Nepali consumers will have to fork out Rs38 for a packet of milk from Saturday as the farmgate price increase kicks in. A half-litre packet of milk currently costs Rs35.

Bowing to pressure from dairy cooperatives and private dairies, Dairy Development Corporation has agreed to jack up the price of milk by Rs6 per litre to Rs76 per litre.

Out of this increase, farmers will get Rs4.16 more per litre for a total of Rs52.46 per litre. Dairy processing companies will get Rs23.54 per litre, up Rs1.84, the state-owned company said.

The corporation had hiked the milk price by a similar amount on August 17, 2017.

Sanjeev Jha, chief of the market management department of the corporation, said they decided to revise the price after receiving the go-ahead from the Ministry of Agriculture and Livestock Development on Thursday.

“The corporation had proposed to hike the price to provide relief to milk producers who have been complaining of a sharp rise in production costs in the past two years,” said Jha.

Dairy Development Corporation holds a 40 percent market share in the country’s dairy business and acts as a market maker.

The Central Dairy Cooperative Association and private dairies have been pressuring the government to raise the price by Rs6-10 per litre for the past few months. They had even warned the government of launching a protest if the price was not increased.

According to the board, the country produces 2.25 million tonnes of milk daily. Half of the production is consumed at the local level. Of the total production, one-third is sold by farmers directly to their customers while the rest is packaged and labeled for sale through business outlets.

The Kathmandu Valley consumes around 60 percent of all the milk produced in the country. According to the board, demand for milk in the Valley stands at 500,000 litres daily.

The Valley is now seeing a shortage of milk. Babu Kaji Pant, acting executive director of the National Dairy Development Board, said demand outstrips supply by 30-40 percent.

Pant attributed the short supply to a government ban on powdered milk imports, ongoing lean season and rise in demand with the start of the festival season. The lean season in the country’s dairy industry lasts from April to September. “After that, production will go up by around 15 percent,” he said.

Dairy Development Corporation and private dairies have been importing raw milk from India to maintain supply amid the ongoing shortage. Pant said part of the reason for the scarcity was the ban on powdered milk imports.

Currently, the corporation produces powdered milk at its plant in Biratnagar while two private firms—Chitwan Milk in Bharatpur and Sujal Dairy in Pokhara—also produce dried milk. These factories produce 1,700-1,800 tonnes of powdered milk annually.

Pant said the production of dried milk this year was also hit by the fall in raw milk output. The government imposed restrictions on the import of dried milk from last year. “The government move is intended to avoid a milk holiday due to a production glut,” said Pant.

According to him, the government is now mulling to lift the restriction. “The ban will be lifted only if private dairies promise to give priority to local farmers when buying milk,” said Pant.