It’s Dairy Development Corporation (DDC) versus private dairies. And, the reason is DDC’s plan to enter the city nine years after it sold its plant to private players.
DDC, the largest player in the domestic dairy business, is planning to start selling processed milk in Pokhara by mid-March in partnership with Panthi Dairy.
Private local dairies are confused why DDC is hell bent on coming back to Pokhara where it shut shop nine years ago. The private players say the government entity’s re-entry in Pokhara is against the spirit of disinvestment, under which DDC sold its plant to Sujal Dairy, a subsidiary of Laxmi Group.
The Dairy Industries Association, Kathmandu, has condemned the DDC’s decision to restart Pokhara operation. In a statement, the association said DDC’s move will affect private dairies’ investment as they cannot compete with DDC which receives the government’s grants. The ill-intended decision is against the liberalisation policy adopted by the government, read the statement.
Around two months ago, the Prime Minister’s Office had instructed DDC to put on hold its plan to re-enter Pokhara. Then, the National Planning Commission (NPC) formed a committee to look into the matter. The panel’s report termed DDC’s attempt to resume its Pokhara business “policy default”.
“Resuming a business handed over to the private sector by a government entity is inappropriate,” said Basudev Sharma, undersecretary at the Finance Ministry and a member of the study panel. “DDC is a business organisation and is free to do business in the area where it sees higher benefit. But being a government entity, it should also comply with the liberalisation policy adopted by the government,” read the report.
DDC has cited insufficient milk supply in the city as the reason for its decision. “As DDC is also a profit-oriented entity, it should not be barred from getting into competition which is the main essence of the market economy,” said DDC General Manager Siya Ram Prasad Singh. “There is no meaning of staging protests,” he said.
However, Pokhara-based private dairies have different take. “We are surprised why DDC is insisting to do business in Pokhara when there is no such scarcity of milk here,” said Punya Prasad Paudel, president of Pokhara Dairy Association.
According to the NPC report, private dairies are supplying 40,000 litres of milk daily in Pokhara. Of the total supply, 12,000 litres is produced in Pokhara, while the rest comes from other districts.
DDC says it collects 250,000 litres of milk daily from over 900 cooperatives from across the country. Out of the collection, around 150,000 litres is sold in the Kathmandu valley. “The excess milk that we are collecting should get the market in order to benefit farmers,” said Singh, adding the corporation’s re-entry in Pokhara could help end the milk holidays held time and again.