National Dairy Development Board (NDDB) has hinted at the possibility of a milk holiday (when dairies do not purchase milk from farmers) amid a slump in the demand for dairy products in the Kathmandu valley after the April 25 earthquake.

Issuing a notice on Sunday, the NDDB said government- and privately-owned dairies have 1,200 tonnes of powdered milk and 1,400 tonnes of butter.

The dairies had converted liquid milk into power and butter after the sales slumped in the valley in the immediate aftermath of the earthquake. Now, they plan to convert the powdered milk back into liquid milk. They say if not done so, the powdered milk would perish soon.

Against this backdrop, chances are high the dairies would not buy milk from farmers during this flush season that has already begun from mid-August. The NDDB has asked the dairies not to use the existing stocks to produce milk and not to import powered milk and butter in order to help attract farmers towards livestock business and to prevent a possible milk holiday.

However, the dairies blamed the government’s move to hike milk price, besides the earthquake, for the current state of the dairy industry.

Arniko Rajbhandari, general secretary of the Dairy Industries Nepal and director of Nepal Dairy, said most of the dairies have enough butter unsold due to falling sales after the quake. As far as the ghee stock is concerned, the Nepali product has lost competitiveness to Indian imports as a result of high milk prices in the domestic market, he said.

According to the Nepal Diary Association, butter and ghee worth Rs2 billion have remained unsold with the diaries. “Chances of a milk holiday in the next few weeks are high if the existing products remain unsold,” he said. “The dairies are doing their bit to clear stocks

by offering discounts and promotional campaigns. However, if the situation remains same for another two weeks, the dairies would start converting the powdered milk back into liquid milk.”

The dairies have demanded putting in place a mechanism of “seasonal pricing” to solve milk holiday problem. “Milk price should be fixed as the per the demand and supply situation,” said Rajbhandari.

Meanwhile, the dairies have launched various promotional campaigns and discount offers to attract buyers. State-owned Dairy Development Corporation (DDC) has slashed the ghee price by Rs30 to Rs720 per kg. It has also launched a scheme for the retailers, while various other private dairies are running print advertisements.

“We have slashed the prices expecting that consumption would rise in this festive season,” said Ganga Prasad Timilsina, general manager of DDC. He said the DDC has around 500 tonnes of ghee in stock. “We have made available the ghee at Rs720 per kg which is equivalent to the price of Patanjali-brand ghee imported from India.”

The dairies expect the upcoming festive season would help clear their stocks. “The recent hike in customs duty for imported ghee could help increase domestic ghee sales,” Pralad Dahal, general secretary of Nepal Dairy Association, said. The government has hiked the customs duty to 20 percent.