KATHMANDU: Nepal has achieved self-sufficiency in the production of milk products, with the domestic market now primarily supplied by local production.
The country is now self-sufficient in producing milk, ghee, and butter. According to the agricultural census, although the number of farmers and cattle has decreased, many are now raising advanced breeds of cattle.
As per the agricultural census of 2078 BS, there are approximately 4.55 million cows and 2.92 million buffaloes in Nepal.
Additionally, around 1.7 million families raise cattle, while 1.41 million families are involved in raising buffaloes.
The private dairy industry claims that local dairies can support themselves with domestic products.
Currently, there are only a few industries capable of producing milk powder in Nepal.
However, private sector industrialists assert that they have the capacity to meet the country’s dairy needs.
Nepal produces about 6.5 million liters of milk daily, while the total consumption is between 57 and 60 million liters.
Currently, the industry has over 100 tons of powdered milk and more than 100 tons of butter, but these products have not been exported.
According to the Nepal Dairy Association, the government has not implemented any concrete policies regarding the export of dairy products produced in Nepal.
Furthermore, milk produced in Nepal is among the most expensive in Asia.
Other countries produce milk in significantly larger quantities than Nepal, but local production remains low. Industry leaders indicate that the influx of imported products hampers domestic production growth.
Since the government halted imports on February 15, 2024, farmers and dairy producers have been seeking financial relief.
With the potential reopening of imports, industrialists express concern that farmers and producers may face severe challenges.
They warn that if imports resume, it could lead to a “milk holiday” for both farmers and industrialists.
What private dairy industries say
Chitwan Milk: Chitwan Milk Industry, one of the largest milk processing companies in Nepal, is currently struggling.
Its financial condition is dire, having recently closed due to the COVID-19 pandemic.
The industry now receives about 100,000 liters of milk daily, but not all processed products are sold and distributed.
The remaining milk is often stored as products like powdered butter, which may expire before they are sold.
Rajubabu Shrestha, the Managing Director of Chitwan Milk Industry, stated, “We have not been able to utilize all the milk produced by Nepali farmers. This is the peak season for milk production, and farmers who typically produce 20 kg can now yield up to 60 liters. This surplus makes it challenging for us to process all the incoming milk.”
The industry has been operating at a loss for several years. Although it can process 150,000 liters of milk daily, much of the milk from dairy cooperatives and other sources remains unutilized.
The remaining milk is processed into powder and butter for storage. Yadav expressed concern that industrialists are prioritizing their own business interests over the industry’s welfare.
Currently, the industry has over 100 tons of powdered milk and more than 100 tons of butter, but these products have not been exported.
Shrestha notes that exporting Nepali milk powder is problematic due to its higher quality and price compared to products from other countries.
He believes that increasing investment in the dairy sector and adjusting milk prices according to seasonal production could help mitigate losses.
Global Dairy: The Global Dairy industry in Kapilvastu produces various dairy products, requiring 40,000 liters of milk daily.
President Thaneshwar Neupane stated that the necessary milk is sourced directly from farmers.
“During the peak milk season, we receive more milk than usual. However, we cannot manage the excess effectively, leading to unsold products,” he explained.
Neupane warned that if imports are allowed, both the Nepali dairy industry and local farmers will face dire consequences.
He emphasized that opening the market to lower-quality Indian products would undermine Nepal’s efforts to achieve self-sufficiency in dairy.
Currently, Global Dairy has over a thousand metric tons of stored products. Neupane pointed out that while there are no major companies with sufficient processing capabilities, the dairy business is facing significant challenges.
Suryodaya Milk and Beverages
Suryodaya Milk and Beverages Pvt. Ltd., located in Biratnagar, Koshi, has been producing a variety of dairy products.
Manoj Yadav, the owner, stated that with the cessation of imports, the industry has become much more manageable.
He cautioned that if the government resumes imports while domestic production is on the rise, it could lead to the migration of millions of farmers.
“We are currently producing more milk than needed, and the key challenge is how to manage this surplus. This season is characterized by an abundance of milk, making overflow a common issue,” he explained.
Yadav noted that it takes 11 liters of milk to produce one kilogram of milk powder, and maintaining adequate supplies of powder is crucial for the industry’s sustainability.
“As production increases, the industry will expand, leading to lower costs and alleviating export challenges. We can export quality dairy products at competitive prices, paving the way for success in our dairy sector.”
Currently, Suryodaya Dairy processes 18,000 liters of milk daily, with 60 percent transformed into various dairy products for sale.
The remaining milk is processed into powder and butter for storage. Yadav expressed concern that industrialists are prioritizing their own business interests over the industry’s welfare.
He pointed out that the push to reopen imports stems from the fact that Indian milk is cheaper, which appeals to profit-driven businessmen.
However, he emphasized that prioritizing imports over local production undermines Nepali dairy products, which are now facing reduced sales due to competition from multinational companies.
“Our leaders do not understand the issues at hand. They lack knowledge and awareness of our strengths. Farmers have stopped importing dairy products because there is an oversupply of milk in Nepal. If this continues, our dairy industry and farmers will struggle to thrive,” he said.
While companies like Britannia used to import cheese alongside other ingredients sourced from Nepali industrialists, these collaborations have now ceased.
Yadav believes that even if imports of milk and ghee are restricted, it will not have a significant impact.
He stressed the need for the government to protect Nepali farmers and industrialists to avoid further deterioration of the situation.
Sujal Dairy Industry
Sujal Dairy Industry has also reported a successful business turnaround since the halt on imports.
Previously, Indian dairy products dominated the market, making it difficult for their products to sell and leaving farmers unable to receive payments.
Dashrath Silwal, Corporate Head of Sujal Dairy Industry, noted that the industry is now thriving due to increased internal production.
He urged the government not to resume imports, asserting that local products sufficiently meet the needs of Nepali consumers.
Instead, he advocates for increased investment in production and exploring various avenues for export.
Currently, Sujal Dairy purchases 90,000 liters of milk daily, selling approximately 60,000 liters, while the remaining 30,000 liters is stored in powdered form.
Silwal believes that if imports remain restricted for two to three years, Nepal could achieve self-sufficiency in dairy products and compete with international companies.
With foreign imports being cheaper than local products, the dairy sector is cautiously optimistic about recovery, particularly as it celebrates what is referred to as the “Milk Holiday.”
He pointed out that data from the past decade shows a 100 percent increase in milk production.
“We need to foster an environment that allows us to produce more than we consume, which in turn will help farms grow. The government should provide low-interest loans and ensure that farmer subsidies are effectively utilized,” he stated.
“As production increases, the industry will expand, leading to lower costs and alleviating export challenges. We can export quality dairy products at competitive prices, paving the way for success in our dairy sector.”
Silwal emphasized the necessity of government investment in dairy products produced by farmers, suggesting that with a focus on boosting production, Nepali brands could establish a strong presence in the international market with high-quality dairy offerings.
While he acknowledged that the private dairy sector currently has the potential to export, he noted that the high costs associated with production and processing create barriers.
He reiterated that increased production would facilitate the expansion of the dairy industry.
Sitaram Gokul Milk
For nearly 28 years, Nepali consumers have relied on various products from Sitaram Milk Dairy.
Kedia believes that, despite the higher costs of production in Nepal, increasing exports cannot be achieved solely through private sector initiatives.
In recent years, excessive imports of foreign dairy products have resulted in significant losses for local producers.
However, since the government halted imports last year, conditions have improved for the industry.
With foreign imports being cheaper than local products, the dairy sector is cautiously optimistic about recovery, particularly as it celebrates what is referred to as the “Milk Holiday.”
Industries that had struggled to pay farmers for years are now fulfilling their obligations.
Despite this progress, Sumit Kedia, managing director of Sitaram Gokul Milk, warned that inconsistent government decisions could jeopardize the dairy sector and harm local farmers.
He described the potential resumption of banned dairy imports as a pretext, claiming it undermines Nepali exports.
“Our small production will not impact India. The government’s claims about export obstructions are merely excuses,” he stated. “Millions of farmers and thousands of industrialists are striving to promote Nepali dairy products, yet the government, under pressure from importers of low-quality goods from India, is threatening to undermine their efforts.”
Kedia emphasized that while Nepal aims for self-sufficiency in certain sectors, it remains heavily reliant on imported goods.
He expressed frustration that despite the emergence of various dairy-based products in Nepal, the government appears more intent on stifling these efforts rather than providing support.
“There are dairy products that we currently do not produce in Nepal. How can we create them without government assistance? We are progressing through extensive research, and the government should offer us opportunities,” he argued. “It is unjust to claim there is no production in Nepal without any investment or effort.”
In other countries, significant investments are made in the dairy industry to boost milk production.
Kedia believes that, despite the higher costs of production in Nepal, increasing exports cannot be achieved solely through private sector initiatives.
He called on the Ministry of Agriculture to provide concessional loans and apply equitable regulations across the dairy sector.
Kedia also pointed out that taxes imposed on large industries result in higher prices for consumers, creating an uneven playing field.
He noted that while large dairies face taxation, smaller operations remain exempt, leading to unhealthy competition within the industry.
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