KATHMANDU, Sept 6: Dairy farmers have called off their protest after dairy industries and the Dairy Development Corporation (DDC) agreed to clear outstanding payments. The agreement was reached on Wednesday following talks among representatives from the Ministry of Agriculture and Livestock Development, the Central Dairy Cooperative Association, the DDC, the Dairy Industry Association, and the Nepal Dairy Association.
According to the six-point agreement, dues up to mid-July will be paid by September 21, dues up to mid-August by October 16, and dues up to mid-September by mid-November. The agreeing parties also committed to making regular payments thereafter. According to Ram Prasad Acharya, General Secretary of the Central Dairy Cooperative Association, farmers are owed about Rs 3.5 billion.
The industries agreed to continue purchasing milk from cooperatives without reducing the current volume. They also pledged to buy milk nationwide at the minimum purchase price fixed by the government. Additionally, industries will provide details of skimmed milk powder (SMP) and butter stocks to the Central Dairy Cooperative Association within 10 days of the agreement, and submit records of annual milk collection and processing.
Dairy dues boil over as farmers stage protest nationwide
The agreement states that the Dairy Industry Association, Nepal Dairy Association, and DDC will be held accountable if any industry fails to pay as per the deal. Farmers had launched street protests after not receiving payments of around Rs 3.5 billion for milk sales.
Both state-owned DDC and private dairies failed to clear payments, forcing farmers to protest. Farmers said they were unable to buy feed for livestock, pay bank interest, or manage household expenses. Acharya said milk payments had been pending for three to six months, with DDC owing Rs 1 billion and private dairies Rs 2.5 billion. Farmers also complained that DDC had not made payments since February, and that large dairies were holding significant amounts in arrears.
Around 600,000 farmers affiliated with cooperatives sell 1.2 million liters of milk daily, while the informal sector accounts for an additional 600,000 liters, totaling about 1.8 million liters. The government-set minimum support price for milk is Rs 65 per liter.
It is considered alarming that state-owned DDC itself failed to clear payments. DDC purchases 200,000 liters of milk daily from about 900 dairy cooperatives and injects Rs 10 million into rural areas every day.
Nepal produces 2.68 million metric tons of milk annually. Farmers rear 1.06 million dairy cows and 1.25 million buffaloes. However, they have long complained about not receiving fair prices based on production costs. A study by the National Dairy Development Board shows that the cost of producing one liter of milk ranges from Rs 45.37 to Rs 67.07.
Of the total cost, feeding grass and straw accounts for 47.5 percent, while feed accounts for 52.2 percent. Farmers say the high expenses on fodder, feed, and veterinary care prevent them from receiving fair returns on their investments.
