Despite an existing provision requiring payment to dairy farmers within 15 days of milk delivery, Nepal’s dairy industry has failed to clear outstanding dues for over six months—pushing the total arrears to Rs 5 billion.
The Central Dairy Cooperative Association Ltd. reports that private dairies owe farmers approximately Rs 3.5 billion, while the government-run Dairy Development Corporation (DDC) is yet to pay around Rs 1.5 billion.
Association Chair Thaneshwar Sapkota said dairy companies have suspended payments, citing unsold stock and surplus inventory. However, he challenged the justification, arguing that surplus milk during the dry season—from mid-April to mid-October, when production typically drops and consumption rises—was unlikely. “This is the season when demand exceeds supply. The surplus excuse doesn’t add up,” he said.
The association has submitted formal memorandums to district administration offices across the country where its member cooperatives operate, urging intervention.
However, Prahad Dahal, President of the Nepal Dairy Association, offered a different perspective. He claimed that milk production has actually increased by 5–10% compared to the same period last year, exacerbating the industry’s challenges.
According to Dahal, roughly Rs 4 billion worth of butter and milk powder remains in stock across the Nepal Dairy Association, Dairy Industry Association, and DDC, leading to a liquidity crunch and delaying payments to farmers.
Meanwhile, Minister for Agriculture and Livestock Development Ramnath Adhikari expressed regret over the government’s inability to resolve the issue. “I feel deeply troubled by our failure to pay the farmers,” he said.
He added that the government is working to open export markets for dairy products, including efforts to enter China, and expressed hope for a breakthrough soon.
Nepal’s dairy sector supports nearly 600,000 farmers. The Nepal Dairy Industry Association and Nepal Dairy Association collectively source milk from about 400,000 farmers, while the DDC operates through 1,200 dairy cooperatives, which represent another 200,000 farming households.
