Dairy farmers price gouged by cooperativesMiddlemen are taking the lion's share of the profit.
Khimlal Pandey, a farmer from Shankhar Nagar in Tilottama Municipality of Rupandehi districts sells 80-90 litres of raw milk to Shankhar Nagar Dairy Cooperative daily. The cooperative buys milk at a rate of Rs45 to Rs50 per litre from Pandey and moments later the cooperative sells the collected milk at Rs65 per litre.
Three kilometres away, in the town centre of Butwal, the same milk sold by Pandey to the cooperative is sold to the general public for as high as Rs 80 per litre.
This is an example of how dairy farmers are being cheated by cooperatives and private firms despite their claims that they pass on the larger portion of the milk prices to the farmers.
Despite gouging milk farmers, private firms and dairy cooperatives are still not satisfied and have been pressuring the state-owned Dairy Development Corporation to raise the milk price by Rs6-10 a litre.
“I have been cheated in front of my eyes but I am bound to sell the milk to the cooperative,” said Pandey. “As I have to sell large quantities of milk at once, I have no other alternatives than to sell to the cooperative.”
The farmers who trade buffalo milk also share a similar plight; no fair prices for their produce.
Gita Sharma of SainaMaina Municipality-10 sells 20 litres of buffalo milk per day to Saljhandi Milk Producers’ Cooperative. Based on the fat and solid contents, the milk is priced at Rs 55 to Rs 60 per litre. However, the milk is snapped up at the market at Rs 80 per litre.
The cooperatives and private dairies fix the purchase rates based on the presence of fat and solid-not-fat contents such as lactose, vitamins and minerals in the raw milk. And while selling the milk to consumers, every consumer pays the same, no matter the milk contents or degree of presence of nutrients.
Dairies in Rupandehi operate on two different pricing rates based on a list which states a price of Rs 70 per litre for cow or mixed milk and Rs 80 per litre for buffalo milk.
As per the standards, the market value of milk with three percent fat and eight percent of solid-not-fat should be at Rs 70 per litre.
But the majority of the dairies do not sell cow and buffalo milk at different prices but at a flat rate of Rs 80 per litre. Given that, the farmers and consumers have been cheated while the intermediaries profit the most out of the deal.
According to Krishna Bhattarai, chair of Dairy Association of Province 5, the middlemen are operating without fear and increasing by the day for lack of stringent monitoring of milk cooperatives and dairies.
“All the cooperatives and dairies assess the quality of milk and buy it based on fat and solid-not-fat pricing,” said Bhattrai. “Many of them sell the low-fat milk by labelling the product as high-fat content just to fetch higher prices, cheating the consumers as well.”
Bhattarai also claimed that dairy farmers are uncertain about their future as the government has not implemented clear rules on spread margin under which the cooperatives and dairies should buy and sell milk.
All three tiers of government have announced plans to save farmers from being cheated, by producing and marketing milk through cooperatives. However, even some of the renowned cooperatives are not farmer-friendly.
The cooperatives set the price such that the farmers are on the losing end.
According to Narayan Paudel, a dairy farmer in SainaMaina, as the dairy operators have no direct involvement in milk production, the farmers are being duped by even those dairy cooperatives that claim to produce milk.
“Many cooperatives are operated by profit-seeking businessmen and middlemen,” said Paudel. “There is a need to revise the profit margin in milk trading to safeguard the farmers’ interests.”
According to Livestock Section Head, Pradip Sharma Paudel of Province 5 Ministry of Land Management, Agriculture and Cooperatives, the profit margin of milk should not be higher than 10 percent of the price paid to farmers.