Milk holiday from today

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.