Lockdown results in losses worth Rs 2 billion for dairy sectorFarmers are left with unsold milk as shops selling dairy products and grocery stores have closed.
The dairy sector accumulated losses of Rs2 billion during the 20 days of the lockdown which hit every link in the supply chain, entrepreneurs said.
Demand evaporated with the closure of hotels, restaurants, offices, schools and colleges, leading dairy shops to shut down and cooperatives to stop collecting milk from farmers.
According to dairy farmers, the cooperatives are collecting milk on alternate days.
Radha Krishna Sapkota, president of the Nepal Dairy Association, demand for milk has plunged by 70 percent due to the stay-at-home order.
Farmers are left with unsold milk as shops selling dairy products and grocery stores have closed, and they lack the equipment to produce milk products from the excess inventory.
Sapkota says he is collecting only 4,000 litres of milk from farmers daily compared to 15,000 litres before the lockdown.
Sometimes he has had to return the milk to the farmers because the dairy factories don't want it. Sapkota supplies milk to 280 dairy firms, and their requirement has shrunk, he said.
Sashi Poudel, owner of Lumbini Agro Product and Research Centre, said that milk output had also declined due to lack of adequate feed.
Poudel's farm located in Tilotama municipality, Rupandehi has 550 cows. He says his farm now produces only 800-1,000 litres daily, a steep drop from 2,220 litres previously.
The milk is not being able to collect from places that are located far and said
Prahlad Dahal, general secretary of the association, said that they had not been able to collect milk from outlying farms, and some municipalities do not allow the dairy shops to open firms.
According to Dahal, the country's dairy farmers produce 6.2 million litres of milk daily during normal times. He said 3.13 million litres used to be shipped to the market and the farmers would keep the rest for their own use. Now, only 30 percent of the 3.13 million litres is being sold, he said.
The dairy sector has already incurred losses totalling Rs2 billion in the past 20 days. The losses will only grow if the lockdown is extended, he said. It will be a relief for the dairy farmers and the industry if the government gives them soft loans.
Dairy farmers and milk factories are going through tough times, and if the situation continues, the industry could collapse, he said.
According to the association, dairy factories have Rs5 billion worth of unsold stock, for which reason they have not been able to pay the farmers for their milk.
The dairy sector accounts for 9 percent of the agricultural gross domestic product. There are 500,000 farmers engaged in the sector, and it provides jobs to 30,000 people directly, according to the association. The dairy industry pays Rs1 billion in taxes to the government annually.