Chitwan Milk fights for life amid foreign competition

Chitwan Milk fights for life amid foreign competition

Apr 14, 2015-

Chitwan Milk, the largest milk powder plant in Nepal, is teetering on the brink of collapse as it has not been able to compete with imported products.

The factory was established in 2009 as a public-private partnership in Thimur, Bharatpur. It produces skimmed milk powder, baby food and other high value products such as yogurt, butter and ghee.

Chitwan Milk has an installed capacity of 150 tonnes of milk powder and 50 tonnes of dairy products daily. However, it has not been able to operate at full capacity.

The plant used to receive 100,000 litres of milk daily from Dairy Development Corporation (DDC) and 19 private dairies. Since it fell on hard times, it has been buying only 25,000 litres of milk. Likewise, the number of employees has shrunk from 200 to 80. Its monthly turnover has plunged to Rs15 million from Rs110 million previously.

State-owned DDC has an 11 percent stake worth Rs20 million in Chitwan Milk. The rest of the shares belong to Chitwan Co-E, a private company, which has invested Rs1.14 billion in Chitwan Milk.

The plant stopped the production of powder milk last week. “Due to technical reasons, we have ceased production from last week,” said Uday Raj Pandit, chief of the company.

“The government has not shown any interest in promoting dairy products, so the company is struggling to survive.” He added that proper coordination was needed between DDC and the private company to promote the dairy.

Pandit said that the government should stop the import of powder milk in order to promote domestic industry. “Besides, customs duty and electricity charges should be waived completely to save the factory.”

Similarly, Chitwan Milk said that it needed more promoters to make it a commercial entity.

“All the powder milk produced here is not sold in the market,” Pandit said. The company has to collect Rs40 million from its various dealers. Currently, DDC and Sujal Dairy, a private dairy in Pokhara, produce 3 and 5 tonnes of powder milk daily. The district has not had a milk holiday since the plant was established. There used to be frequent milk holidays in Chitwan as a result of swelling output amid low demand.

Meanwhile, local milk farmers have become greatly concerned by the deteriorating condition of Chitwan Milk. The number of milk producers in the district shot up following the establishment of the plant, said Bal Krishna Upreti, vice-chairman of the District Milk Producers Cooperative Association. “If the plant is closed, a large number of farmers will be hit hard.”

He added that the problem should be dealt with jointly by the government and the private sector to bring the plant back to its full capacity.

DDC said that the government was currently studying problems related to the plant’s operation.

Published: 15-04-2015 08:46

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