A trade that has stalled
For Munnabhai Jaghirdar, October-January is when business is brisk, with farmers flush with cash from sale of their kharif crop and spending this money also on purchase of cows — which is what this trader at the Loni cattle market in Ahmednagar district’s Rahata taluka deals in. For farmers, this is an opportune time to buy because the winter and spring months coincide with milk production from animals, too, peaking. As more milk flows from their udders, the faster is the payback on investment; this is simple economics.
But this time, things have turned out quite the opposite, with demonetisation. “During this period, I normally do sales of around 20 cows every week. These days, though, I would be lucky to do even two,” remarks Jaghirdar. He’s particularly troubled by the lack of buyers from Gujarat. “About 80 per cent of my customers are farmers from that state. Since notebandi (the outlawing of all existing Rs 500 and Rs 1,000 denomination currency notes after November 8), they have virtually stopped coming,” he adds. (Click here to read more)
When milk sold in Delhi comes from cows reared in Punjab and milked in Gujarat
When farmers have no hard cash with which to buy things — in this case, cattle — the impact isn’t just on themselves. It’s also on other farmers — those in the business of breeding and supplying the same animals, ready to be milked by the former lot.
Nowhere is the cash crunch-imposed crisis more apparent than in Punjab, India’s No. 1 cow breeding state that supplies an estimated 3 lakh animals — mostly Holstein Friesian crossbreds — worth Rs 2,400-2,500 crore annually to other states. A third of it goes to Gujarat alone, with UP, Rajasthan, Maharashtra and Andhra Pradesh accounting for the rest. This entire business — of cows that are reared in Punjab, milked in Gujarat and whose produce comes back for sale, including in Delhi and other northern markets — has been hit by the government’s November 8 decision to demonetise all existing Rs 500 and Rs 1,000 denomination currency notes. (Click here to read more)
The next inflation: When drought strikes – with a lag
In the last six months, Maharashtra’s dairies have seen their procurement prices for cow milk with 3.5 per cent fat and 8.5 per cent SNF (solids-not-fat) content rise from Rs 16-17 to Rs 23-24 a litre. This, even as skimmed milk powder (SMP) rates have climbed from Rs 130-140 to Rs 210-220 per kg.
It has been no different with buffalo milk containing 6.5 per cent fat and 9 per cent SNF, for which dairies in the North are paying farmers Rs 37-38 per litre, as against Rs 31-32 at this time last year. Even sharper has been the increase in fat prices: A 15-kg tin of ghee, selling at under Rs 4,600 a year ago, is now trading at Rs 6,000-plus; white butter prices have similarly soared from Rs 250 to almost Rs 350 a kg. (Click here to read more)