Dairy Sector Faces Challenges Amidst Payment Delays and Consumption Issues

Kathmandu. The problem of arrears payment to farmers is always seen in Nepal's dairy sector. Protests are also held from time to time regarding this issue.

Even now, farmers are complaining that they have not received payment for milk, but dairy industries are saying that they are facing problems in managing the payment cycle, citing the inability to increase milk consumption in Nepal. In this context and regarding the representation of agricultural associations in the elections of the Federation of Nepalese Chambers of Commerce and Industry, an interview with Pralhad Dahal, Chairman of the Nepal Dairy Association.

This is also considered the season for milk consumption, how is the condition of Nepal's dairy sector at this time?

The condition of the dairy sector in Nepal is not as good as we might think or as it appears from the outside. However, it cannot be called bad either. When all sectors are facing difficulties, it is not possible for the dairy sector alone to be good, but even in such a situation, we are managing to sustain it.

The history of the dairy sector in Nepal is not very long. Started commercially from Nala in Kavre in 2009 BS, this sector has now made strides. Currently, 7.6 million liters of milk are produced daily, half of which comes to the market. Of the milk that comes to the market, 17 percent is labeled and packaged, while 33 percent is sold informally. The private sector has an investment of about 60 billion rupees, and 50,000 people are employed in the industry. 7-8 lakh farmer families are directly connected, and millions have indirect employment. About 8-9 crore rupees go from the city to the village daily, so dairy alone contributes 9 percent to the total gross domestic product of the agricultural sector. This sector has become a means of immediate income in the villages.

Milk consumption in Nepal has not increased much, sometimes the problem of 'milk holiday' is also seen. What initiatives is the Dairy Association taking to increase consumption?

It cannot be said that consumption has not increased, but we are a bit behind in the age of advertising. Advertising has not been as it should be, and the investment that the government or private sector should have made has not happened. But we have also made some new efforts.

For example: three years ago, we started the 'Lassi Campaign' by distributing 100 liters of lassi free of charge daily in front of Dharahara. If we look at the results today, the demand for lassi has increased in weddings, feasts, and all kinds of events. The media has also supported this positively. We are conducting various programs in schools and government offices to increase the consumption of milk and dairy products. Earlier, only cold drinks were available at feasts, but now lassi has become almost mandatory. If the government provides a little support and we all work together, consumption can be increased further, rather than the private sector alone.

The problem of fertilizer and milk payment is always seen in the agricultural sector. Why do complaints of farmers not receiving money on time keep coming? Is there some weakness in this system?

This needs to be understood in a little more depth. After milk is produced from the shed, it reaches the dairy industry through collection centers and chilling centers. The industry processes it and sends it to the market. In the market, it reaches the customer through wholesalers, retailers, and outlets.

Only after the customer pays, the money reaches the industry and the farmers after passing through various levels. This is a long chain. Sometimes, when problems arise in between, the blame falls only on the industrialists. Industrialists continue to buy milk from farmers whether it is sold or not. Excess milk has to be converted into milk powder and stocked. This balance was slightly disturbed after Kovid, but it has now come back on track. It is not that the industrialists are deliberately causing trouble; it is also a compulsion and a circumstance.

The issue of exporting milk and dairy products also comes up. What do you think is the problem there?

I have a slightly different opinion regarding exports. Instead of exporting milk itself, we should focus on products like 'chhurpi'. There is a huge demand for 'chhurpi' in foreign countries. Due to our high costs, we cannot compete in the global market with other general products. We have fewer high-breed cows and buffaloes, a lack of technical knowledge, and animal husbandry is still subsistence-based. Therefore, we should focus on exporting specific products like 'chhurpi' and cheese. The government should help by providing subsidies for 'chhurpi' export, building warehouses at the airport, and finding markets. Increasing domestic consumption and focusing on specific export products is the right path.

It has been some time since the new government came into power. How have you assessed the work done by the government for the agriculture and dairy sectors?

The government is making efforts, but when making policies and regulations, there should be sufficient discussion with experts and business people from the relevant sectors. For example, a rule was introduced – interest will be charged if payment is not made within 25 days. While this sounds good, it is not practical. It takes six months for the money to come back after making 'chhurpi' and bringing it to the market. In such a situation, a 25-day rule will only create problems.

The government should sit with the stakeholders and make practical policies. There is no doubt that farmers should be paid on time, but the industry's cycle should also be understood. Another thing is that we lack real data. The state should maintain data on how many cows and buffaloes are in which ward and how much milk is produced. We also need to utilize the skills of those returning from foreign employment.

There are complaints that milk and dairy products have become expensive, are there any ways to reduce them?

When the cost price is high, it is difficult to reduce the selling price. Commercial animal husbandry is necessary to reduce costs. Earlier, grass and straw, which were available for free in the villages, now have to be bought and fed in the city. Feed is expensive. The subsidy provided by the government also does not reach everywhere; some municipalities provide it, while others do not. If the government provides subsidies on feed, vaccines, or electricity, and removes the VAT on dairy products, the price will automatically decrease. It is also necessary to make the price cheaper to increase domestic consumption.

There is also the context of the Federation of Nepalese Chambers of Commerce and Industry elections. What is the issue of your association and 18 other associations not being given voting rights?

The Nepal Dairy Association has been a member of the Federation since 2055 BS. The bylaws state that membership will not be given to two institutions of the same nature, but later 'Ice Cream Association' was also given membership. We protested against that. This matter reached the court. The court had ordered to decide on the issue of 18 associations and then hold the general assembly, but to ensure that the Federation's elections were not stopped, we, the 18 associations, with great magnanimity, cooperated in completing the elections by giving up our voting rights. The Federation should be an umbrella organization for all, big and small, but some factions and discrimination were seen there. We prioritized the dignity of the organization over our rights.

Is the representation and voice of the agricultural sector weak in the Federation of Nepalese Chambers of Commerce and Industry?

Yes, the voice of the agricultural sector in the Federation is not as strong as it should be. Earlier, the Agro-Enterprise Center used to do good work, but now it has faded. Agriculture is still not seen as a respectable profession in Nepal. In textbooks, farmers are depicted as dirty and wearing tattered clothes, which prevents the new generation from being attracted to it. We need to connect agriculture with tourism. Nepal has a climate found all over the world; anything can be produced here. Instead of imitating foreigners, we should take agriculture and tourism together while preserving our originality. The government should also prioritize the dairy industry and establish industrial villages.

What do you want to say to the state and consumers?

The state should make policy reforms, remove VAT, and bring plans to reduce costs. To the consumers, I want to say, consume Nepali products with confidence. Do not fall into the misconception that milk is mixed with powder; powder is also made from milk. We dairy entrepreneurs are committed to maintaining international quality. Let's think positively and translate our nationalistic spirit into practice. Let's not rely solely on the government; if we all work together, we can make the country prosperous through the agriculture and dairy sectors.