Agriculture remains the backbone of Nepal's economy, contributing around 24 percent to the country's GDP and providing employment to over half the population. Within this sector, dairy farming plays a significant role, accounting for 8 percent of the agricultural GDP. However, this crucial sector is facing a severe crisis, as dairy farmers across the country are burdened with unpaid dues and an oversupply of dairy products, leading to a deepening financial struggle.

The Growing Debt: Rs. 6.5 Billion Unpaid to Farmers

For months, dairy farmers have been waiting for their dues to be cleared by both state-owned and private dairies. Since December, these farmers have not received full payment for the milk they supply, causing their debts to soar to an estimated Rs. 6.5 billion. The National Peasants' Coalition Nepal reports that private dairies alone owe farmers Rs. 2 billion. The situation has been exacerbated by a combination of decreased demand for dairy products and an oversupply of butter and powdered milk in the market.

Market Saturation and Its Consequences

The dairy association has indicated that the state-owned Dairy Development Corporation (DDC) covers 30 percent of Nepal's dairy market, with private dairies handling the remaining 70 percent. Currently, private dairies are sitting on approximately 2,000 tonnes of butter, while the DDC itself has 750 tonnes of butter and 850 tonnes of powdered milk in stock. Every day, around 3,000 tonnes of milk, valued at Rs. 90 million, are delivered to the market across the country. Despite these significant figures, the inability of dairies to clear their dues is pushing farmers into financial distress.

The Struggles of Dairy Farmers

The impact of unpaid dues on dairy farmers is severe. Most farmers rely on their income from milk sales to cover essential expenses such as school fees, hospital bills, and daily necessities. The delays in payment have caused significant financial stress, forcing many to consider drastic measures. The situation has become so dire that farmers are planning protests to demand their rightful payments.

Government Promises: Will They Deliver?

The issue of unpaid dues has been raised in Parliament, where lawmakers have promised a Rs. 600 million release to the DDC to partially address the debt. However, farmers remain skeptical, having heard numerous promises from successive governments without any tangible results

Solutions to Nepal's Dairy Crisis

1. Government Regulation of Payments:
The government should enforce strict deadlines for payments to dairy farmers, with penalties for delays. Regular monitoring and digital payment systems can ensure transparency and timely disbursements.

2. Expanding Dairy Markets:
To reduce oversupply, Nepal should explore exporting dairy products to nearby markets like Bangladesh and China. This expansion could help stabilize demand and support fair prices for farmers.

3. Public-Private Collaboration:
The government and private sector should work together to create a stable dairy market, ensuring that farmers receive fair compensation and preventing future crises.

Conclusion: A Call for Sustainable Solutions

The dairy sector is not just a part of Nepal's economy; it is a lifeline for thousands of farmers who depend on it for their livelihood. The current crisis, marked by unpaid dues and market saturation, threatens the very survival of these farmers. While the government has made promises, the situation calls for immediate and sustainable solutions.

As Nepal's dairy farmers prepare to take to the streets, it is clear that the status quo cannot continue.

The question now is: Will the new government rise to the challenge and implement policies that protect the interests of these farmers? Or will the promises once again fall flat, leaving the backbone of Nepal's economy to bear the burden?