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Constant correction in milk procurement prices by dairies has made Diwali a bitter experience for dairy farmers. As dairies struggle with increased production and low demand, they have warned of further lowering of price if urgent measures are not taken by the state or Centre.
The procurement price of milk with 3.5 per cent fat and 8.5 per cent SNF (solid not fat) in Maharashtra has crashed from Rs 35/litre to the present Rs 28-29/litre. Barring cooperative dairies, private players have begun correcting prices which has led to unrest among dairy farmers.
Gopalrao Mhaske, director of Pune District Cooperative Milk Producers Union (which owns dairy brand Katraj) said cooperative dairies are bound to pay the government the declared rate of Rs 35/litre while private brands which produce around 70 per cent of milk procured in the state are not. “Cooperatives have seen increased collection but demand for milk or milk based products are low. The excess milk is being sent to private players who convert it into Skimmed Milk Powder (SMP). However, private players have slashed their prices which is causing us a loss,” he said.
Katraj, for example, is now reporting a collection of 2.10 lakh litres of milk per day. “Our requirement is of about 1.10 lakh litres– the rest we send to private players for conversion into SMP, and thus our losses are mounting,” he said.
In the dairy industry, demand and supply follow an inverse relation. Thus demand is high during summer when production is low, and in winter, when animals increase milk production, demand for milk dips. Dairies convert excess milk into SMP and white butter which they use when demand increases especially during summer.
SMP, other than being an item used especially in summer, is also an exportable commodity, but not much is exported from India given the high demand in the country itself. Dasarath Mane, CMD of Sonai Dairy (Indapur Dairy and Milk Products Ltd) said the country is at present sitting on a reserve of around 2.80 lakh tonnes of SMP. “Exports are non viable – international prices are around Rs 220-230 as compared to the cost of production of Rs 250-260/kg,” he said.
Without government subsidy, exports would not be feasible, Mane said.
Mhaske who heads the Dairy Farmers and Processors Welfare Association (an association of private and cooperative dairies in the state) has demanded government intervention in terms of either direct subsidy to farmers or procurement by government. “The state government should buy excess milk from dairies and convert it into SMP. Last time, such intervention in times of Covid 19 pandemic had helped the government,” he said Without intervention, either in terms of export subsidy or procurement, most dairies warned of further reduction in procurement price of milk for farmers in the days to come.
