Dairy Sector

Sector highlights

Dairy production is an important a growing food industry in Nepal. According to Census of Manufacturing Establishments (2006/07) the number of units manufacturing Dairy products was 39 with employment of 2070 persons and a value of output of NPR 2.854 Billion with a added value of NPR 0.471 Billion. The production of milk and milk products over last five fiscal year 2010/11 was estimated at almost 1.6 Million tons (Economic survey of Fiscal Year 2010/11).

Presently, the Nepalese Dairy industries are producing standard milk as well as other milk products like yoghurt, ice-cream, cheese and butter. There are three major process steps for milk and milk products, namely chilling of raw milk for intermediate storage, heating of milk (Pasteurization or boiling) and, finally, cooling for storage and distribution. The industry use significant amount of electrical as well as thermal energy for operating the motors and drives as well as for compressors of chilling units (GIZ/NEEP, 2012).

Energy use

Main energy sources of the Dairy industries in Nepal are electricity, either from the grid or from the Diesel generators, and rice husk. Electrical energy is mainly consumed by motors, drives, compressors (both air and refrigeration), pumps and lighting. The major electricity consuming processes are cold storage, homogenization and chilling of water. Thermal energy is required for the operation of boilers that generate steam for the pasteurization of milk and other processes. Fuel used for the boiler operation is mainly rice husk and diesel.

Figure 1: Energy use in Nepalese Dairy industries (GIZ/NEEP, 2012)


  • GIZ/NEEP, 2012: Baseline Study of Selected Sector Industries to assess the Potentials for more efficient use of energy.



Energy intensity

The energy intensity of Nepalese Dairy units is much higher compared to the regional benchmark (see table 1). The energy cost per product value in Dairy industry is estimated to be around 5%. The energy saving potential amounts to more than 6% on electrical side and about 14% on thermal side. Consequently, a total amount of 26 Crore Nepalese Rupees of annual energy cost could be saved by improving the energy efficiency of all Nepalese Dairy units. The main areas for improvement are minimization of steam leakages, insulation of steam pipes as well as cold pipes and cooling rooms, minimization of energy losses by partition of cooling areas using air curtains and replacement of old rewound motors by energy-efficient motors (GIZ/NEEP, 2012).

Table 1: Specific energy consumption (GIZ/NEEP, 2012)

Energy audits that were conducted in several Dairy industries in Nepal have identified many energy saving options  that are highly profitable with payback periods of investment of less than 2 years. 

Table 2: Energy saving option and payback period of investment for Dairy industry

Energy saving tips

Following a short list of potential saving opportunties for dairy industries is given:

Milk Reception & Weighing

  • Ensure that the received milk is at optimum temperature (4 oC to 6 oC)
  • Pre-chilling & Storage
  • Incorporate temperature gauges at each PHE to enable performance monitoring and tracking.
  • Upkeep of heat transfer surfaces of the PHEs
  • Ensure that the raw milk storage tank is properly insulated

Cream Separation

  • Use energy efficient motors
  • Ensure proper temperature of cream separation


  • Select pasteurizer of highest regeneration efficiency
  • Ensure full capacity utilization
  • Adopt automation for temperature control
  • Incorporate temperature gauges at each stage of heat exchange/regeneration.
  • Ensure condensate recovery


  • Maintain proper pressure at the homogenizer
  • Use Energy efficient motor


  • Replace pneumatic pouch filling with mechanical pouch filling
  • Optimize cold insulation in the storage area (cold room)
  • Maintain proper temperature by suitable temperature controllers.


  • GIZ/NEEP, 2012: Baseline study of selected sector Industries.

Energy Manager Training India – Dairy Sector Knowledge base and platform for energy auditors in India established by Bureau of Energy Efficiency India and supported by Indo-German Energy Program (IGEN). The webpage contains a database of industrial processes and respective energy saving measures as well as a directory of energy efficiency professionals and technology suppliers from India.

Dairy Sustainability Website is an The Global Dairy: The Global Dairy Agenda for Action is the industry’s commitment to making a positive contribution to the global action in addressing climate change.  They provide a Collection of GREEN PAPERS to create a sustainable dairy industry.