The state-owned dairy company will finally settle just over one-third of the dues owed to farmers by this week, a month and a half after the prime minister acknowledged the issue.

“We are clearing Rs370 million dues by this week,” the newly-appointed general manager of the Dairy Development Corporation Surya Prasad Paudel, told the Post.

The corporation owes Rs1 billion to farmers.

In February, the corporation had sought bailout funds amounting to Rs300 million to pay the farmers, who have been protesting over the outstanding dues.

Subsequently, in March, the government decided to provide the credit.

“We will receive Rs300 million in our [bank] account by Wednesday,” said Paudel. “We will add around Rs70 million and send the money to dairy cooperatives to make payments to farmers.”

In February, the corporation wrote to the Agriculture Ministry requesting a soft loan. The Agriculture Ministry then requested the Finance Ministry to arrange the bailout fund.

“We are also discussing the plan to clear the remaining dues. The decision is yet to be made. Most probably, we will come up with some solution within the next two weeks,” Paudel said.

Huge amounts of butter and skimmed milk have piled up in the warehouses of the corporation due to a decline in demand, he said.

“As the demand increases, it will eventually strengthen the financial health of the corporation.”

The corporation had earlier said due to the ongoing economic slowdown, consumption of dairy products has dropped sharply, putting them in a difficult situation.

According to the corporation, it has 1,000 tonnes of skimmed milk powder and 550 tonnes of butter in stock. The country currently produces more than 6 million litres of milk daily. Around 25 percent of this is purchased by the corporation and the rest by the private sector.

The corporation said it collects around 115,000 litres of milk daily.

At the rate of Rs70 to Rs80 per litre, the corporation needs to pay between Rs700,000 to Rs800,000 daily.

According to the Central Dairy Cooperative Association, the private and state-owned diaries owe farmers Rs7 billion. The dues have been piling up since August last year.

On March 4, an agreement was signed between the Ministry of Agriculture and Livestock Development, three dairy associations—Central Dairy Cooperative Association, Nepal Dairy Association and Dairy Industry Association—and the state-owned Dairy Development Corporation, to settle the dues by April 3.

As per the agreement, the farmers who have not received payments since August last year until mid-January, were to receive the payments by April 3.

“But the promises were broken. Dues have been accumulating,” said Ganesh Chandra Timilsina, president of National Peasants' Coalition Nepal.

The National Peasants' Coalition Nepal, the association of dairy farmers, had at that time said they were not part of the agreement and had decided to continue the protest.

“We, however, had to postpone the protest because of the changes in the government,” said Timilsina. “Also, the new Agriculture Minister Jwala Kumari Sah has committed to settle the payment issue as soon as possible.”

“We have been invited by the agriculture secretary tomorrow [Tuesday] to discuss the issue. Things may be clearer after the meeting,” said Timilsina. “We will decide whether or not to resume our protest after Tuesday's meeting,” he said.

According to Timilsina, farmers in eastern terai are facing even more hardships as it has been nearly a year since they received any payments.

The farmers of Jhapa and Biratnagar [Morang] have not received their payments for months, he said. “The farmers of Chitwan are also in trouble.”

On February 22, dairy farmers decided to launch their agitation over non-payment of their dues by dairy companies.

Both state-owned and private dairies have been saying that the ongoing economic slowdown has dampened dairy demand, resulting in stopped cash flow and rising liabilities to farmers as products remained unsold for the last five months.

Farmers say that amid high inflation, without receiving payments, they face challenges in managing household expenses and feeding the livestock.

Commercial dairy producers say they are unable to pay the interest on their loans.

In some districts, farmers have dumped the milk in the streets to protest against the government.

According to the Nepal Dairy Association, currently, 3.1 million litres of milk enters the Nepali market and 500,000 litres is surplus.