Nepal's DDC to Introduce Fortnightly Milk Payments from January 2027 to Support Dairy Farmers

Nepal's state-owned Dairy Development Corporation (DDC) plans to shift to a fortnightly payment system for dairy farmers from the first week of January 2027, addressing long-standing concerns over delayed milk payments and the financial pressure faced by milk producers.

The move follows a Supreme Court directive calling on the government to establish a system that ensures dairy farmers receive payments regularly and on time. DDC also plans to strengthen its financial position by increasing milk sales, opening new retail outlets and expanding its distribution channels.

According to The Kathmandu Post, DDC currently collects approximately 95,000–100,000 litres of milk daily from farmers across Nepal and pays them around NPR 65 per litre.

Why Fortnightly Payments Matter for Dairy Farmers

For dairy farmers, timely payment is essential to maintaining daily farm operations. Milk production involves recurring expenditure on animal feed, veterinary care, labour, breeding and farm maintenance.

When payments are delayed, farmers may struggle to cover these costs, repay loans and sustain production.

Moving from monthly to fortnightly payments could help farmers manage working capital more effectively and reduce the financial uncertainty associated with milk procurement.

The proposed change also reflects a broader challenge in the dairy sector: ensuring that milk producers receive payments on time, even when processors face weak demand, rising inventories and cash-flow constraints.

Supreme Court Directive Adds Pressure for Payment Reform

The payment issue has been a significant concern for Nepal's dairy industry since late 2023.

When a petition was filed in March 2024, dairy farmers were reportedly owed approximately NPR 7 billion. Private dairy companies accounted for around NPR 6 billion of the outstanding amount, while DDC owed approximately NPR 900 million.

In August 2026, Nepal's Supreme Court directed the government to establish mechanisms to ensure regular payments to dairy farmers, in line with an agreement involving the Ministry of Agriculture and Livestock Development, dairy entrepreneurs and farmers.

DDC General Manager Sharan Kumar Pandey has said that the corporation has cleared its outstanding dues. The planned fortnightly payment system is intended to help maintain timely payments going forward.

DDC Targets Higher Milk Sales and Wider Market Reach

Regular farmer payments will depend partly on DDC's ability to strengthen its cash flow and generate more revenue.

The corporation has outlined several measures to improve sales and expand its market presence.

• Higher milk sales: DDC aims to increase its daily milk sales in Kathmandu Valley from approximately 60,000–65,000 litres to 100,000 litres.
• Retail expansion: The corporation plans to establish eight to ten additional outlets in Kathmandu Valley, adding to its existing network of 22 outlets.
• Online distribution: DDC intends to make its products available through online shopping platforms operated by distributors.
• Better cost management: The corporation plans to increase revenue and reduce expenses to support regular farmer payments.

These measures are designed to improve product movement, strengthen revenue generation and reduce the risk of cash-flow disruptions.

Unsold Dairy Stocks Remain a Challenge

The payment crisis has also highlighted the connection between consumer demand, dairy inventories and farmers' incomes.

During the slowdown in demand, dairy companies struggled to sell fresh milk and converted surplus supplies into milk powder and butter. However, weaker demand for these products contributed to rising inventories and tied up working capital.

For dairy processors, the lesson is clear: milk procurement, processing capacity, inventory management and market demand must remain closely aligned.

Expanding retail access and developing new sales channels may help DDC improve product movement, but sustained results will depend on consumer demand and the corporation's ability to sell products profitably.

What This Means for Nepal's Dairy Industry

The planned payment reform could provide dairy farmers with greater financial predictability and strengthen confidence in formal milk procurement systems.

For cooperatives, processors and policymakers, it also underscores the importance of transparent payment schedules, effective financial management and reliable market access.

However, the long-term success of the initiative will depend on whether DDC can maintain the proposed 15-day payment cycle while meeting its operating expenses and managing dairy product inventories.

Source: Dairynews7x7 18 Oct, 2026 Read full story here

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