The country will again
witness a milk holiday from today as dairy firms and skimmed milk powder
industries will stop purchasing milk from farmers.
Powder milk companies
will stop purchasing milk as the government has not reduced Value Added Tax
(VAT) on milk, said vice president of the Central Dairy Cooperative Association
Baburam Adhikari. "Bharatpur-based Chitwan Milk will stop buying about
50,000 litres of milk," he said quoting milk industry officials.
"Farmers have
blamed the government for the milk holiday because the government refused to
reduce VAT on milk," said general manager of Dairy Development Corporation
(DDC) Siyaram Singh. Earlier, in August, the government had agreed to reduce
VAT on skimmed milk to four per cent from the current 13 per cent.
Prime minister Dr
Baburam Bhattarai had given an assurance to reduce VAT in two months. According
to the agreement, the state entity — DDC — had stopped its milk holiday plan at
the time. "DDC sells about 40,000-50,000 litres of milk to Chitwan Milk
every day," he said.
Pokhara-based Sujal
Dairy has already stopped purchasing milk as skimmed milk powder piles up in
its stock. Powder milk firms have been incurring losses due to the VAT rate
that is higher than in India. India has about four per cent VAT on milk and
milk products.
Farmers, dairy industries
and even DDC have been pressurising the government to reduce VAT on milk and
milk products. "If the government cannot take the right decision, then
there is no option other than to start the milk holiday after five years,"
said Adhikari, adding that the milk holiday will hamper the development of
livestock in the country. Therefore, the government must be serious about it,
he added.
At present, the
country has a supply of about 450,000 litres of milk, mainly in Kathmandu
valley and towns. DDC has been selling about 250,000 litres in Kathmandu. The
milk is collected from Kavre, Chitwan, Dhading, Makwanpur and Nuwakot
districts. Private dairy firms have been collecting and distributing about
200,000 litres across the country. 
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