Terms of Reference (ToR) for consultancy service to conduct National Milk Market System Study for Nepal

Terms of Reference (ToR) for consultancy service to conduct National Milk Market System Study for Nepal

1.         Background

The Agriculture Development Strategy (2015-2035) of Nepal has identified the dairy as second most important value chain. The fifteenth five-year plan has targeted annual milk production to 271.1 million mt from 209.2 million mt (MOF 2022). Economic Survey (2023) revealed average per capital milk availability is 88 liters against the recommended minimum 91 liter. According to NDDB (2021), this sub-sector including production, processing and marketing contributes almost 9% in AGDP and 63% of livestock GDP(LGDP). Despite this fact, Nepalese milk market system is often disturbed due to different factors and largely impacting smallholder farmers, newly emerging commercial farms, cooperatives and the dairy industries. Time and again, the demand and supply of raw milk mismatches resulting difficulty in marketing of both raw milk and milk products, but the root cause is not yet identified. On the other hand, different literatures have indicated higher cost of raw milk in Nepal than in neighboring countries mainly due to lower productivity of animals, improper husbandry practices, poor quality of milk, inefficiencies in milk marketing systems.       

Heifer Project International Nepal (HPIN) in collaboration with Heifer Korea, Department of Livestock Services (DLS), National Dairy Development Board (NDDB) and Nepal Agricultural Research Council (NARC) is implementing a signature program “Milky Way-Transforming Dairy Sector of Nepal”. The overall goal of the Milky Way Signature Program is to support 500,000 dairy farmers’ families in their pathway to achieve living income. It has envisioned three interlinked three pathways to achieve the goal. Pathway 1 is focused to establish a Model Dairy Village (MDV) as a “Center of Excellence and Learning” reinforcing the local dairy sector to make it more efficient, more profitable for smallholder dairy producers (particularly for women) and more respectful of the environment. It will also serve as resource center for high genetic worth HF dairy cattle and knowledge and technologies. Pathway 2 focuses on the reinforcement of national and local capacities to guarantee availability of better genetic material for dairy purpose. This will include particularly improvement system for the national dairy herd, the strengthening of technical capacity for the National Livestock Breeding Offices (NLBOs) and the dissemination of improved genetic material. Pathway 3 focuses on addressing the challenges of the national dairy ecosystem to build an enabling business and regulatory environment that would allow Pathway 1 and 2 to reach its impact in a sustainable way. It will scale up the Pathway 1 model to impact Nepal's national dairy sector by expanding improved technical assistance delivery to dairy producers, service providers, and public agency staff across the country.

In this context, HPIN in coordination with NDDB is planning to conduct a comprehensive study on national milk market system which will ease to assess the competitiveness of Nepalese dairy sub-sector explicitly assessing the milk marketing system inefficiencies, opportunities and way forward. This TOR is drafted to identify/select competent expert(s) for this study.  

2.         Objective of the assignment

Comprehensive assessment of national milk market system for recommending resilience approaches targeting to different market actors in the dairy value chain.

3.         Scope of Work 

• Conduct a preliminary work-session with the HPIN team to refine the scope of work, plan field research (survey, FGD, KII), finalize the work calendar, and understand roles and responsibilities and submit comprehensive inception report before field work
• Review existing literature on dairy value chain/market studies at national, provincial and local levels, analyze and make a synopsis report.
• Assess Market Demand and Supply dynamics of milk at national and provincial level with validation by accomplishing the following: 
  • Collect and analyze milk production data using secondary data from government and third-party sources and cross validate the production data, 
  • Analyze trends in consumer ability and preference to buy milk (raw, pasteurized and processed) and other milk products using primary and secondary data 
  • Identify key demand sources by geographical regions, provinces and cities as well as non-household demand sources (cottage industry, hotels, restaurants, and institutional consumers)
  • Forecast 5-10 years demand for  milk and dairy products,
  • Develop five (5) and ten (10) year demand forecast models with sensitivity analysis considering price and quality of milk (including tetra pack) and other dairy products (SMP, butter, cheese, ice cream, paneer, chocolates, baby formulas etc.) 
• Conduct a competitive supply analysis by analyzing the following: 
  • Mapping of major milk producing areas, volume and values disaggregated by geographical area,  and volumes broken down by species of dairy animals when applicable. 
  • Collect and analyze dairy import and export [formal and informal] data using secondary market data from government and third-party sources, 
  • Analyze trends of production, import and export of milk and dairy products  
• Identify and analyze market systems opportunities and challenges (including gaps) by conducting Key Informant Interviews and Focus Group Discussions with key stakeholders including federal and provincial agriculture ministry, Dairy development Board, DFTQC, Dairy industries, Dairy Association, Dairy Experts, milk producers’ associations, importers, institutional buyers, supporting actors and enablers  
• Conduct market mapping of raw milk and major dairy products [separately] by accomplishing the following: 
  • Identify key formal and informal market actors and their level of engagement and interconnection
  • SWOT analysis of existing market system
  • Quantification of value addition at different nodes of the value chain, 
  • Comparative analysis [price, quality and seasonal variation] of raw milk and dairy products in Nepal in contrast to neighboring countries and other key importing countries
  • Analyze seasonal pricing system possibilities of raw milk and dairy products
  • Analyze seasonal variation of milk production and demand in the country
  • Prepare raw milk and dairy products market maps separately.
  • Mapping of existing powder milk plants in the country with their installed capacity, assess their current operational efficiency and recommend need/demand for next 10 years
  • Create value chain maps summarizing flow of goods and services throughout the dairy value chain
• Review of regional and global pricing strategies and practices, and recommend adaptable quality-based milk pricing system in the country.
• Explore export opportunities for various dairy products including dog chew. 
• Recommend cross boarder informal dairy trade regulation.  
• Explore causes for delayed payment to the milk producer farmers and recommend timely payment mechanism
• Identify specific business opportunities along the chain by accomplishing, not limited to, the following: 
  • Identify and conduct feasibility analysis of specific business opportunities within the dairy value chain,  
  • Include detail on the business need, financial and market sustainability, potential private sector partners, opportunities for cooperation with government, etc. 
  • Recommend capture strategies based on return on investment, feasibility, and timing (short-, medium, and long-term strategies), and 
  • Identify specific interventions to catalyze and facilitate capture of business opportunities (by producers, producer associations, private service providers, other private sector actors, and potentially direct investment by HPIN); 

4.         Methodology

The consultant shall work closely with the HPIN to refine the methodology and delivery plan however the following shall be included. 

• Submit a brief technical and financial proposal.
• Upon selection, meeting with HPIN team for better clarity of assignment, review available information, experiences and insights, and methodology of the study,   
• Review of relevant literature including research reports, articles; plans, policies and strategies; statistical information; policy briefs at national, regional and global context. 
• Prepare inception report outlining study design, detailed methodology, analytical framework, outline structure of reports, research tools and instruments, and field visit schedule and deliverable timelines, 
• Work in close collaboration with NDDB to proceed further. 
• Compile and analysis of qualitative and quantitative statistics collected through required number of FGD and KII with representative stakeholders as outlined and agreed in inception report.
• Prepare a draft report and share it with HPIN and NDDB for initial comments and feedback.
• Finalize the report incorporating the comments and inputs from HPIN and NDDB, and present at sharing session organized by HPIN. 
• Prepare final report and submit to HPIN. 

5.         Deliverables 

• Inception report with refined methodology, work plan and outlie of final report 
• Draft and final copies of market system assessment report
• Presentation slides of the report 
• Raw and clean data sheets with coded variables, photographs and supporting documents 

6.         Timeframe – 4 months after signing the agreement. 

7.         Institutional arrangements and reporting 

HPIN shall provide relevant information, project document and resources to the consultant and facilitate coordination between the consultants and concerned stakeholders/institutions as and when necessary. The project shall not provide any direct logistical support to the consultant during the execution of consultancy service. HPIN shall designate a primary contact person who will act as professional and support counterpart personnel to the consultant team for any necessary assistance. The consultant shall work closely with her/him and the concerned team members for quality deliverables. Similarly, HPIN shall liaise with NDDB for smooth collaboration with relevant actors and stakeholders. 

8.         Required professional competency and eligibility of the consultants and firm 

The consulting firm should compose of the following team members with at least 10 years of relevant experience

• Economist having Master’s degree in agriculture economics or livestock economics with minimum 10 years professional experience in this field or Master’s degree in development economics with minimum 15 years relevant experience in related field. 
• Dairy Expert with at least Master’s degree in animal science / dairy science / veterinary science with minimum 10 years’ experience in related field,
• Business Expert with at least Master’s degree in economics, business management or marketing with minimum 7 years’ experience in related field.
• Data Analysis with at least Master’s degree in statistics, data science or relevant field and experience in modeling. 
• The consultants should have sound knowledge and experience on dairy sub-sector including national and international market system dynamics including compliances, regulations and standards. 
• Have accomplished similar market studies in any agricultural commodities in the past.
• Preference shall be given to the consultants with successful experience on similar assignments. 

9.         Evaluation Criteria: Proposals will be evaluated based on: Understanding of the project scope and objectives, proposed methodology and approach, relevant experience, qualifications, cost-effectiveness of the proposal.

Interested consulting firm is requested to submit application to Procurement-NP@heifer.org including below documents mention email subject line “Application for national milk market system study” by 5th January, 2025, 5 : 00 PM. 

• Cover letter
• Technical proposal
• Financial proposal including appropriate cost breakdown 
• Curriculum Vitae of the lead consultant and key team members 
• Examples of similar projects undertaken 
• Firm/company registration certificate
• Copy of VAT/PAN registration certificate
• Tax clearance certificate (FY 080-81) 

Applications received with incomplete documents and after the due date will be disqualified. Only shortlisted applicants will be contacted for further evaluation process. HPIN reserves all the rights to reject any or all applications without providing any reasons.