The ongoing economic turmoil in Nepal has hit many, including dairy farmers. Last month, citing the neglect of the government-owned Dairy Development Corporation (DDC) and private dairy industries, farmers in different parts of the country spilled milk in a demonstration. According to the farmers, the government and private industries owe them around Rs7 billion, accumulated since August last year.

Earlier this month, the Ministry of Agriculture and Livestock Development, three dairy associations—the Central Dairy Cooperative Association, the Nepal Dairy Association, and the Dairy Industry Association—and the DDC agreed to pay them their respective amounts by April 3. The ministry has decided to give the dairy corporation a loan of Rs300 million to pay dairy farmers. This, however, has failed to give hope to farmers because, according to the president of the National Peasants’ Coalition Nepal, farmers were not invited to the meeting. As a result, they are unwilling to end their protest.

Nepal’s daily milk production capacity is over 6 million litres. The situation is dire this time as the dairy companies that take milk from the farmers suffer, with inflation-hit consumers not purchasing their products, including powder milk and butter. The sale of milk and milk products is also low during the winter season. This has stopped the cash flow of the private diaries, making them refrain from purchasing milk from farmers. Meanwhile, even the state-owned DDC has been unable to sell butter and powdered milk worth Rs1.10 billion. Worse, the corporation has exhausted its butter storage capacity of 550 tonnes, and it has also been unable to buy milk. Owing to market challenges, these companies claim they are unable to keep payments flowing to farmers.

Whenever the prices of products in the country go down, poor farmers throw tomatoes and vegetables or spill milk on the roads. But then the cycle of supply and demand is always fluctuating. Farmers need to be better educated on this dynamic. A pilot study carried out last year by the UN Capital Development Fund shows that many smallholder farmers in Nepal have no understanding of agriculture insurance. The authorities should encourage more farmers to come under insurance, which has a 75 percent government subsidy.

Similarly, another study titled “Willingness to pay for livestock insurance by dairy farmers in Kavrepalanchowk” reveals that the dairy subsector (which falls under the livestock sector) has scant insurance coverage in Nepal. Farmers’ disinterest in insurance is understandable. Regardless of insurance schemes in place, they often face hassles while insuring their cattle. Even when insured, they aren’t paid the amount immediately when it is due, as was evident during the lumpy-skin disease epidemic that killed over 50,000 cattle last year. After all, Nepal is notorious for consistently lagging behind in the implementation of such schemes.

It is also important to add value to milk by producing high-quality chocolates, ice cream, dairy whiteners, and other products and to explore new markets for export. Moreover, the country needs adequate fridging, processing, and distribution infrastructure to store milk and dairy products and to supply them during high-demand periods, like summer and festive seasons. Only through collective efforts of dairy farmers, dairy corporations and the government will this ongoing problem be resolved.