Kathmandu. The Dairy Development Corporation (DDC) is an example of how an institution that has been making losses for years can make a profit in a short period of time if it works honestly with clear policies, unnecessary expense management.

A few days ago, Prime Minister Balendra Shah presented some statistics related to DDC through social media, which has raised everyone’s interest about how DDC is now making daily profits. We talked to DDC General Manager Dr. Sharan Kumar Pandey about this.

According to Dr Pandey, DDC has been collecting around 61,000 litres of milk and selling 80,000 litres milk from 44 districts on a daily basis. Of this, 19,000 litres of milk is being consumed from the previous stock, he said.

“When I took charge of the management on April 2, the stock of powdered milk and 450 tons butter was in stock which has now come down to 140 tons and butter to 135 tons,” said Pandey. ”

DDC procures milk with four per cent fat content from farmers. Two types of milk are sold as standardized. Milk costing Rs 130 per litre has 5 per cent fat, while milk costing Rs 100 per litre has 3 per cent fat. The average share of milk that costs Rs 130 in the daily sale is 7,000 liters while the share of milk that costs Rs 100 is 73,000 liters on an average.

DDC buys milk from farmers at Rs 66 per litre. The initial cost of milk comes to around Rs 70 after adding the cost of transportation, cooperative management and other expenses. However, since the extra fat in the milk purchased from the farmers is processed separately and used in butter and ghee production, the actual cost of milk is reduced by Rs seven per liter. That is, it reaches DDC up to Rs 64 per liter.

After that, the cost of processing, packaging, cooling, transportation, staff and machine operation is added to the maximum of Rs 15 to Rs 18 per liter for producing milk with 3 percent fat. In this way, the cost of production of milk will be Rs 82 per liter. DDC sells this milk to the dealer at Rs 92 per liter. That is, it makes a profit of Rs 10 per liter. DDC currently sells 73,000 litres of milk per day. In this way, the company has been making a profit of Rs 730,000 per liter.

DDC sells milk with 5 percent fat for Rs 15 more. Out of which one percent fat is added at the rate of Rs 7.5. If Rs 15 is added to Rs 82 per litre, the cost of production will go up to Rs 97. DDC sells this milk to dealers at Rs 120 per liter and consumers buy it at Rs 130. This is a daily profit of Rs 1.61 lakh.

DDC has been selling 80,000 litres of milk daily. This profit is only the initial margin of milk sales. This does not include income from the sale of butter, ghee, curd, ice cream, mustard and other dairy products.

Currently, around 85 per cent of DDC’s total sale is of milk while the remaining 15 per cent is of other dairy products, said Dr Pandey. The corporation, which was heavily dependent on milk due to low sales of other products in the past, has now increased its sales in the stock market, including butter, powder, ghee, among others, according to the corporation. According to the corporation, milk is being collected from 45 collection centers across the country while there are around 18 collection centers under Balaju alone.

Payment of 60 crores to farmers

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The corporation has been mobilizing the income earned from the sale of milk and milk products to pay farmers’ dues as well as reducing the old debt. With the new management of the new management, the farmers are yet to receive payment for eight months (Rs 72 crore) but now it has been reduced to two to three months (Rs 350 million). DDC has already paid Rs 60 crore to farmers during this period. There is no grant from the government. DDC said it is now working towards the target of reducing the payment to a month.

According to DDC, the reduction in unnecessary expenses, reduction in employee facilities, purchase of milk at cheaper prices, efficient management and increase in sales have made it easier for farmers to make payments to the farmers. According to DDC General Manager Dr Pandey, the DDC has also repaid around Rs 30 million in loan by earning income during this period. During this period, eight dedicated sales counters have been opened in the Kathmandu Valley in coordination with the private sector. Work is also being done to recover the dues.

DDC has also stated that the daily sale of milk has also increased in recent period. The corporation has been selling around 60,000 to 62,000 liters of milk daily till mid-July and has increased its average sale to 80,000 liters from the third week of July. The daily sales revenue has increased from Rs 60 lakh to Rs 90 lakh. The additional amount has been spent on payment of 100 percent of the farmers, according to the DDC.