KATHMANDU: A high-ranking official from the state-owned Dairy Development Corporation (DDC) has revealed that powdered milk worth over one and a half billion rupees s about to expire due to unsold stock. Recently, the DDC issued two calls for proposals to sell these dairy products at a discounted rate, fearing they would soon expire. These proposals aimed to sell the dairy products in bulk.
Due to the large quantities of unsold dairy products, both the DDC and private sector dairies have been unable to pay approximately Rs 4 billion in arrears to farmers. Reportedly, the DDC alone owes farmers around Rs 2 billion.
Sources indicate that 983 metric tons of powdered milk and 777 metric tons of fresh milk have reached their expiration dates. Currently, the market value of these milk products is estimated at Rs1.52 billion.
"The shelf life of powdered milk and butter is 18 months from the date of production," said a senior official from the DDC, "But the shelf life of these products in our inventory is now only 5 to 6 months. If we don't sell them soon, they will go to waste." Despite issuing two public notices, reducing the maximum retail price, and setting a 1-month deadline, the DDC has been unable to sell the products.
On June 10, the DDC called for proposals to sell 200 tons of butter in 15 kg blocks and 300 tons of powdered milk in 25 kg bags.
"We reduced the price of powdered milk from Rs 700 per kg to Rs 600 per kg, and raw butter from Rs 1000 per kg to Rs 800 per kg," the official added.
Powdered milk is mainly used by dairy or biscuit industries, but the open border with India allows cheaper imports, diverting traders' attention and leaving the DDC's stock unsold.
Despite the large quantities of leftover powdered milk and butter, the DDC has struggled to sell them quickly. Private dairies, on the other hand, have been more proactive.
Sumit Kedia, owner of Sitaram Gokul Milks, noted that due to his policy of selling older dairy products promptly, his industry’s products have not reached the point of expiry. "A month ago, our industry had dairy products worth Rs 40 million in stock. We sold products worth Rs 10 million in the last month," he said.
Most private dairies, however, have been slow to pay farmers, citing unsold powdered milk and butter as the reason. The DDC's inability to sell products and pay its dues has compounded the issue. The DDC and other dairy industries had signed an agreement with farmers' organizations to clear all dues by July 11, 2023. However, farmers report that payments have not yet been made.
Farmers' organizations argue that since the DDC, which owes the most, hasn't paid its dues, private sector dairies are using this as an excuse not to pay.
The DDC has recently requested a loan of Rs 600 million from the government to cover its dues, as it is unable to do so from its income. Acting Deputy General Manager of DDC, Rajendra Prasad Adhikari, mentioned that although the Ministry of Agriculture and Livestock Development sent a letter to the Ministry of Finance over a month ago seeking loan approval, the proposal has yet to be approved. "This has caused a delay in payments," he said.
As the stockpile of dairy products continues to grow, the DDC is facing a shortage of storage space. According to a deputy general manager, the increasing inventory of products, especially powdered milk and butter, is causing storage problems.
The DDC currently stores milk products in Balaju, Kharipati, Hetauda, Lumbini, Nepalgunj, Dhangadhi, Janakpur, and Biratnagar milk distribution units. However, as all these warehouses are now full, the DDC has had to rent additional storage space from other dairy industries. According to Naveen Kishore Sharma, head of DDC's Hetauda project, there are 5 warehouses for storing raw and powdered milk, with a capacity of up to 450,000 metric tons. However, these warehouses are now full, leaving no space to store more products.
