DDC cuts incentive to milk producers

Published On: July 24, 2018 04:05 AM NPT By: Republica  | @RepublicaNepal

KATHMANDU, July 24: The government has set a target of doubling agricultural output within five years and making the country self-reliant in agro-products by 2019. But the government itself and its implementing agencies seem to be acting counter to these goals. Milk producers are the latest to be punished for producing more.

The Diary Development Corporation (DDC) has dropped the incentive for increased milk supply in Chitwan, Ilam, Rupandehi and Kavre districts, citing excesives supply.

A halt to the payment of Rs 3 extra per liter to dairy farmers in those districts has prompted protests. This is probably the second instance of agro-production being discouraged in this fashion. Earlier, the authorities failed to ensure payment to cane growers by sugar mills.

The country is still importing agro-products including sugar, milk and milk products. Goods import by the country was Rs 990.11 billion in Fiscal Year 2016/17 and this was one of the major factors behind the widening trade deficit.

The country imported agro products worth Rs 196 billion including Rs 35 billion in food products. Milk powder import accounted for Rs 710 million in FY 2016/17, according to government statistics.

DDC has, however, not slashed its selling price, indicating that it is now making extra profit. With the decision to slash the Rs 3 incentive, private diaries may lower the price paid to dairy farmers across the country , who will thus end up at the receiving end.

“Earlier, we had added Rs 3 per liter of milk for farmers as an incentive to increase milk collection,” said Sanjiv Jha, an official at DDC. The idea was also to attract farmers toward DDC over the private daries, he added. “But now the milk supply has increased more than our collection capacity. So we have decided to cut out the incentive.”

Generally, milk production rises during September, November and December. The milk collected during these months is used for making milk powder to meet the milk demand during dry season. However, this year the collection in the dry season has crossed the storage capacity at DDC , Jha told Republica. The decision of cut the incentive is temporary , he added.

According to DDC officials, milk collection from farmers has risen by 15 percent to 3.7 million liters by mid-May, by 26.51 percent to 5.1 million liters by mid-June and by 20 percent to 4.5 million liters by mid-July, compared with the same periods of the previous year. “This is the dry season and the collection is not supposed to rise like this. But this year it has increased drastically even in dry season,” he added.

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