Nepal’s dairy sector is grappling with a severe financial crunch as the flush season—characterized by high milk production from August to February—has led to excessive stockpiles and mounting unpaid dues to farmers. The Dairy Development Corporation (DDC) owes farmers approximately Rs900 million since January 2025. Sales have dropped, compounding the crisis, with DDC stockpiling 750 tonnes of butter and 950 tonnes of milk powder.
Despite attempts to initiate butter exports to China, no agreements have been finalized. High production costs, stiff competition from private dairies offering cheaper alternatives, and milk prices now exceeding Rs110 per litre have hurt domestic demand. DDC sells about 85,000–86,000 litres of milk daily, generating around Rs8.5 million in revenue, but it remains heavily dependent on milk sales among its 22 products.
The broader sector shows worrying signs: dairy products worth the equivalent of 500 million litres of milk remain unsold across Nepal. In September 2024, DDC had to secure a Rs600 million loan to clear partial dues, but both public and private dairies continue to face cash flow constraints. Calls for government-backed soft loans have been rejected, leaving the dairy sector vulnerable as summer approaches, when demand may marginally improve.
Industry Insight:
For Indian and global dairy stakeholders, Nepal’s ongoing dairy crisis signals the risks of seasonal overproduction, high operating costs, weak export strategies, and falling domestic consumption—a cautionary scenario that underlines the need for agile demand-supply balancing, diversified product portfolios, and stronger market access strategies.
Source : Dairynews7x7 April 28th 2025 The Kathmandu Post