Aaryatara Dairy Industries Pvt Ltd, a privately-registered dairy logistics company, was established by two member dairies from the Dairy Industries Association (DIA) to collect raw milk from distant or virgin markets in Provinces 2 and 5 of Nepal and deliver it to the processors on demand at a competitive cost. The company also planned to manage the existing dairy logistics system, making it more efficient, guaranteeing constant milk supply and reducing the cost by sourcing milk collectively rather than sending separate milk tankers for separate dairies.

Introduce a Shared Logistics Business Model to Improve Procurement Efficiency of Dairy SMEs

This project ran from October 2020 to May 2022. The £297,443 budget (£33,56,662 from CASA) for technical assistance covered building internal business systems (including the software for a fleet management system), preparation for investment readiness and organising a pitching event to fellow DIA members, and conducting a mapping study of milk collection centres. Since the beginning, CASA acknowledged that the partnership with Aaryatara Dairy industries would be complex as it involved a variety of influential stakeholders from the dairy sector. However, as this was an innovative project that could transform the entire dairy supply chain and logistics system, CASA planned to take on this challenging partnership believing that these powerful stakeholders could be convinced to collaborate and establish Aaryatara Dairy and support the growth of the entire dairy industry. 

The partnership initially went smoothly as CASA provided TA support to the company to develop a concrete business plan and an investment pitch, convinced other dairies to invest £10,000 in the company and got the company registered under the name of the 12 new investors. In addition, a scoping study was carried out in Province 2 of Nepal to identify milk pockets in those areas to determine locations to establish new milk collection centres. However, COVID-19 surged in Nepal and led to lockdowns and restrictions for about 18 months, which presented several challenges to the partnership with Aaryatara. The demand for milk and dairy products dropped drastically during the lockdown and restriction period. Milk supply remained constant leading to oversupply in the market. The dairies continued to purchase milk from the farmers to continue to build their trust and maintain their income and processed the milk to Skimmed Milk Powder (SMP) and butter creating a sharp rise in the stock of butter and SMP that led to high processing costs and cold storage costs. As a result, the dairies investing in Aaryatara faced large losses and were hesitant to invest more in the company to develop new milk collection centres and a proper milk logistics system. Gradually, after the economic impact of COVID-19 receded and the market situation had improved, the priority of the investors changed from establishing a systematic milk logistics system to instead reduce wastage of milk and dairy products by establishing a proper cold storage facility in collaboration with the World Bank and the government of Nepal to better store processed dairy products like butter, SMP, and ice cream and increase their shelf life. Therefore, Aaryatara and CASA mutually decided to terminate the partnership two months early. The company was dissolved not long after.

Updated: August 2025