KATHMANDU: Dairy industries have cheated farmers for the third time in the payment of arrears for milk sold on credit. On June 30, the government, dairy industry, and farmers' representatives agreed to settle the outstanding amounts up to mid-April by July 11. However, no farmer has received the arrears payment within the agreed date, according to farmers' representatives.

Farmers are yet to receive dues amounting to Rs 4 billion by the government-owned Dairy Development Corporation (DDC) and private dairy industries. Of that amount, DDC alone owes about Rs 2 billion. "Neither the government agency DDC nor the private dairies have paid the farmers," Thaneshwar Sapkota, president of the Central Milk Producers' Cooperative Association, told New Business Age.

Sapkota criticized the government for failing to fulfill its responsibilities. "Even though the government coordinated the agreement with both parties, it did not take any initiative to implement it," he complained. Among private sector dairies, Sujal Dairy, Rajdhani Dairy, Gayatri Dairy, and Tulsa Dairy owe the most to the farmers.

Both DDC and other dairies claim they lack the funds to pay farmers due to unsold stocks of powdered milk and butter. According to the National Dairy Development Board, as of mid-April 2023 to mid-April 2024, 1,400 metric tons of butter and 4,800 metric tons of milk powder worth about Rs 5 billion are in stock, with the balance still increasing. "DDC currently has 1,100 tons of powdered milk and 850 tons of butter worth Rs 1.5 billion, but it has not been possible to pay the farmers within the specified time," said Rajendra Prasad Adhikari, Acting Deputy General Manager of DDC.

Adhikari mentioned that DDC requested a loan of Rs 600 million from the Ministry of Agriculture and Livestock Development to pay the farmers, but the payment was halted due to lack of approval from the Ministry of Finance. "We have no intention to cheat farmers," he stated.

Farmers' representatives argue that private sector dairies use the non-payment from the government-owned company as an excuse to withhold payments. Previous agreements to pay farmers on December 12, 2023, and March 2, 2024, were not implemented, leading to a third agreement on June 30, which also failed. Farmers even protested in Kathmandu recently, demanding payment, but the government clamped down on the protests. The latest memorandum of understanding stipulated that arrears arrears for mid-April to mid-June must be paid by mid-September, and that from now on, the dairy industry should pay for milk purchased from farmers in two installments every month.

Farmers Plan to Protest Again from mid-July

With arrears still unpaid, frustrated farmers have warned of further protests from mid-July to fulfill their demands. Sapkota said that they will wait for a few days due to the new government formation process and will present their demands to the new agriculture minister once the new government is in place.