A new dairy processing plant in Nangarhar hopes to challenge Iranian and Pakistani imports on the local market. But can it reach maximum production levels and become a model for other Afghan provinces?
The new multi-poduct dairy processing facility in Nangarhar. (Photos: Atal)
The Afghan Ministry of Agriculture, Irrigation and Livestock opened the region's first dairy processing facility in eastern Nangarhar province this year with an eye to replicating the cooperative model in other provinces and strengthening food security.“Supporting the dairy sector through public-private partnership is an essential element in the country’s mid-term and long-term development", said Acting Minister Salim Khan Kunduzi cutting the ribbon at the facility on February 17.
The Nangarhar processing plant cost 6 million US dollars and was funded by the United Nations Food and Agriculture Organisation (UNFAO). It is part of the Integrated Dairy Development Programme, a nationwide project which has already created dairy unions in Kabul, Herat and Balkh. According to a 2011 report by UNFAO, "Over 4200 families are involved in the Afghan dairy network."
In 2010, the Afghan government began to undertake some steps in the eastern part of the country to develop and enhance livestock in the region. With the financial help of the UNFAO, the Afghan Ministry of Agriculture, Irrigation and Livestock (MAIL) began providing technical assistance to livestock raisers. In the same year the government began to assess the potential of a diary union in the east. MAIL and UNFAO provided training to Afghan farmers on animal health and wellbeing, nutrition, chemically treated seeds and artificial insemination.
More than 1500 dairy farmers involved
Dr Nesar Ahmad, the manager of the Eastern Dairy Processing Plant.
Five years later, the Eastern Dairy Processing Plant is run by the Khatiz Dairy Union and managed by Dr Nesar Ahmad, who says the plant works with 1500 local dairy farmers in six districts in Nangarhar province. "We produce eight or nine types of dairy products from the milk we process here, including: milk, yogurt, thick sour cream, cheese, doogh (a sour yogurt-based beverage), butter, cream and ice-cream," Ahmad told Afghanistan Today.
The milk is collected from farmers in villages across the province where it is inspected by technicians before being cooled to below 40 degrees Celsius at a special facility. "Only after a final health inspection is the milk taken to the processing phase," says Ahmad. The factory employs 21 technical engineers, has its own refrigerated vehicles, a storage warehouse and a series of outlet stores, yet it is finding the local market hard to conquer.
Foreign exports still rule local market
“Milk from the Afghan factory is superior to both Pakistani and Iranian milk, but it is expensive," says Haji Lala Gull, who runs a dairy store in a busy square in Jalalabad. "We sell a carton of Pakistani milk at 30 Pakistani rupees ($0.28), but a carton of Afghan milk is sold at 40 rupees ($0.38), because the Afghan milk is more in weight. But people don’t see the weight, they just buy the one which is cheaper,” Gull told Afghanistan Today.
Imports from Pakistan still dominate the eastern Afghan market. According to a 2014 report by the Pakistan Business Council, Pakistan imported 950,000 US dollars worth of official dairy products to Afghanistan in 2013 alone. This did not include smuggled goods, which experts say could account for more than double the official figure.
According to the provincial head of the agriculture and livestock department in Nangarhar, Dr Arif Amaniyar, MAIL conducted a survey in 2005 which indicated that annually more than two metric tons of dairy products were imported to Afghanistan from Pakistan through the Torkham checkpoint alone. Amaniyar counters that Afghanistan has more 7.5 million daily litres of milk capacity in the country's approx 2.5 million cows, according to an earlier MAIL report from 2003.
The Khatiz Dairy Union says it is doing what it can to contribute to the growth of Afghan business, even sourcing its plastic packaging needs in Herat instead of looking to cheap imports. Finding the capital to compete with foreign imports on the local market however is still a challenge, says Ahmad.
Only 750 litres per day
Despite costing six million US dollars to build, the plant is still only operating at less than 10 per cent of full capacity.
"Our main problem is with marketing," says Ahmad. "We don’t have enough capital to conduct advertising in the media and compete with dairy products imported from Iran and Pakistan.” The fact that the plant is running at less than 10 per cent of its potential capacity only deepens the crisis. Ahmad says the processing plant only currently supplies 750 litres of dairy products per day to the market. Yet according to a UNFAO press statement from February this year "the plant has a production capacity of 10,000 litres of milk and other dairy products per shift."
Ahmad says the plant employs 21 engineers but even their position is at jeopardy because "they cannot live" with a salary of under 200 US dollars per month. A UNFAO representative in Nangarhar acknowledges that there are structural issues but says the processing facility is part of a much broader market strategy. “Ninety-five per cent of people in Afghanistan use dairy products, and everything will likely improve with improvements in processing," says UNFAO's Mohammad Zafar. "Very poor quality dairy products are sold on every street and if a proper system is put into place then we would have improved products, a better market and high quality dairy products," he added.
Many Afghans still prefer unpackaged milk sold in open top containers. “I know this yogurt, the Gojer people supply it to the dairy shopkeepers, it is buffalo milk and it is also cheap," says Atif, a customer seen buying dairy products in Jalalabad recently. As for the packaged milk, Atif isn't convinced. "Who even knows where the packaged milk comes from?” he says.