According to the state government, the policy is aimed at protecting milk producers from price volatility and ensuring that cooperatives continue purchasing milk even when supply exceeds immediate demand. By converting excess volumes into ghee, dairy processors can store value-added products for longer periods and release them into the market later.

The initiative is part of a broader push to strengthen the dairy sector in Himachal Pradesh. The government has already increased the minimum support price for cow milk from Rs 32 to Rs 51 per litre and for buffalo milk from Rs 47 to Rs 61 per litre. Additional transport subsidies and digital milk procurement systems are also being introduced to improve transparency and raise farmer incomes.

To support the new strategy, the state is expanding dairy infrastructure. A recently upgraded milk processing plant in Duttnagar can now handle 70,000 litres per day and produce products including ghee, butter, paneer, curd and flavoured milk. Another large processing facility under development in Dhagwar is expected to process 150,000 litres daily and benefit more than 35,000 dairy farmers across multiple districts.