But with foreign dairy products flooding the market, the market has been saturated to the extent that local farmers have lost market for their dairy products.Domestic dairy owners blame the import of Patanjali Yogpeeth-manufactured ghee, which is available at a cheaper rate, for losing competitiveness of domestic dairy products.
"Patanjali Yogpeeth has been supplying ghee at a cheaper rate since last six months and now the product now available everywhere," said Prahlad Dahal, general secretary of Nepal Dairy Association (NDA).
Patanjali ghee costs IRs 450 per kg in India and is sold for NRs 720 in Nepal. According to NDA, the product cannot be sold for less than Rs 987 if 15 percent customs and 13 percent VAT are to be included. Dahal said the average cost of Nepali ghee Rs 750 per kg.
Combined stock of ghee manufactured by domestic dairies is said to be around 3 million tons worth Rs 1.5 billion. Dahal also attributed low consumption of dairy products to the exodus of people outside the Valley after the recent earthquakes.
Spokesperson for MoAD Uday Chandra Thakur said, "We have heard that the ghee manufactured by Patanjali Yogpeeth is cheaper than ghee manufactured in the domestic market." He said they will study the matter and take an appropriate decision to protect domestic dairy products.
"Domestic dairy industries are not in a position to bring down prices," said Thakur, adding they can neither ban import of foreign dairy products as Nepal is a member of the World Trade Organization. There was a long milk holiday a decade ago but did not continue for long as the milk demand was soaring high. Per capita milk consumption of the country currently stands at 91 kg per year.
However, it might be difficult for MoAD to handle the issue as Nepal does not have anti-dumping laws and countervailing laws to take action against the exporter of such products.
According to WTO agreements on anti-dumping, subsidies, safeguards and contingencies say that current price of a product in the domestic market should not be lower than the price at which they are exported.
Upon the request of MoAD, the Department of Customs is looking into how the ghee has been made available at a rate cheaper than ghee manufactured in the domestic market.
Director General at the Department of Customs (DoC) Shishir Dhungana said they will study the matter. Spokesperson of DoC Surya Sedhai said, "We charge 15 percent customs duty and 13 percent VAT on a minimum of 50 percent of the maximum retail price of products," informed Dhungana.
Bhairahawa Customs Point is also studying the issue and officials said they can charge additional duty and agriculture service fee on products if the price at which the product is sold is lower than similar products manufactured in the domestic market.
"The government should immediately start bilateral consultation if an imported product has caused any injury or posed a threat of injury to domestic products," said Purushottam Ojha, former commerce secretary. Nepal should start secretary-level consultations through Inter Governmental Committee (IGC) or Inter-Governmental Sub-Committee (IGSC) to settle the problem. The government can impose other duties on such products to protect domestic products if the government failed to address the issue within 60 days.
Shalik Ram Singh, trustee of Patanjali Yogpeeth in Nepal said the ghee manufactured by them is being sold at a competitive price.
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