Value Chain Analysis of Milk in Kathmandu Valley-Nepal

This study investigates the socio-demographic characteristics of dairy farmers and evaluates the economic viability, gender dynamics and marketing efficiency of milk production in the Kathmandu Valley, Nepal. Dairy farming is a critical livelihood source, yet it faces challenges like high production costs, inefficiencies in marketing and gender disparities. Previous studies have emphasized production trends but less attention has been paid to value distribution, a gap this study addresses.

Primary data were collected in 2023 from 150 dairy farming households in Kathmandu Valley through structured surveys and focus group discussions. The study applied cost analysis to estimate fixed and variable costs, gross and net returns and cost per liter of milk. Value chain performance was assessed using marketing cost, marketing margin, marketing efficiency and producer’s share in consumer price. Garrett’s ranking technique was employed to identify production and marketing constraints faced by farmers.

The findings reveal that 60.67% of households are male-headed, with nuclear families (79.33%) averaging 5.44 members. The literacy rate (79.33%) surpasses the national average, with 68% of household income derived from agriculture. The average number of milking animals per household is 2.01, with Lalitpur recording the highest milk yield of 14.45 liters per cow per day. The cost of milk production averages NRs. 74.25 per liter, with Kathmandu having the highest cost (NRs. 76.78). Women predominantly handle production tasks, while men dominate marketing activities. Bhaktapur households reported the highest net revenue, though profitability is constrained by high feed and veterinary costs. Marketing efficiency is highest in direct sales channels (Channel I), where farmers capture a 99.32% share, while intermediary-dependent channels significantly reduce margins. The study concludes that while milk production is profitable, systemic inefficiencies and gender disparities limit sustainability. Policy interventions should focus on reducing input costs, strengthening cooperatives and ensuring fair value distribution across the chain.