCAA Bureau of South and Central Asian Affairs
CBS Central Bureau of Statistics
Coop Cooperative
CCI Chamber of Commerce and Industries
CP Crude Protein
DADO District Agriculture Development Office
DANIDA Danish International Development Agency
DCIP Dairy Cattle Improvement Project
DDC Dairy Development Corporation
DLS Department of Livestock Services
DLSO District Livestock Service Office
ED Executive Director
ESCAP Economic and Social Commission of Asia and the Pacific
EU European Union
FAO Food and Agricultural Organization
FGD Focal Group Discussion
Fig. Figure
GDP Gross Domestic Product
GNP Gross National Product
Ha Hectares
HDR Human Development Report
IAAS Institute of Agriculture and Animal Sciences
IFAD International Fund for Agriculture Development

xii
INGO International Non Government Organization
LSC Livestock Service Centre
LSSC Livestock Service Sub-Centre
MASF Market Access for Smallholder Farmers
MDG Millennium Development Goal
MoAC Ministry of Agriculture and Cooperatives
MoAD Ministry of Agricultural Development
MT Metric Ton
NA Not available
NARC Nepal Agricultural Research Council
NDDB National Dairy Development Board
NEAT Nepal Economic Agriculture and Trade
NGO Non Government Organization
NMDP Nepal Market Development Program
NPC National Planning Commission
NRB Nepal Rastra Bank
PACT Project for Agriculture Commercialization and Trade
PAF Poverty Alleviation Fund
PRSP Poverty Reduction Strategy Paper
S.No. Serial Number
SNF Solid Non Fat
TDN Total Digestible Nutrients
UN United Nations
UNDP United Nations Development Programme
US United States
USA United States of America
VAHW Village Animal Health Worker
VDC Village Development Committee
WB World Bank

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CHAPTER I
INTRODUCTION
1.1 Background of the Study
The livestock sector plays a vital role in the economies of many developing countries. It
provides food or more specifically animal protein in human diets, income, employment and
possibly foreign exchange. For low-income producers, livestock also serves as a store of
wealth; provide draught power, and organic fertilizer for crop production as well as means of
transport.
Milk provides relatively quick returns for small-scale livestock keepers. It is a balanced
nutritious food and is a key element in household food security. Smallholders produce the vast
majority of milk in developing countries where demand is expected to increase by 25% by
2025. Dairy imports to developing countries have increased in value by 43% between 1998
and 2001. Informal market traders handle over 80% of milk consumed in developing
countries. Two thirds of total world milk is produced by Brazil, India, Pakistan, Poland,
Russian Federation, USA, and 15 EU member states. Developing countries produced one third
of total world milk production in 2000 (216 million metric tons) and it is increasing. Various
animals including buffalos, cows, sheep and goats produce milk. Total world milk production
is dominated by cow’s milk followed by buffalo, goat and sheep. (Berdegue et. al, 2005 )
Livestock sector significantly contributes to national AGDP by nearly one third and the dairy
sub-sector shares more than half of the livestock sector contribution. The annual production of
milk is 1.35 million metric ton per year. Buffaloes contributes more than two third of the total
.production and rest by cows. About 13 percent of the total population of cattle (0.9 million)
and 26 percent of buffaloes (1.19 million) are in milking conditions. Crossbreeding with
Jersey and Holstein Friesian cattle and Murrah buffaloes is the major breed improvement
activity. There is predominance of small holder production system. Nearly 125 thousand farm
families are engaged in milk production and are organized in about 1500 primary
cooperatives. (MoAC, 2010)

2
Production system is crop-livestock-forest integrated especially in hills. In the high mountains
regions, yak and chauries are reared in transhumance system. There is seasonal fluctuation in
milk production and collection which affects supply of pasteurized milk in the market (flush
season; August-September to January-February; lean season; rest of the months). The ratio of
lean to flush season production is about 1:3 in most of the country and 1:1.5 in areas where the
feed supply is better. Seasonal breeding pattern of buffaloes and avilability of green forages in
monsoon season are the main reasons. (MoAC, 2008)
Dairy development efforts started in early fifties with assistance from FAO. Initiatives were
focused in Himalayan region with establishment of yak cheese factories. Besides FAO,
bilateral assistance from the governments of Switzerland, New Zealand and Denmark has
made remarkable contribution. Dairy Development Corporation (DDC) was established under
corporation Act in 1964. DDC started functioning from 1969. DDC is the pioneer in dairy
development in Nepal a fully government state owned corporation DDC was initiated for the
economic advancement of the poor small milk producing farming communities. It is still one
of the major players in the milk market and handles about half of the total milk marketed in
the formal sector (about 13 percent of the total milk produced in the country is believed to be
marketed through formal marketing channel. (FAO, 2010)
Private sector investment in dairy has increased over the years and in past two decades their
share has increased to nearly half of the total milk marketed in formal sector. Main operation
area is in and around Kathmandu which is the major market for milk and milk products. The
National Dairy Development Board (NDDB) was established as apex body to oversee that
dairy sector in the country 1992. The DANIDA Support Project funded by the Royal Danish
Government supported to prepare and implement Ten Year Dairy Development Plan (1990-
2000) and strengthened NDDB. (Baisya, 2010)
Poverty is the state of one who lacks a certain amount of material possessions or money.
According to World Bank “Poverty is pronounced deprivation in well-being, and comprises
many dimensions. It includes low incomes and the inability to acquire the basic goods and
services necessary for survival with dignity. Poverty also encompasses low levels of health

3
and education, poor access to clean water and sanitation, inadequate physical security, lack of
voice, and insufficient capacity and opportunity to better one’s life.” Poverty is usually
measured as either absolute or relative . Absolute poverty or destitution refers to the
deprivation of basic human needs, which commonly includes food, water, sanitation, clothing,
shelter, health care and education. It refers to a set standard which is consistent over time and
between countries. Relative poverty is defined contextually as economic inequality in the
location or society in which people live. Various poverty reduction strategies are broadly
categorized here based on whether they make more of the basic human needs available or
increase the disposable income needed to purchase those needs.
Nepal is facing significant challenges in poverty due to the alarming population growth and
the sluggish nature of its economy. Its socio economic condition is predominantly
characterized by lack of employment opportunities. Over 80 percent of the economically
active population depends on subsistence agriculture. The demand for agriculture labour is
highly seasonal creating a need for combining agriculture with other jobs.
In simple words poverty is a social phenomenon in which a section of the society is unable to
fulfill even its basic necessities of life. However when a substantial segment of society is
deprived of the minimum level of living and continues at a bare subsistence level that society
is called to be plagued with mass poverty. Most of the economists have defined poverty and
poverty line with different views. Oscar (1982) defined : Poverty is a situation syndrome in
which the following are combined under consumption, malnutrition precarious housing
conditions, low education levels, bad sanitary conditions, either unstable participation in the
production, primitive strata, attitude of discouragement and anomie, little particular scale of
values different in some extent from that hold by the rest of society.
Poverty is a matter of feeling while fixing a poverty line is certain concept. The nature of
poverty differs vastly in developed countries. Every country has its own definition, concept
and logic of poverty. In 1982, while initiating the poverty alleviation program in UK, the
Prime Minister Margaret Thatcher said that there is no government definition of poverty.
(Kunwar, 2002)
Poverty is a familiar concept and has existed in every society at the time. Poverty exists not
only in the least developed countries but also in the developed countries. Nepal is an

4
agricultural country where the majority of its population lives in rural areas. Both urban and
rural villagers are suffering badly by this problem. Thus it is needless to say that development
of rural areas and agriculture help to boost the country’s economy and hence achieve
alleviating poverty to greater extent. Many of the economists and institutions have defined
poverty as the mass problem in the third world is primarily one of rural poverty. The majority
of population lives in rural areas where average income is much lower than in urban areas and
the incidence of poverty is much higher. Poverty in undeveloped countries is conceived as an
absolute phenomenon present in rural society.
Poverty is rapidly increasing not only in Nepal but also in the whole world. In Nepal, the
growing incidence of poverty is the outcome of an economic process that is associated with
worsening income distribution among the households. Poverty has further been exacerbated by
limited access to productive resources. High level of under employment or unemployment and
perpetuated by the indebtness of the poor.
In Nepal poverty incidence profile was not a long history. Initially in 1976/77, National
Planning Commission conducted the national survey on employment, income and
consumption. The poverty level has been quantified with the help of minimum subsistence
level of income and consumption. About 33 percent population was below the prescribed
poverty lines in 1983 (NPC, 1983), 70 percent in 1992 and 53.1 percent in 1997 population
was below poverty line. In Tenth five years plan (2002-2007), 38 percent were living below
the nationally prescribed poverty line in 1999. Nepal living Standard Survey 2003/04
estimated that 31 percent population was below the poverty line. (CBS, 2005).
The Nepalese economy is quite dynamic with favourable economic indicators.viz. stable
prices, strong balance of payment position and average annual economic growth of more than
4 percent during the decade of 1990s. These descriptions, however, hide the fact that Nepal is
a least developed country with widespread poverty and a gross national per capita income of
US $ 240 in fiscal year 2004/05 with the country ranking 136 out of 177 countries in the
United Nations Development Program, Human Development Index. (NRB, 2006 )

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1.2 Statement of the Problem
Associated with low level of economic growth, Nepal is characterized as a country with a
large portion of rural population, high poverty rate and subsistence agriculture. On various
levels, all of these factors are interconnected. About eighty percent of the country’s population
lives in rural areas and agriculture is their primary livelihood where the rural poverty rate is
over three times that of urban areas, 35 percent compared to 10 percent (NARC, 2010). This
poverty rate can be associated with the subsistence nature of the major means of livelihood in
these areas, agriculture. Seventy-eight percent farm holdings have been reported to be
producing mainly for home consumption. The proportion of holdings that produce mainly for
sale is not even 1 percent, while little over 21% farm families use their farm produce almost
equally for both sale and home consumption (CBS, WB, DFID, & ADB, 2006). However,
even when such a large portion of the population is into agriculture, being self sufficient on
food has also not been a reality for a large section. An estimated 60 percent of households
cannot meet their own food needs, especially in mountainous areas, and agricultural
production only meets food requirements for three-to-eight months per year (NARC, 2010).
Hence, the involvement of the majority of the population in agriculture is very important to
analyze in context of social and economic development of Nepal.
The other major problems for farmers to start dairy cattle farming is the insufficient supply of
pure breed calves and the fodder/feed deficit in lean season. In addition to this, the marketing
and milk pricing policy is not favorable to the smallholder farmers. The middlemen are
enjoying the profit whereas the milk producers and the consumers are always deceived.
Similarly the dairy development policies of the government has also become somehow as the
hindrance for development of dairy sector of Nepal.
However, despite all efforts to bring about revolutionary changes and growth in the agriculture
sector of Nepal, the attempt has not fully translated into reality. Hence, from policy issues to
institutional challenges to practical bottlenecks, this study attempts to analyze various aspects
of commercialization of dairy cattle farming in Nepal.

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1.3al Objectives of the Study
1.41.3.1 General Objective:
To explore the role of dairy cattle farming and milk selling in poverty reduction of people
living in Tanahu district.
1.3.2 Specific Objectives:
i. To assess the average income of farmers through dairy cattle farming and milk-
selling.
ii. To explore the motivational factors of farmers towards dairy livestock raising.
iii. To explore the problems and prospects of dairy cattle farming and Dairy industry in
Tanahu district.
1.4 Significance of the Study
With a huge percentage of the population in Nepal living under conditions of absolute poverty
and social deprivation, poverty alleviation is the biggest long-term development challenge for
the government. To meet this challenge, Nepal has to focus on achieving a high level of
economic growth. Currently, the economy is largely remittance driven and it has been yet
another challenge to get the remittance money invested in the productive sector which could
escalate the much needed economic growth of Nepal. In this context, agriculture and livestock
commercialization has been looked upon as an important option in development agendas, both
economic and social. The stagnation in the agriculture sector has a huge part in impeding the
economic growth of Nepal and fight against poverty and thus commercialization of agriculture
has to be extensively discussed. So in such condition the livestock and agriculture sector
should be uplifted to meet the challenges of the country and its people.
In these contexts, nowadays commercial livestock farming is flourishing all over Nepal.
Mostly the youths are initiating in these activities which is a positive factor for sustainable
livestock development. Dairy cattle farming are also a very good method of earning income.
But there are not enough references for analyzing whether this has been upgrading the
livelihood of farmers or is it just increasing their workload. The current study about the role of
dairy cattle farming in reducing poverty mainly aims for the analysis of income generation
through selling cattle milk and its impact upon the livelihoods as well as the environment. The
study will be beneficial both for farmers level as well as for local government bodies (DLSO,

7
DADO) of Tanahu that need to prepare plannings of various income generating activities
under agriculture and livestock. The study will also guide the milk cooperatives which tend
collect fresh milks from villages and produce diversified dairy products.
1.5Limitations of the study :
The major limitations of the study can be:
i. Fluctuation of milk production during lean and flush season.
ii. The pricing policy of different dairy cooperatives can differ.
iii. The farmers selected by simple random sampling may not demonstrate the average
of the population.
iv. The study is based only upon the milk from cattle and the milk production and sale
from buffaloes is not included here.
1.6 Organization of the Study
Any study must have a proper organization. This present study also has some definite
organization. This present study has been organized chapter wise. This study has been divided
into five major chapters.
The first chapter i.e introduction deals with different aspects of the study consisting of
background of the study, statement of the problem, objectives of the study, significance of the
study, limitations of the study and organization of the study. The second chapter is literature
review that includes the conceptual reviews and policy review as well as some previous
studies. It also includes the gaps in existing literature related to topic. The third chapter is
about the research methodology which has been used to conduct this study. It includes the
conceptual framework and the research design. Sampling design, sample size, sampling
procedure, data collection methods and methods of data analysis are included here. The fourth
chapter is about data processing and analysis. It includes introduction of study area and its
demographic and socio-economic information. It also includes the analysis of data and
interpretations of the results to fulfill the objectives. In the fifth or last chapter, conclusion of
the study and the recommendations for the remedy of problems described in the statement of
problem are included.

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CHAPTER II
LITERATURE REVIEW
Literature review is one of the important parts of any research works. To gain useful and
background information about the problems and impact over the study area, literature review
is essential. For this research work, the development of literature review have been enriched
by many researchers by their contribution in conceptual review. But there is no universal
definition of poverty. In several developing countries, different kind of parameters have been
used to define poverty.
2.1: Conceptual review:
Nepal is a small land- locked mountainous country covering 14.718 million hectares (ha.) of
total land area. About 28 % is cropland, out of which 21% is cultivated and 7% is non-
cultivated land, Forest occupies 29% while grassland, shrub wet land including water and
other lands covering by ice and rocks and urban areas approximately occupy 12 %, 10.6%,
2.6%, and 17.8%, respectively ( MoAC, 2010). The central challenge for rural development in
Nepal is to shift from a subsistence to a commercial economy in an environment characterized
by widespread and day-to-day insecurity and violence. Agriculture is the principal source of
food, income, and employment for the majority, particularly the poorest. Growth in agriculture
is, therefore, crucial for reducing poverty, and preliminary findings from the National Living
Standards Survey indicate that despite the insurgency, the sector has made a significant
contribution to poverty reduction. (World Bank, 2011)
The human population of Nepal is 26.6 million while the number of livestock is estimated at:
cattle 7.3 million, buffalo 4.99 million, sheep 0.81 million, goats 9.19 million, pigs 1.11
million, fowl 39.53 million, ducks 3.78 million and fish production is 0.052 million MT
(AICC, 2011). Agriculture is the major sector for economy and employment in Nepal that
contributes 35.65% of the total Gross Domestic Product (GDP) which is expected to increase
to 45% by 2015 as targeted by Agriculture Prospective Plan (APP, 2006) and comprised
73.9% percent of overall workers in 2011 (BSCAA, 2012). Milk alone contributes around
53% within the country to livestock GDP, which is over 5% to national GDP (Parajuli, 2011).

9
Small scale dairy production is most common throughout the country. Majority of the farmers
in the rural areas have been keeping cattle and buffaloes for milk production as well as for the
draft power and manure. Due to the increasing cost of chemical fertilizers, it has been out of
reach to the majority of the small and marginal farmers. Therefore, the importance of livestock
component has been further increased to sustain subsistence farming in Nepal.
Livestock production is a very important industry both on a national scale and for farming
families; yet animal productivity is constrained by lack of fodder. Feed is the main component
to improve animal production. At present, the nation is producing 1.55 million MT fresh
milk with 1.4% average annual growth rate (AICC, 2011). Buffalo and cattle are the main
source of milk production. The milk is produced in Nepal from both improved and cross (10%)
and native cattle and buffaloes (DCIP, 2010). There are several breeds of cattle and buffalo in
Nepal. But only limited breeds are recommended for commercial (economical) milk
production. Cross breed of cattle and buffaloes are the major source of milk production
contributing about 71 % of total milk produced (1.55 million MT) and remaining 29 %
(0.447 million MT) from cattle (AICC, 2011) in the country. It has been estimated that
about 75% and 47% households in the country keep cattle and buffaloes, respectively
(Pradhan et al., 2008). This existing scenario proves the importance of dairy animal in
rural household economy. In the recent years, several small dairy farms have been developed
in the milk corridor comprising of nearly 40 districts in the country. These farms have higher
level of milk production comparing with the small rural dairy in other parts of the nation. The
highest producing cows (8200 liters in 300 days) in DCIP herds compared with the national
averages of 438 liters/lactation shows the tremendous scope for increasing the productivity of
cattle in the country. The average productivity of milk in Asia is 670 liters while world’s
average productivity is 1000 liters/ lactation (DCIP, 2010).
Dairy Development Corporation (DDC) needs 300,000 liters of milk every day but in dry
season the corporation is able to collect only 70 percent of its requirements. Likewise,
Chitwan Dairy requires 150,000 liters of milk per day to run its plant in full capacity but at
present the industry is getting hardly 70,000 liters milk a day. Likewise, Sujal Dairy, based in
Pokhara has running its factory only in 60 percent capacity due to inadequate supply of milk.
In totality, about 300,000 liters less milk is being produced in the country than the national

10
requirement. Average milk production from cow was 3000 liters per lactation and highest
productivity was found as high as 8262 liters. About 15 percent of evaluated cows were high
yielding i.e. producing more than 4000 liters of milk in a lactation period of 300 days (DCIP,
2010).
It has been estimated that per capita availability of milk in Nepal is 50.7 kg while it is 63 kg in
India. The requirement to a healthy man is 57.0 kg indicating 11.1 % deficit in the country
(Pradhan et al., 2008). It has become important to reduce the deficit which can be done
by (1) increasing in milk production and (2) improving access to buy and consume more
milk. Reduction in the cost of milk production is one of the main activities which are
possible by reducing on the cost of feed items and other managemental activities.
Variables governing to the cost of production of milk are : (a) feeds and fodder (b)
labor cost (c) capital cost (d) service charge such as vet cost, AI and insurance fee, etc.
Tanahun district lies in the milk corridor and has potential pocket area for milk production
which supplies the milk to Pokhara and Kathmandu (MOAC, 2008). There are 13 chilling
centers and 28 milk producers’ co-operatives in the district (DLSO, 2010). It was estimated
that there were about 92,755 cattle and 1, 06,067 buffaloes annually producing 9,455 and
31,665.9 metric tons of milk, respectively in 2010 (DLSO, 2010). The district had produced
total of 41,120.9 metric tons of milk in year 2010.
Poverty has been defined in various ways and debates about its nature and causes. The
concepts and measurements of poverty are linked to the way poverty is perceived and defined.
Thus programs for poverty alleviation are implemented based on the way poverty is defined,
measures and socially constructed. The Third World receives immense foreign aid from
Western (developed) nations and poverty alleviation programs and projects in developing
countries are influenced by the western concept of poverty (Marklund, 1990)
The phenomenon of poverty is as old as the human society. It was considered as sin and had
the belief that there was no escaping from it. The presence of poverty anywhere is the threat to
everywhere (Kunwar, 2004). According to Human Development Report (1995), “More than
three-fourth of the World’s population lives in the developing countries, but they enjoy only
16 % of the world’s income; while the richest 20% have 85% of the global income”. The
eradication of poverty has been explained as the unfinished business of the 21st
century.

11
Poverty is a strong determinant of people or community. It contributes to physical weakness of
people through lack of food, small weak body, malnutrition leading to low immune response;
inability to pay for health services; isolation because of the inability to pay the cost of
schooling and bicycle, inability to powerlessness because due to the lack of wealth and the
poor have no voice. Thus poverty is a relative term and may be defined as an economic
condition that is inadequate to meet basic needs of a person. Generally following types of
poverty has been defined: (Kunwar, 2004)
1. Absolute poverty : It occurs when people fail to receive sufficient resources to support
a minimum level of physical health and efficiency that is often expressed in terms of
calories or nutritional values.
2. Relative poverty : It is the general standard of living in different societies culturally
stated as being poor rather than some absolute level of deprivation.
3. Hardcore or Ultra poverty : It is the line below the absolute poverty line, its half by the
gestation as the rule of thumb.
Poverty is a relationship between the essential needs of the people for survival and physical
efficiency and their ability of satisfying them. Those who cannot satisfy their basic needs such
as : feeding, clothing and shelter are called poor and those who have are non-poor. (HDR,
2005 )
“A world that has 1 in 5 its people living object poverty is certainly not just and it is also
dangerously unstable. This is particularly so when the poorest fifth of the world population
have seen their share of global income fall to less than 2 % and the richest fifth by contrast,
have seen their share to 85 % such high levels of poverty are linked with spread of disease
unrest and war migration, population growth and environmental degradation. If we are to
leave safe world to the next generation, we must eradicate those massive levels of poverty
from the world.” (Clare, 1997)
Nepal is one of the least development countries in the world and 10th
poorest nation in the
world. Thirty two percent of the population lives below the poverty line in Nepal. The poverty
line is estimated based on the annual consumption expenditure level below which the
population of Nepal can be considered poor. DFID estimates that 50 % of the population lives

12
on less than $ 1 per day, with the status of fifth very poor. According to the World Bank
estimate, 40-50% of the population lives below the poverty line. Over nine million are now
below poverty line, most of them live in rural areas. The total poverty in Nepal according to
Ninth plan and Nepal Living Standard Survey (NPC, 1996) was estimated at 42 %, with
24.9% and ultra poor 17.1%. The poverty in rural area was 44% and in urban region 23%. The
revised estimate per capita GNP in terms of US $ for the year 2002/03 is $ 250 (CBS, 2005)
Rural poverty rate is the percentage of the rural population living below the national rural
poverty line. The Poverty headcount ratio at rural poverty line (% of rural population) in Nepal
was last reported at 27.40 in 2010, according to a World Bank report published in 2011.
Poverty gap at rural poverty line is the mean shortfall from the poverty line (counting the
nonpoor as having zero shortfalls) as a percentage of the national rural poverty line. This
measure reflects the depth of poverty as well as its incidence. The Poverty gap at rural poverty
line (%) in Nepal was last reported at 6 in 2010, according to a World Bank report published
in 2011. (World Bank, 2011)
Livelihood analysis of the dairy farmers can be done by Asset/Vulnerability Approach. It can
be analysed by exploring out three major componenets: inputs (capital, assets), processes
(policies and institutions) and outputs. (Castro, 2002)
While the share of agriculture in total gross domestic product (GDP) has been declining over
the years, it still contributes to one-third of the GDP. But then, over the years the overall
economic growth rate and the agriculture sector growth have been going downhill. Since
agriculture contributes to more than one third of the GDP, this sector not being able to grow as
planned has hampered the picture of broader economic growth of Nepal. Overall economic
growth rate declined from 4.8 percent in the 1990s to 3.2 percent during 2001- 2006.
Agriculture virtually stagnated -- agriculture sector growth rate was 2.7 percent per annum in
the 90s and 2.8 percent during 2001 to 2006. Marred by low labor productivity, agriculture is
not able to contribute to the economy its due (33 percent share of GDP with 66 percent of
country’s labor force employed in the sector (Karkee, 2008).
Agriculture, which employs two third of the country’s labor force and contributes to more than
one third of Gross Domestic Product (GDP), is the main source of food, income and

13
employment for the majority, especially for the rural population. Hence, agricultural sector is
key in issues of economic growth, poverty alleviation, better living standard of the Nepalese
people and overall Human Development. In this context, Commercialization of agriculture has
been proposed as a feasible option for economic growth and poverty alleviation. Since the
formulation of the Fifth Five-Year Plan (1975–80), agriculture has been the highest priority
because economic growth was dependent on both increasing the productivity of existing crops
and diversifying the agricultural base for use as industrial inputs (Savada, 1991). The adoption
of the 20- year Agriculture Perspective Plan (APP) in 1997 reflects the emphasis the
government has given on the agricultural sector and its commercialization.
2.2: Poverty Alleviation Program in Nepal
Poverty alleviation program and projects in developing countries are influenced by the western
concept of poverty. Therefore the empirical consequences of the western socially constructed
concepts in the Third world are important. The major source of addressing the problem of
poverty is based upon a proliferation of non-governmental organization as well as community
based organizations involved in the poverty alleviation programs (UNDP, 2004). The
government is primary source of program for community. More importantly the government
designs and enforces its set of national policies for poverty alleviation. Various bilateral and
multilateral donors have provided resources for general development of the country and
poverty alleviation. The effectiveness of donor assistance for poverty alleviation is contingent
on the government policies under which these resources are mobilized. The NGOs have
become implementing agencies for a number of poverty alleviation program supported by
donors. A developing country Nepal has seen a proliferation of non-governmental
organizations in the past two decades. Although the majority of non-governmental
organizations are concentrated in the central development region, nearly half of them are
working in community development. (Kharel, 2005)
A lot of proposals and strategies have been presented to alleviate poverty but a complete
package is still missing. The ninth and tenth development plans have made a singular goal of
poverty alleviation as the mission. Poverty reduction is the highest priority for Nepal. The sole
objective of Tenth National Development plan has been poverty reduction. The plan also

14
known as Poverty Reduction Strategy Paper (PRSP) has four major pillars, broad based
sustainable economic development, social development, targeted programs and good
governance. It is view of the need for special efforts in reaching the poor and disadvantaged
section of the Nepali population in line of targeted programme (social inclusion) of PRSP,
Poverty Alleviation Fund (PAF) ordinance 2003 was issued which states, “With the active
participation of the poor and marginalized group of society the fund shall run various poverty
alleviation programs and shall provide necessary assistance and fund to organizations
involoved in similar works” (PAF, 2005).
Poverty is a major problem all around the globe and likely to be an epidemic with very few
cures. There are several dimensions, such as education enrollment and advancement, infant
and child mortality reduction and overall longevity attached with income poverty. Cross-
cultural, socio-political conflicts and natural devastations have had a depression impact on
them. Indeed most countries have increased their income inequality with rapid economic
development (ESCAP, 2002). The project like Millennium Development Goals (MDG) was
introduced for the reduction of poverty. The MDGs set targets for making progress in varied
dimensions which ranges from having extreme poverty to putting all children into primary
school and stemming the spread of infectious diseases all by 2015 (HDR, 2005). A significant
progress has made on these issues during last decades but developing countries have slower
progress on it and progress in others several issues has lagged. Economists have attempted to
perceive the linkage between the population and micro-economic growth through the real data
sets with improved techniques and they concluded that population has a variety of effects on
development at both the household and national levels (Birdsall, 2001).
Despite some progress in poverty reduction in recent years, Nepal remains one of the poorest
countries in the world, with a Human Development Index of 0.463, placing it 157th out of 187
countries listed in the United Nations Development Programme's Human Development Report
2013. Over 30 per cent of Nepalese live on less than US$14 per person, per month, according
to the national living standards survey conducted in 2010-2011. While the overall poverty rate
for Nepal is 25 per cent, this figure increases to 45 per cent in the Mid-Western region and 46
per cent in the Far-Western region. In these remote hill and mountain zones, the terrain is

15
rugged, rainfall is low and the poor-quality soil is difficult to farm. Agricultural holdings per
household are the smallest in the country. (IFAD, 2012)
About 80 per cent of Nepal's people live in rural areas and depend on subsistence farming for
their livelihoods. Household food insecurity and poor nutrition are major concerns in these
areas, where about half of children under five years of age are undernourished. Most rural
households have little or no access to primary health care, education, safe drinking water,
sanitation or other basic services. Various factors contribute to chronic poverty in Nepal's
steep and mountainous areas. The rugged terrain makes it difficult to promote economic
activity and deliver services. These regions are also physically isolated, with poor
communications and infrastructure. They are ecologically fragile as well. Increasing
population pressure has led to the unsustainable use of natural resources, including
overgrazing and deforestation. Erosion in the uplands causes flooding in the lowlands, which
can devastate crop yields.
Lack of economic opportunity and conflict has prompted many of the most productive
members of rural households to migrate from Nepal in recent years. In fact, Nepal is one of
the world's highest recipients of remittances, which totaled some US$5.1 billion from
Nepalese living abroad in 2012. Yet almost 80 per cent of remittance income is used for daily
consumption, and 7 per cent is used for loan repayment. Less than 3 per cent of all remittances
are used for capital formation. (IFAD, 2012)
2.3: Policy Review:
Nepal Government, Ministry of Agriculture and Cooperatives have developed Dairy
Development Policy, 2064 in order to promote the dairy development and livestock
development of Nepal. There are four major objectives of the policy which are as follows:
i. To increase the milk production and productivity in rural areas
ii. To commercialize the milk and milk products by improved milk collection units,
transportation and establishment of milk processing industries.
iii. To promote dairy product diversification on basis of national and international market
demand and establish dairy product as a good exportable product.

16
iv. To ensure the quality assurance of milk and milk products and their easy access to
consumers
Various programs and projects has been running in order to promote the livestock and dairy
development of Nepal. In order to achieve the above objectives various sub headings of the
policies has been made. To achieve the first objective “To increase the milk production and
productivity in rural areas”, followings policies have been adopted:
a. Availability of genetically improved cattle and Community Based Breeding
Management Program through local cooperatives
b. Extension of veterinary health services
c. Development of pasture area and availability of green fodder/forage all year around
d. Cattle insurance through local cooperatives and farmers group
e. Banks would be encouraged to provide soft loan to farmers for purchasing dairy cattle.
f. Prioritization of district on basis of milk production
Similarly to achieve second objective, “To commercialize the milk and milk products by
improved milk collection units, transportation and establishment of milk processing
industries”, following policies are adopted:
a. Subsidy on electricity bills to cooperatives running milk collection, storage and
processing units.
b. Subsidy on dairy equipments to milk cooperatives
c. Promotion of skimmed milk industry and baby food industry.
d. Provision of soft loans via banks and technical support to farmers groups and
cooperatives for dairy product diversification.
e. Promotion of yak cheese in mountainous area
f. Establishment of dairy institute / training centre to produce technical manpower for
dairy industry.
g. Research & Development in milk production, processing and milk product
diversification.
h. Promotion of dairy goat and goat cheese industry.

17
Similarly for third objective “To promote dairy product diversification on basis of national and
international market demand and establish dairy product as a good exportable product.” ,
following policies are implemented ( Dairy Development Policy, 2064):
a. Open market policy for milk pricing
b. Regular monitoring of milk and milk product market and information collection on
demand and supply chain.
c. Discount on income tax for certain duration to local dairies of certain area in order to
promote milk production of that local area.
d. Awareness program to farmers and entrepreneurs about the importance of quality milk
production and dairy products.
Similarly to achieve fourth objective, “To ensure the quality assurance of milk and milk
products and their easy access to consumers” following policies have been adopted:
a. Awareness program on food habit promotion and consumption of milk and milk
products
b. Regular monitoring of quality of milk and milk products supplied to market and
quality assurance of their storage.
c. Implementation of effective packaging quality of milk and milk products
d. Implementation of Milk Collection & Processing Code of Practice in milk chilling
centers and dairy processing industries.
e. Establishment of Dairy laboratories to monitor regularly the quality assurance of milk
and milk products.
2.4: Previous Study
The study conducted on the relationships between body weight and years of age, and
nutritional status of buffalo and cattle in Chitwan District explored the fact that the difference
of feeding management between the villages and the availability periods caused the variance
of nutrient supply: crude protein (CP), neutral detergent fiber, and total digestible nutrient; and
consequently affected the physical traits and milk production in cattle. The low level of
nutrient feeding in practice warrants the need of more nutrient supply, particularly CP. On the
other hand analyses of mineral concentrations in feed and blood plasma revealed that the

18
diversity of mineral concentrations in total rations was attributed to the variation of ingredients
of feedstuff among the villages and availability periods. Attention should be paid for calcium,
sodium, copper and zinc status of lactating cattle and buffalo due to low concentrations of
these minerals in feedstuff and/or blood plasma. Moreover, it is necessary to study and review
how management skills affect the traits and nutritional status of lactating cattle and buffalo.
(Kumagai, 2009)
High price of feed was the major constraint of milk production, where as low milk price and
frequent disturbances were the major marketing constraints, yet findings indicated that there is
still a high potential of milk production in Chitwan with suitable production and marketing
adjustments. (Timsina and Regmi. 2009)
Effects of feeding different proportion of maize silage and rice straw on milk production and
its quality was examined in lactating buffaloes and cows for a period of 56 days at IAAS
Livestock Farm, Rampur, Chitwan during February to April 2003. A consecutive experiment
was also conducted to determine the digestibility of maize silage (MS) and rice straw
(RS).This suggests that in order to improve the milk yield as well as its quality in both Murrah
buffaloes and crossbred cows particularly during winter to early spring, maize silage can be
used as a supplement, at least 33% of the total daily roughage dry matter requirements.
(Thapa, 2003)
The study conducted to assess the effectof calcium and phosphorus supplementation on the
milk production, milk fat and solid non fat (SNF) content, serum calcium and phosphorus
level, and cost benefit of the Ca and Psupplementation under farmers’ management conditions
revealed that the milk production in buffaloes is affected by calcium and phosphorus levels in
the diet. The optimum levels of calcium and phosphorus for increased profit was within the
range of 15-20 gm/day. Hence, the buffaloes fed diets deficient in calcium and phosphorus or
reared in poor grazing conditions with no supplemental calcium and phosphorus should be fed
with supplemental calcium and phosphorus in order to increase the milk production, and
decrease the intervals between two lactations.( Bist and Yadav, 2011)

19
Atmospheric warming due to global climate change resulting thermal stress is one of the
greatest climatic challenges faced by dairy cattle. Loss in production, reduced reproductive
performance of the animals, and increased incidence of diseases and mortality are the major
issues of economic importance to dairy farmers in areas of the world where ambient
temperature often exceeds upper critical temperature. Impacts of thermal stress range from
simple physiological and metabolic disturbances in animals to severe heat stroke and death.
(Bajagai, 2011)

20
Chapter III
RESEARCH METHODOLOGY
The study employed various methodologies since here is no single methodology being
sufficient to this type of research work.
3.1Conceptual framework
Farmers/ Producers
Banks
MILK
Fodder/forage
Veterinary
medicines and
vaccines
Concentrate
feeds
Cooperatives
DLSO/DADO
Dairies /
cooperatives
Consumers (door
to door sale)
Expanding
cattle farming
INCOME
Local tea
shops
Fooding and
health
Livelihood improvement
Education
RURAL POVERTY ALLEVIATION
SERVICE
PROVIDER
INPUTS
OUTPUT

21
3.2 Selection of study site
The study was conducted in Tanahun district. This study was carried out from June to August
2013.
Fig 3.1 : Map of Tanahu District
3.3 Research Design
Research design is a blue print of planned action while conducting a research work. It is a
conceptual framework within which a research is carried out. Research work refers to the
procedures for collection of data and its analysis. The research design adopted in this study is
descriptive research design which helps us understand the phenomenon by asking questions.

22
The descriptive research was followed for the qualitative data obtained and derived during the
study. One of the major concerns of this study is to ensure the validity of findings and
conclusions. Validity refers to the correctness or credibility of a description, conclusion,
explanation, interpretation and other accounts. As this study requires both qualitative and
quantitative data, it is essential that both types of data should be valid.
The exploratory method was used for the collection of qualitative and quantitative data from
the study site with the help of structured questionnaire mostly closed ended questions and only
a few open-ended questions. While the descriptive method for data collection was used with
the view of having more clear and concise understanding of dairy cattle farming with prior
focus on selling of fresh milk.
3.4 Nature and Sources of Data
The study will use both primary and secondary data and information. The source of primary
information will be the local farmers raising dairy cattle for their daily earning and livelihood.
Secondary data will be obtained through review of existing literatures that hold relevancy with
the study theme. The major consult sources for the secondary data will be the District
Livestock Service Office Tanahu, Milk producers cooperative union Tanahu, Belbas Milk
Producers Cooperative, NGO Network Tanahu, Tanahu Chamber of Commerce and
Industries.
3.5 Universe / Population of study
In Tanahu district, there are 78309 households. Among them, around 2200 are engaged in
dairy cattle farming, producing fresh milk. The farmers sell their milk via various channels
viz. door to door sale, sale to hotels or through milk cooperatives and diaries. Among them,
1150 farmers are engaged in milk cooperatives and sell their milk through dairies and
cooperatives. There are total 14 milk producer cooperatives and among them 10 are actively
running in the district and are supplying milk continuously having around 795 farmers as the
members. Those 795 households are the universe or population of my study.

23
Table 3.1 : Milk producers Cooperative of Tanahu District
S.
No.
Name of Cooperative Address Number of members
1 Dumsi Milk Producer Coop Byas-5 202
2 Pokharivanjhyang Milk Producer
Coop
Pokharivanjhyang-2 88
3 Suryodaya M.P.Coop Ghansikuwa-1 58
4 Byas M.P.Coop Byas-8 55
5 Gausewa M.P.Coop Khairentaar-9 75
6 Chandrasurya M.P.Coop Jaamune-1 43
7 Baradi M.P.Coop Aanbu-2 92
8 Aandhimul M.P.Coop Bandipur-1 38
9 Pragati M.P.Coop Purkot-6 84
10 Belbas M.P.Coop Pokharivanjhyang-1 60
TOTAL 795
(Source : Milk Producers Cooperatives Union, Tanahu, 2013)
3.6 Sampling design, sample size and sampling procedures
The farmers were selected by simple random sampling. The total sample size was 100 out of
795 i.e population of the study. While selecting the farmer samples, sampling criteria was
followed which were developed beforehand as a result of the research problem - or the
purpose of the research. In other words, it was looked at what is being studied for research,
and then decided, what essential characteristics or the elements, the dairy farmers would need
in order to be able to look at the problem. The selection criteria was as follows:
a. The farmers of the dairy potential areas where a Milk cooperative is being run
smoothly would be selected as the sample. The information was be obtained from the
District MiIk Producers Cooperative Union.
b. The study area would be selected so as to represent the average geographical scenario
of the Tanahu district under the recommendation of District Livestock Service Office
,Tanahu

24
c. The farmers having at least 3 cattle and raising cattle for at least 1 year were be
selected for the questionnaire survey and the information were obtained from the
respective Cooperatives.
3.7 Data Collection methods and tools
Basically, three techniques were applied to collect the primary data from the field;
Questionnaire survey, focused group discussion and key informant survey. Besides these,
informal discussions were conducted in order to verify the obtained information as well as to
gain more detail insights regarding the research objectives.
3.7.1 Household Survey
A structure set of questionnaires different for each was provided to them. The questions
categorically related to the objectives of this study. Income of the farmers through selling milk
and its area of expense were put on the questions which assessed state of their livelihood.
3.7.2 Focus Group Discussion
After having the data collected from household survey, two sets of group discussions were
conducted that consisted a group of leading farmers and members of milk cooperatives and
related stakeholders (DLSO, NGO Network and CCI, Commercial Banks) on the specified
topics was carried out. Issues for discussion were primarily on following sectors:
• The problems and prospects of dairy cattle farming,
• Challenges of market by other districts
• Veterinary extension services
• Financing on livestock sector by commercial bank
3.8 Data processing methods
After the completion of the collection of data, the data were gathered and the information were
processed manually and analyzed in a descriptive way to fulfill the objectives of the study.
Both qualitative and quantitative tables, figures, charts, pictures, etc. that provide basis to
analyze economic and social status of farmers are prepared.

25
CHAPTER IV
DATA PRESENTATION, ANALYSIS AND INTERPRETATION
4.1 Introduction to study area
4.1.1 Geographical setting:
Tanahu is a developing district of Western Development region. It lies in southern east part of
Gandaki zone. It lies between 83 ° 75 " to 84° 34" east longitude and 27° 3" to 28° 5" north
latitude. It covers a total area of 1546 sq.km. that is 1.05 % of Nepal and consists mainly of
Mahabharat Range and Mid hills. Its altitude ranges from 240 – 2325 m from the sea level.
Its borders include Chitwan and Gorkha in the east, Syangja in the west, Kaski and lamjung in
the north and Palpa, Chitwan and Nawalparasi in the south.
4.1.2 Political and administrative division:
In political division, Tanahu has been divided into 3 constitutional regions, 13 ilakas, 1
municipality and 46 Village Development Committees. Damauli is its headquarter that lies in
Byas municipality.
4.1.3 Population Statistics:
According to CBS census 2011, the population statistics of Tanahu is presented in table no.
4.1
Table 4.1 : Population Statistics of Tanahu
Total Household 78309
Total Population 323288
Male population 143410
Female Population 179878
Average family size 4.13
Sex ratio 79.7
Population Density 209
(Source: CBS, 2012)

26
4.1.4 Socio – Cultural Division:
Mostly compact settlements is seen in the market area i.e around Damauli whereas sparse
settlement in and around the hilly areas. The population distribution of Tanahu according to
caste is presented in table no. 4.2.
Table 4.2 : Population distribution according to caste
Caste Population Percentage
Brahman 39875 12.33
Chhetri 28619 8.85
Newar 20901 6.46
Gurung 39832 12.32
Magar 98586 30.49
Thakuri 8154 2.52
Kaami 21035 6.50
Damai 11829 3.65
Sarki 16545 5.11
Darai 4697 1.45
Others 33215 10.27
Total 323288 100
(Source: CBS, 2012)
4.1.5 Occupational status:
The occupational status of the Tanahu according to CBS census 2011 is 60 % of total
population are getting opportunities whereas 40 % are unemployed. Among the 60 %
population, i.e 193973, 59.1 % are engaged in agriculture, 22.8% are engaged in labour and
daily wages work whereas remaining 18.1 % are engaged in other jobs.

27
Table no. 4.3: Occupational Status
Having
opportunities
Agriculture Labour Others
Nepal 58.2 51.4 32.1 16.5
Tanahu 60 59.1 22.8 18.1
(Source: CBS, 2012)
4.1.6 Land acquisition:
According to CBS census 2011, the land acquisition of the people of Tanahu is presented in
table no. 4.4
Table 4.4 : Land Acquisition
Land acquisition No. of households
Landless 402
< 1 ha 48544
1 – 5 ha 29236
> 5 ha 127
(Source: CBS, 2012)
4.1.7 Development parameters:
Various development parameters of Tanahu on basis of CBS, are presented in table no 4.5
Table 4.5: Development Parameters
HDI 0.524
Life expectancy 68.79
Literacy Percentage 84 %
Below poverty line 42 %
(Source: CBS, 2012)

28
4.1.8 Livestock data:
The livestock population of Tanahu according to CBS, is presented in table 4.6
Table 4.6: Livestock population
Particulars Nepal Tanahu
No. of cows 7199260 92755
No. of lactating cows 954680 12320
No. of Buffaloes 4836984 106067
No. of lactating Buffaloes 1252770 32475
Cow milk production ( MT) 429129 6057
Buffalo milk production ( MT) 1068300 29112
Total milk production (MT) 1497429 35169
(Source: CBS, 2005)
4.2 Dairy Cattle Farming as an Occupation
From the survey done among 100 farmers, it was found that before starting the dairy cattle
farming , many were engaged in agriculture , others as laborers whereas few were working as
teachers, tailors, plumbers etc. that were remarked as others in the data.
Table 4.7 : Occupational Status of farmers before raising cattle
S No. Occupation Number of people
1 Agriculture 43
2 Laborer 37
3 Others 20
Source: Field Survey,2013
Table no: 4.1 shows that 43 farmers has been engaged in agriculture sector before raising dairy
cattle, whereas 37 were working as laborers inside country or in gulf countries. Remaining 20
farmers of the sample explored out the fact that they were working as teachers, plumbers,
tailors, small shopkeepers etc. that were kept under the heading of others in the survey.

29
Fig 4.1 : Source of income before raising cattle
Among them, 43 % were unsatisfied about their previous occupation as that was not enough
for feeding their family whole year.
The survey also revealed the period or years of raising dairy cattle to check its sustainability
whether farmers are continuing it for more years or few years.
Table 4.8 : Years of Raising Cattle
Source: Field Survey, 2013
It was found that among 100 farmers, 37 were raising cattle for one to three past years,
whereas, 41 farmers were engaged for three to five years, 18 farmers for five to ten years.
There were 4 farmers that were raising dairy cattle for more than ten years.
Agriculture
43%
others
20%
labours
37%
Source of income before raising cattle
S no. No. of years No. of farmers
1 1 to 3 37
2 3 to 5 41
3 5 to 10 18
4 > 10 4

30
Fig 4.2 : Years of raising Cattle
Source of motivation
In spite of being an agricultural country, Nepal has never developed in this field as it can be.
But nowadays time has changed. People are interested towards commercial agriculture
farming and livestock raising. There are many pull factors in commercialization of livestock
sector. As the objective of this study was also to explore out the motivational factors of
farmers, it was asked among those 100 farmers about their source of motivation to raise dairy
cattle.
Table 4.9 : Source of Motivation
S No. Source of motivation No. of farmers
1 Information by TV, radio, newspaper etc 51
2 Watching neighbour’s success 38
3 Knowing milk demand of country 1
4 Govt. subsidy in livestock sector 10
37
41
18
4
0
5
10
15
20
25
30
35
40
45
1 to 3 3 to 5 5 to 10 >10
no.offarmers
No. of years of raising cattle
No. of years

31
From the survey, it was found that, among 100 sample farmers,51 farmers responded it that
the information about livestock farming obtained form TV, radio, newspaper were the major
source of motivation. Whereas 38 said the neighbour’s success in dairy cattle farming inspired
them to raise cattle. 1 farmer revealed the bitter truth that there is huge demand of milk in
country that is not fulfilled by supply channel and so he started raising cattle. Whereas 10
farmers said the government subsidy in the livestock sector, and various program, projects
implemented in livestock sector has motivated them for dairy cattle raising.
Fig 4.3 : Source of Motivation
Fig. no 4.3 shows that TV, radio, newspaper have become a good source of information in
rural area and the information obtained from them is easily accepted and adopted by rural
people.
4.3 Present Status of Dairy Cattle farming
Dairy cattle population
Since the study is about rural poverty alleviation, most of the samples were smallholder
farmers. Survey was done to find out the numbers of cattle raised by farmers. The groups were
classified as farmers raising 3-5 cattle, 5-10, 10-15 and more than 15 cattle.
51
38
1
10
0
10
20
30
40
50
60
a b c d
a: information by TV, radio etc
b: watching neighbour success
c : knowing milk demand
d: Govt. subsidy in livestock
sector
Source of motivation for raising dairy cattle
No.ofrespondetns

32
Table 4.10: Cattle Population
S No. No. of raised cattle No. of farmers
1 3-5 cattle 27
2 5 – 10 54
3 10 -15 19
4 >15 0
Among 100 farmers, 27 farmers were raising three to five cattle, 54 were raising five to ten
cattle, 19 farmers were raising ten to fifteen cattle. Whereas no farmers among the sample
were raising more than fifteen cattle.
Fig 4.4: Number of cattle
From Figure no: 4.4, it can be said that the average number of cattle raised by smallholder
farmers is around 7. The smallholder rural farmers couldn’t afford for more than fifteen cattle
as it requires more fodder/forages and more land area.
As this study is about rural poverty alleviation, estimation of milk production should be done.
Not all the raised cattle produce milk. So the farmers were asked about the cattle in lactating
phase.
27
54
19
0
0
10
20
30
40
50
60
3 to 5 5 to 10 10 to 15 >15
No.offarmers
No. of cattles

33
Table 4.11 : Lactating Cattle Population
S No. No. of lactating cattle No. of farmers
1 <5 58
2 5 – 10 40
3 10 - 15 2
It was found out from the survey that among 100 farmers, 58 were raising less than 5 lactating
cattle at the survey time. Whereas 40 farmers have 5-10 lactating cattle and only 2 farmers
were raising 10 – 15 lactating cattle.
Fig 4.5 : Number of lactating cattle
As we have already explored that the average number of cattle raised by ordinary smallholder
farmer is 7 and among that, average number of lactating cattle is 4.
Dairy Cattle feeding
The main basis of dairy cattle farming is the availability of improved green fodder and
forages. So the survey was also carried out to find that whether the farmers were able to feed
their cattle properly or not. Green fodder has 2 benefits viz. increase milk quantity and quality
and reduce the per litre cost of milk prodcuiton.
58
40
2
0
10
20
30
40
50
60
70
<5 5 to 10 10 to 15
No. of lactating cattles
No.offarmers

34
Table 4.12: Source of feeding cattle
S
No.
Source of feeding cattle No. of farmers
1 Fodder/forage in own field 44
2 Grass cultivation in community forest 30
3 Purchase of green fodder/forage 2
4 Concentrate ration 24
The survey study was done to find out the source of feeding for dairy cattle. Among 100
farmers, 44 were producing enough green fodder and forages in their own field to raise dairy
cattle whereas, 30 farmers practice the improved grass cultivation in community forest and
leasehold forest. 2 farmers purchased the green fodder for their cattle. These types of farmers
were based on green fodder for dairy cattle farming. On the contrary, 24 farmers were totally
based on concentrated ration that are nutritionally balanced but has increased the cost of
production thus reducing the overall profit.
Fig 4.7 : Source of feed
green fodder in own
field
44%
Grass cultivation in
commuinty forest
30%
Purchase green
fodder
2%
Concentrate ration
24%
Source of feed

35
Milk Production
It is a well known fact that , not all cattle produce same amount and quality of milk. The
amount of milk produced depends upon various factors like genetic factors, feeding and
management factors, environmental and climatic factors. The survey also carried out to find
the total amount of milk production per day by the smallholder rural family.
Table 4.13: Production of milk per day
S No. Milk production ( ltrs.) / day No. of farmers
1 < 15 21
2 15 – 30 27
3 30 – 45 21
4 > 45 31
It was found that, among 100 farmers, 21 were producing less than fifteen ltrs of milk per day,
27 were producing fifteen to thirty ltrs , 21 were producing thirty to fourty five ltrs per day and
31 were producing more than fourty five ltrs of milk per day. From the calculation it was
found that on an average, a cattle produces 8 ltrs of milk per day.
Fig 4.7 Milk production per day
21
27
21
31
0
5
10
15
20
25
30
35
<15 ltrs 15 to 30 ltrs 30 to 45 ltrs >45 ltrs
Milk production per day
No.offarmers
No. of ltrs/day

36
4.4 Milk Marketing in Tanahu
In Tanahu, generally the producers sell their milk in dairies and cooperatives whereas some of
them sell their milk to local teashops and few sell to consumers directly via door to door sale.
From the study, it was found that, among 100 farmers, 78 sell their milk regularly to dairies
and milk cooperatives, 14 farmers sell their milk to local teashops and 8 farmers sell milk
directly to consumers daily via door to door sale. While selling to teashop and directly to
consumers, there is not issue on quality of milk but the farmers may not get good price or the
continuity of their milk sale in flush season. In case of sale to cooperatives the farmers can sell
their milk regularly in flush season too. They get the actual price of milk based on its quality.
Fig 4.8: Milk Sale Area
There are various methods of milk pricing done in Tanahu according to area of sale. In case of
cooperatives and local dairies they fix the price on basis of quantity and quality of milk viz.
fat% and SNF % of milk as fixed by NDDB. The farmers whose quality of milk is high and
Door to door
8%
dairies
78%
local
teashops
14%
Milk sale area

37
has more fat and SNF % get more price. But when the farmers sell milk to local teashops and
directly to consumers the price is fixed on the basis of quantity of milk i.e per litre.
Table 4.14 Basis of Milk Pricing
S No. Basis of milk pricing No. of farmers
1 Per litre 22
2 Per fat % 10
3 Per fat % and SNF % 68
From the study it was found that, among 100 farmers, 22 farmers get their milk price on per
litre basis whereas 10 farmers get their milk price on basis of their fat percentage found in
milk. And 68 farmers get their milk price on basis of fat % and SNF % of milk.
Fig 4.9 : Basis of milk pricing
As the study is about poverty alleviation of rural farmers, it is wise worthy to know about the
payment intervals of milk to the rural farmers. Depending upon the area of sale and basis of
milk pricing, the payment interval is fixed. If the milk sale is directly to teashops or
consumers, then it can be daily basis or sometimes monthly basis. Whereas in case of dairies
and cooperative the payments can be monthly or twice a month.
22
10
68
0
10
20
30
40
50
60
70
80
per litre Per fat % Per fat and SNF %
Basis of milk pricing
No.ofmilkproducers

38
Table 4.15 : Payment interval of milk
S no. Payment interval No. of farmers
1 Daily 7
2 Twice a month 39
3 Monthly 51
4 Quarterly 3
This study revealed the fact that among 100 farmers, 7 are getting their payments daily; 49 are
getting their payments twice a month; 51 farmers are getting the payments of milk montrhly
and 3 are getting their payments on quarterly basis.
Fig 4.10 : Payment Intervals of Milk
The study was also conducted to explore out the new possibilities of dairy product marketing
in Nepal. It was surveyed to find out the other dairy product that has high demand in the
market. The farmers responded to the question and answered the major other product as ghee,
curd , paneer and ice-cream.
7
39
51
3
0
10
20
30
40
50
60
daily twice a month monthly quarterly
No.ofmilkproducers
Payment interval of milk

39
Table 4.16 : Market Demand of Dairy Product
S no. Dairy products No. of farmers
1 Ghee 48
2 Ice-cream 8
3 Paneer 12
4 Curd 32
It was found that out of 100 farmers, 48 said ghee has high demand, 8 said Ice cream has high
demand, 12 said paneer and 32 farmers said curd has high demand in the market.
Fig 4.11 : Market Demand of Dairy product
It was also analyzed to know whether the farmers know about the market demand and supply
of milk and dairy products in Nepal. Most of the farmers knew the situation and said that the
demand is not fulfilled by Nepalese farmer’s production of milk whereas few farmers said
demand is fulfilled by supply chain. 80 farmers said no whereas 20 farmers said yes for
demand meet by supply.
ghee
48%
ice cream
8%
paneer
12%
curd
32%
Market Demand of Dairy product

40
Fig 4.12 : Market demand fulfilled by supply
(Source: Field Survey, 2013)
4.5 Income and expenses status
Agriculture and livestock raising are the basic source of income for most of Nepalese rural
farmers. In Tanahu too, dairy cattle farming has become a great source of income nowadays.
To explore the income and expense status of rural farmers of Tanahu, some indirect questions
were also asked in the survey. At first per litre price of their milk was estimated as shown in
table n0 4.13
Table 4.17 Price of Milk
S no. Per litre price of milk in NRs No. of farmers
1 30 – 35 2
2 35 – 40 26
3 40 – 45 49
4 >45 23
20
80
0
10
20
30
40
50
60
70
80
90
Yes No
No.offarmers
Market demand fulfilled by Supply

41
During the study the farmers were grouped in 4 classes for per litre price of milk viz. NRs 30-
35, NRs 35-40, NRs 40-45 and >45. It was found that there were 2 farmers getting 30 to 35 Rs
for 1 litre of milk whereas 26 were getting between 35 and 40 ; 49 were getting between 40
and 45 and 23 farmers were getting more than 45 NRs.
Fig 4.13 : Price per litre of milk
The study also revealed the fact that those farmers who sell their milk directly to consumers or
in local teashops gets more price of their milk because in that case, the milk pricing is done on
basis of only quantity (per litre) and not on the quality basis ( per fat% and SNF% )
Not all the rural farmers are literate to keep farm records, neither all of them are commercial.
They are raising dairy cattle, producing milk, selling them and earning. But all of them do not
know what their profit is. They rely directly upon the dairy cooperatives for all these
calculations. In this study, it was also found that 73, out of 100 farmers know their
approximate monthly profit.
Fig 4.14: Farmers keeping farm records
30 to 35
2%
35 to 40
26%
40 to 45
49%
>45
23%
Price per litre of milk
21
79
0
20
40
60
80
100
yes no
No.offarmers

42
The study also found out that, to calculate farmer’s monthly profit, the technicians of dairy
cooperatives are helping. Since the daily records of milk sale are well kept at dairy
cooperatives, it was very useful to farmers to calculate their monthly profit. Sometimes the
cooperatives are also organizing awareness meeting and trainings to farmers on cost
calculation as well as profit computation of their milk sale. But in case of the farmers who are
selling their milk directly to consumers, most of them don’t know the way of calculating their
profit. In this case also, the farmers were divided into 4 groups on the basis of monthly profit
viz. having profit <5000, 5000-10000, 10000 – 20000 and having monthly profit >20000.
Table 4.18: Monthly profit from sale of fresh milk
S No. Monthly Profit in NRs No . Of farmers Percentage
1 <5000 9 12
2 5000 – 10000 26 36
3 10000 – 20000 24 33
4 >20000 14 19
TOTAL 73 100
From the study it was found that 9 farmers were earning less than 5000 profit monthly, 26
were having 5000-10000, 24 were having 10000- 20000 and 14 were earning more than 20000
profit per month.
Fig 4.15: Monthly profit from fresh milk
< 5000
12%
5000 to 10000
36%
10000 to 20000
33%
>20000
19%
Monthly profit in NRs.

43
From the study conducted, it was found out that only 21 out of 100 can compute their per litre
cost of milk production. After cross questioning, they said that, some of them were working in
large dairy farms in gulf countries and so they know how to compute and few of them said,
they were trained by Dairy cooperatives and the DLSO members for cost computation of their
milk.
Fig 4.16: Farmers computing per litre cost of milk production
Among 21 farmers, 3 groups were made on the basis of per litre cost of milk production viz.
NRs 20 – 25, 25-30 and 30 – 35.
Table 4.19 : Per litre cost of milk production
S no Per litre cost of production in NRs No. of farmers Percentage
1 20 – 25 1 5
2 25 – 30 12 57
3 30 – 35 8 38
4 TOTAL 21 100
From table no 4.19, it is shown that there was 1 farmers whose per litre cost of milk
production is in between 20 to 25. Whereas 12 farmers has between 25 to 30 Rs and 8 farmers
said that their per litre cost of milk production is between 30 and 35.
21
79
0
10
20
30
40
50
60
70
80
90
yes no
No.offarmers

44
Fig 4.17: Per litre cost of milk production
It was also surveyed that if there is any source of income from dairy cattle farming, besides
selling fresh milk. It was found that farmers are generally selling ghee and curd, calves, and
compost fertilizers. Among 100 farmers, 42 are selling their dairy cattle by-products
mentioned above.
Fig 4.18: Sale of milk-product
20 to 25
5%
25 to 30
57%
30 to 35
38%
Per litre cost of production in NRs.
42
58
0
10
20
30
40
50
60
70
yes no
No.ofFarmers
Milk product Sale

45
Among 42 farmers, it was asked about the tentative annual income from the by-product sale.
And the farmers were grouped as <5000, 5000-10000 and more than 10000.
Table 4.20: Annual Income from milk products
S No. Annual Income in NRs No. of farmers Percentage
1 <5000 16 38
2 5000-10000 18 43
3 >10000 8 19
4 TOTAL 42 100
It was found that 16 farmers earn an annual income of less than 5000 from by-product sale,
whereas 18 farmers earn between 5000 to 10000 annually and only 8 farmers earn more than
10000 annually from by product sale.
Fig 4.19: Annual Income from milk products
The objective of the study was not just to analyze the income from dairy cattle farming but
also the various expenditure heads where the farmers are using their money from milk and
<5000
38%
5000 - 10000
43%
>10000
19%
Income from milk product

46
other products. It was asked about their major expense head and then it was grouped under
four major headings viz. Food and clothes, education, cattle feed and medicines and family
health and medicines.
Table 4.21: Major expenses headings
S No. Expenditure heads No. of farmers
1 Food and clothes 52
2 Education 32
3 Cattle feeds and medicines 6
4 Family Health and medicines 10
From table no. 4.21, it is found that, out of 100 farmers, 52 spends their income in foods and
clothes whereas 32 farmers spend their income in their children education for their bright
future. Similarly, 6 farmers use their income for cattle feeds and medicines and 10 farmers
spend their income for family health and medicines.
Fig 4.20: Major Expenses Headings
Food and
clothes
52%
Education
32%
Cattle feeds and
health
6%
Family health
10%
Major Expenses heading

47
4.6 Commercialization of dairy farming
Nepal is an agricultural country and more than 80 percent people are directly engaged in
agriculture. In spite of this, agricultural revolution has not taken place in Nepal. It’s because
the agriculture trends in our country is still the classical one that is integrated farming in less
quantity of production that means it is only subsistence type. Use of poor variety seeds in
agriculture has been the curse for the farmers. Maximum land is used with more manpower
and more energy, but the production record is not elevating.
But the time has changed now. Nepalese farmers are heading towards commercialization of
farming, regardless sluggishly. The farmers are interested towards one farming but in large
scale using all type of technologies and equipments. In the field of agriculture and specially
horticulture, various off-season vegetables and fruits have been grown by farmers. In case of
livestock farming too, commercialization concept is emerging. Various commercial pig farms,
poultry farms, goat farms, dairy cattle farms can be seen around the country which is a very
positive sign of hope for livestock development of Nepal. The concept of commercialization
of farming and maximizing the profit has been started in Nepalese land. People are getting
aware of reducing their unwanted farm expenses in order to gain more.
This study also tried to find out the future plans of dairy farmers of Tanahu and their strategies
for commercialization of dairy farming. Regarding the cost of production of milk unless it can
be reduced to minimum value the profit of farmers can’t be maximized. So, to reduce the per
litre cost of milk production, 3 strategies were made and surveyed between farmers. The
strategies were as follows:
Feeding based on green fodder/forages
Maintain health condition of cattle by timely vaccination and deworming so that cost
on medicines and treatment is reduced.
Minimizing the management expenses like labour, water etc.

48
Fig 4.21: Strategy to minimize cost of production
(Source: Field Survey,2013)
From the study it was found that, out of 100 farmers surveyed, 76 has the strategy of feeding
the dairy cattle on green fodder/ forages sos that milk quality and quantity is also improved,
health condition get improved and and per litre cost of milk production get reduced. Whereas
10 of them has strategy to maintain the health condition of cattle by regular deworming and
vaccination so that their animals won’t get attack of diseases and cost of treatment is reduced
and ultimately it will reduce the per litre cost of milk production. 14 out of 100 farmers have
strategy of reducing their unnecessary management costs like excessive labour cost, feeding
cost, electricity and water cost etc.
Besides the strategy to minimize cost of production, survey was also done to know the
farmers’ future plan for commercialization of their dairy farming. Most of the farmers have
similar types of future plans which were as follows:
Increase the number of animals
76
10
14
0
10
20
30
40
50
60
70
80
a b c
No.ofFarmers
Strategy to minimize cost of production
a: Feeding on green fodder/forage
b: Routinely deworming and vaccination
c: Minimize managemental expenses

49
Adopt new technologies in cattle farming
Minimise the per litre cost of milk production
Fig 4.22: Future plans of commercialization of cattle farming
From fig no. 4.22, it is seen that out of 100 farmers, 54 have future plan of increasing the
number of cattle, 30 farmers would adapt new technologies of dairy farming like improved
grass cultivation, improved shed, use of milking machine, good record keeping technologies
etc in order to commercialize their dairy farms. Whereas 16 farmers have said their future plan
is to minimize the per litre cost of milk production and maximize the profit because without
maximizing the profit dream of commercialization can’t be achieved.
4.7 Problems and prospects of dairy cattle farming and dairy industry
Nepal is an agricultural country, in spite of this, the commercialization of agriculture and
livestock sector has not taken place yet. The production patterns are still the subsistence type
and classical method of farming is applied by the farmers. Maximum utilization of land and
increasing production trends have not been followed in our country. This has lead to the
vicious circle poverty and the Nepalese farmers are unable to uplift their livelihood.
54
30
16
0
10
20
30
40
50
60
a b c
No.ofFarmers
Future plans for commercialisation of cattle farming
a: Increase no. of cattles
b: Adopt new technologies
c: Minimize cost of production

50
Sometimes, it is also heard that agriculture has become the curse for farmers because they are
using their maximum time and effort in it but the production level isn’t increasing. If the same
time and effort were applied in gulf countries they would earn more. This has developed the
mentality of forbidding agriculture and emigrating to gulf countries which can be seen clearly
nowadays. Besides the productions, there are other major problems faced by the farmers like
the active role of agents. The farmers are investing their whole life in agriculture sector but the
middlemen are enjoying the profit. The producers as well as consumers are in problem due to
the middle men. Similarly the unorganized market system of Nepal has also created a problem
to the farmers.
In case of livestock sector too, these types of problems are seen. More specifically in dairy
sector, before few years, milk holiday was a big problem. There was only one dairy industry
DDC, with limited capacity and when the capacity has been filled they would not buy the
farmers milk and started milk holiday. In the peak season (July- August) when the milk
production in farmer’s house is high, DDC wouldn’t take their milk and the farmers had to
spill their milk on roads. These type of problems has become past after establishment of many
dairy industries like, Sujal Dairy, Chitwan Milk , Sitaram Gokul milk Pvt, and the milk
marketing channel has gone to opposite direction. That is the milk demand in market is high ,
the large milk processors has been developed but the production of raw milk by the farmers is
not enough and the processor of dairy industries are not run in full phase. Similarly other
problems include poor access of road to villages where the production is high. Since milk is a
sensitive product it should be carried to processors as soon as possible but the road conditions
in July August is so poor that much amount of milk is wasted.
This study tried to find out what were the major problems of farmers and their responses
showed the major problems for dairy livestock farming as:
• Inadequate and inappropriate breeding support services like AI (artificial
insemination).
• Critical shortage of improved dairy animals.
• Ineffective pricing policy i.e lowerpricing of milk relating itto higher cost of milk
production
• Discouraged farmers due to frequent closures and strikes by different political parties

51
• Poor access to animal health extension services by government sector
Fig 4.23: Major Problems of Livestock and Dairy Development
From the survey it was found that, out of 100 farmers, 26 farmers said the major problem for
dairy farming as inadequate AI services, whereas 42 farmers said the ineffective pricing policy
of milk is the major problem for farmers. If they sell the same milk to local teashops or direct
consumers then they will get around 50-55 Rs/ltr but in dairy cooperatives, they will get
around 35 to 40 / ltr. Similarly 24 farmers said that the major problem for livestock
development is the poor access of government technicians all over the district. The
government technicians and veterinary doctors are limited in number and they could not
provide quality animal health services in time. Due to this, famers are frustrated to raise dairy
cattle. 3 of the farmers said the strikes and bandhs are the problems whereas 5 farmers said
there is a critical shortage of improved animals. They said if some farmers want to start a good
dairy cattle farm, then there is no any cattle resource centre to buy quality cows.
Besides all these problems, there are some good prospects too for livestock development.
Nepal is rich in its natural resources, it has huge amount of water and the production of fodder
/ forages is very suitable. The agro climatic features of Nepal is very favorable for dairy cattle
26
5
42
3
24
0
5
10
15
20
25
30
35
40
45
a b c d e
Major Problems
a: Inadequate AI Services
b: Shortage of Improved Animals
c: Ineffective pricing policy of Milk
d: Strikes and Bandhs
e: Poor access to animal health
extension services by govt. sector
No.offarmers

52
farming and dairy industry. There are still hopes to bring a revolutionary change in dairy
development of Nepal. When surveyed among 100 sample farmers of Tanahu, it was found all
have positive hope for dairy revolution of Nepal. In addition to this, their views were also
collected regarding the future prospects of livestock development and dairy industry of Nepal.
The future policies to be adopted by NDDB, Government sector, NGO/INGOs and other
private sectors for dairy development of Nepal were listed in three major headings as follows:
• Effective pricing policy in milk
• Huge government subsidy in agriculture equipments
• Policies to make AI accessible to most farmers
Fig 4.24: Future Policies for livestock and Dairy development
From the study it was found that, out of 100 farmers, 45 farmers said the pricing policies of
milk should be very effective. The NDDB should make the pricing policy favorable to the
farmers in order to encourage towards dairy cattle farming. Similarly 19 farmers said that the
government should be responsible for the farmers and it should provide the various types of
subsidies to farmers. Whereas 36 farmers said that the AI policy of Nepal should be made very
effective and its access should be made to every corners of the country. Without AI services
and good breeding management system, quality cattle can’t be produced and the milk
production can’t be increased.
45
19
36
0
5
10
15
20
25
30
35
40
45
50
a b c
No.offarmers
Future policies for Livestock and dairy development
a: Effective pricing policy of milk
b: Govt. subsidy in agriculture
and livestock sector
c: Effective AI access policy

53
After having the questionnaire survey, group discussions were conducted on dairy
development of Tanahu. The major participants of the discussion were a group of leading
farmers, members of milk cooperatives and related stakeholders (DLSO chief, Executive
Director of NGO Network, president of CCI Tanahu, Branch Managers of ADB and
Muktinath Development Bank) on the specified topics was carried out. Issues for discussion
were primarily on following sectors:
• The problems and prospects of dairy cattle farming,
• Challenges of market by other districts
• Veterinary extension services
• Financing on livestock sector by commercial banks
According to DLSO Chief Baburam Jammarkattel, they are trying their best to make Tanahu a
good source of milk. DLSO is carrying out various training programs for capacity building of
farmers towards commercial dairy farming. Regarding the poor access of veterinary health
services he accepted it and said the limitations of government. He also declared that in coming
days the farmers wouldn’t face such problems because the DLS is planning to produce
VAHWs in every villages and this will be a great hope for farmers.
According to ED of NGO Network Tanahu, Mr. Pratap Gurung, programs and projects related
to dairy sectors have great role in making Tanahu a dairy district. Various projects like MASF,
NMDP, NEAT and PACT are being implemented in Tanahu by various NGOs/INGOs that
will surely bring positive results in coming future. He further added, the NGO sector alone
can’t achieve success and they need joint collaboration from government sectors as well as
local farmers and Chamber of Commerce and Industries as well as from Commercial and
Development Banks.
Similarly, Branch Manager of Agriculture Development Bank, Mr. Chij Kumar Joshi and Mr.
Laxmi Bhakta Khanal of Muktinath Bank also explained about the various schemes and low
interest loans to dairy farmers. Their major problem is the repayment of loans. So they
requested if the DLSO and CCI Tanahu recommended the farmers, it would be very easy for

54
them to provide low interest loan to farmers. They need the help of DLSO for close
monitoring of the farm and the bank’s investment to farmers.
Finally, President of CCI Tanahu, Mr. Bedh Kumar Shrestha revealed the facts of milk
marketing of Tanahu. CCI is supporting the farmers to make their business plans and
obtaining loan from banks. He said that many training programs relating to manufacture of
dairy by products and small diaries industries have been run by CCI Tanahu. He said that their
main market is Pokhara valley and the Prithvi highway between Aabu khaireni to Pokhara
should be developed as Milk Corridor. He further added that there are some threats from
neighboring districts whether they will consume their market. But since Tanahu is
approximate the centre for Pokhara, Narayangarh and Kathmandu; neighbouring districts
cannot create a huge problemand the milk of Tanahu will get market. Finally he requested the
farmers to produce the maximum amount of good quality milk and committed that the CCI
Tanahu would help to sell it in market via various channels.

55
CHAPTER V
CONCLUSION AND RECOMMENDATIONS
5.1 Conclusion:
Nepal is an agricultural country rich in natural resources and biodiversity. It has favorable
agro-climatic conditions and has a great scope for agriculture and livestock development and
finally the economic development of the country. Associated with low level of economic
growth, Nepal is characterized as a country with a large portion of rural population, high
poverty rate and subsistence agriculture. Production system is crop-livestock-forest integrated
especially in hills. The production patterns are still the subsistence type and classical method
of farming is applied by the farmers. In spite of this, livestock sector significantly contributes
to national AGDP by nearly one third and the dairy sub-sector shares more than half of the
livestock sector contribution.
This study analyzes various aspects of commercialization of dairy cattle farming in Nepal
from policy issues to institutional challenges to practical bottlenecks. There are many
hindrances for the livestock and dairy development in Nepal. The major problems for farmers
to start dairy cattle farming is the insufficient supply of pure breed calves and the fodder/feed
deficit in lean season. In addition to this, the marketing and milk pricing policy is not
favorable to the smallholder farmers. Similarly the dairy development policies of the
government has also become somehow as the hindrance for development of dairy sector of
Nepal.
This study explores the fact that dairy cattle farmers of Tanahu are earning income from cattle
raising and selling milk. But still they can earn more if the technical aspects of the farming be
applied there. Farmers have a great desire and devotion to cattle farming and the market
demand of milk and milk products is motivating them towards dairy cattle farming.
Information through television, radio, newspaper etc. are their source of inspiration. But the
ineffective pricing policy and poor access to AI is chaining them towards achieving their
target.

Masters thesis

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