November 29: Dairy industry have halted the payment of Rs 5 billion to milk producing farmers, reasoning that the powdered milk and butter worth around Rs 9.5 billion are yet to be sold.

Acting Executive Director of the National Dairy Development Board, Balak Chaudhary informed New Business Age that the farmers are yet to receive payments equal to Rs 5 billion from the state-owned Dairy Development Corporation (DDC) along with the private dairies.

The DDC alone has to pay around Rs 2 billion while the dairies under the private sector Dairy Industry Association and Nepal Dairy Association are yet to pay the remaining due amount. Around 30 percent of the total milk in the domestic market is purchased by the DDC and the rest is bought by private dairies. Under normal conditions, about 7 million liters of milk is produced every day in Nepal out of which only 3.1 million liters reach the market daily.

Chaudhary said that the consumption of milk in the market has decreased due to the recession in the economy and therefore the dairy industries stopped the payment to the farmers stating that they have stocks of powdered milk and butter worth Rs 9.41 billion.

According to the data collected by the board, the DDC has powdered milk and butter worth Rs 400 million, Dairy Industry Association Rs 7.60 billion and Nepal Dairy Association Rs 1.41 billion. “It is not good to stop the payments that farmers are liable to receive. We are taking the initiative to release the payment to the farmers as soon as possible,” added Chaudhary.

According to Chaudhary, milk production usually increases from mid-September to February. However, this year, production had increased since May. Lately, the increase in milk production has started ahead of the usual time due to the farmers’ preference in rearing advanced breeds of cattle and the initiative shown by the local and provincial governments in milk production, says Chaudhary.

President of Nepal Dairy Association Prahlad Dahal also admitted that the private dairies are yet to pay about Rs 3 billion to the farmers. He said that they could not make the payment since the powdered milk and butter were not sold.

General Secretary of Central Milk Cooperative Federation Ram Prasad Acharya said that the private dairies have reduced the purchase of milk by about 15 percent due to the decrease in the consumption of milk in the market.

“Dairies sell milk and other dairy products to consumers in cash, but do not pay farmers on time. Farmers are in a critical condition as they haven't received payment for the last three months,” said Acharya adding, “It has become difficult to feed the cattle because the farmers are not getting money even after selling milk.”