Milk price to go up by Rs 10 per litre

The government is likely to hike milk price by up to Rs 10 per litre targeting the rise in cost of milk production for farmers.
According to acting executive director of the National Dairy Development Board (NDDB) Babukaji Panta, the preparation is under way to raise milk price by up to Rs 10 per litre. Panta is the coordinator of the task force formed by the Ministry of Agriculture and Livestock Development (MoALD) to review milk price.
The ministry – on Wednesday – has formed an eight-member task force led by Panta to revise milk price. The task force includes representatives from Nepal Dairy Association, Dairy Industry Association, Central Dairy Cooperative Association, Dairy Development Corporation, Department of Livestock Services, and technical officer of NDDB.
The farmers had been demanding to hike upto Rs 10 per litre since long. But they are still holding consultations with other stakeholders on this front. “The task force will soon submit its report to the government recommending that the milk price be increased in favour of farmers,” Panta said, adding that farmers will get 69 per cent of the raised price of milk – after the revision – while dairies and milk distributors will get the remaining amount like they are getting now.
The Central Dairy Cooperative Association has also been lobbying that the government should increase milk price by Rs 10 per litre as the price has not been revised since more than two-and-a-half years. “The government is reluctant to raise milk price though inflation has hit every sector,” the association informed.

Dairy development policy amendment on cards

National Dairy Development Board (NDDB) is planning to amend Dairy Development Policy (DDP-2007) to improve the dairy industry in rural areas and to uplift the livelihood of dairy producers. The board is going to be amended the 12-year old policy that has never been implemented.
The NDDB has planned to regulate and develop the dairy industry making the amended policy more flexible. The draft amendment has changed the provision related to establishment of a dairy fund for the welfare of the dairy industry.
“The government enterprises, cooperatives and private dairy firms would have to pay service tax on each litre of milk to the dairy fund,” the initial draft read, adding that the collected amount would be spent on the development of various areas of the dairy industry. The Ministry of Agriculture and Livestock Development (MoALD) has, however, not endorsed the policy forcing the board to amend it. The board has thus now made the policy more flexible by softening the provision and the dairy fund will be set up through the contribution of stakeholders, which means industrialists are no more obliged to pay service tax for the dairy fund.
Likewise, the draft provision has not changed the policy mostly related to preserving and promoting livestock farming, providing grants and subsidies to farmers involved in dairy industry, providing required machinery, conducting awareness programmes and skill-based trainings along with establishing cold stores and warehouses.

Milk, ghee prices hiked

The state-owned Dairy Development Corporation (DDC) and private dairies have increased prices of fresh milk and ghee claiming that they have been incurring losses.  

Effective from tomorrow, milk is dearer by Rs 2 to Rs 50 per liter in the capital, whereas price of ghee by Rs 40 to Rs 550 per liter, according to the DDC. But, private dairies are yet undecided over increasing price of ghee.
The dairy farmers are not going to benefiting despite the hike in the price of milk as the DDC has not yet increased the procurement price of fresh milk. The DDC had last increased the procurement price of milk last January.
Regular load shedding has increased the operation cost, according to the dairies.

DDC has been incurring an annual loss of Rs 95 million. After the price hike, the loss will be now reduced to Rs 15 million, said the corporation that has been producing powdered milk from 80,000 liters of surplus fresh milk daily since August.

Out of the total some 300,000 litres is being procured from farmers and some 135,000 liters is supplied to the capital.

However, the dairy farmers have been demanded the government to provide them subsidy in insurance.

Government fails to run industries

It could be an eye-opener for the government that it has completely failed in operating industries.
During 2007-08, major loss-making ventures of the government were Udayapur Cement Industry and Janakpur Cigarette Factory (JCF) with losses amounting to Rs 266 million and 154.5 million respectively. "The net loss of seven PEs of the industrial sector doubled to Rs 435.9 million from Rs 272.7 million in 2006-07," said a report of the Finance Ministry.
The demand for cement is growing because of the construction boom but Udayapur Cement Industry posted loss. "Total sales of Udayapur Cement Industry has declined due to reduction in its production. Its loss increased due to its inability to minimize the cost of production proportionate to the decline in production," said the report.
The cumulative loss of Nepal Orind Magnesite Private has reached Rs 3.58 billion including this year's loss of Rs 86.1 million. Nepal Drugs Ltd has posted Rs 66.1 million profit -- basically due to sale of fixed assets to the tune of Rs 116.2 million.
Dairy Development Corporation (DDC) incurred net loss of Rs 89.8 million during the period despite a profit of Rs 14.7 million in 2006-07. "This was due to an increase in administrative expenses and provision of gratuity," the report said.
The total outstanding debt of all PEs in the industrial sector amounted to Rs 3.63 billion during 2007-08. However, net fixed assets also increased to Rs 4.67 billion from Rs 1.82 billion. The overall progress of the industrial sector does not seem to be satisfactory, said the government report. There is no improvement in the condition of Nepal Orind Magnesite and its financial burden has been increasing each year.
Of the total number of PEs established in the 60s, currently 36 are operating under full or majority ownership of the government. Of these 36 enterprises, seven are in the industrial sector, six in the trading sector, seven in the service sector, five in the social sector, three in the public utility sector and eight in the financial sector.

JCF neckdeep in trouble
JANAKPURDHAM: Janakpur Cigarette Factory (JCF) is facing a serious financial crisis and the factory is operating by using overdraft for operational costs. The company is currently at a loss of over Rs 530 million, including Rs 500 million overdrafts and Rs 30 million interests. The crunch in operational capital occurred due to high maintenance costs and high wastage due to the old rotary filter cigarette producing machine, AC plant and other equipment. The factory was set up 45 years ago with Russian support. Most of the machinery dates back to inception time. It will cost Rs 440 million to change the machines. Technicians said the factory is in a dilapidated condition and it would require Rs 1 billion immediately to keep the factory operating smoothly. They added that the factory is suffering a monthly loss of over Rs 12.5 million due to old machinery. The factory management has urged the government to arrange funds for the factory by selling its fixedassets like land. The factory owns land worth Rs 2.75 billion. Meanwhile, the factory is facing problems in arranging over Rs 260 million funds to be paid in gratuity funds to over 240 staffers who retired recently. Production in the factory has also been declining due to lack of modern equipment. Last year, the factory produced 1.15 billion sticks of cigarettes against the target of 2.36 billion sticks.