AS if drought was not enough, dairy farmers in the state now have to deal with lower procurement prices. Dairies have decided to slash procurement prices by Rs 2 per litre, from Rs 25 per litre to Rs 23 per litre. This was decided at a meeting of dairy firms in Pune last week in view of lack of clarity on the continuation of government subsidy for dairies.
In July last year, the state government introduced a subsidy scheme for dairies to enable them to pay farmers a base price of Rs 25 per litre of milk with 3.5 per cent fat and 8.5 SNF (Solid-Not-Fat). Till January, the subsidy was Rs 5 per litre, which was revised to Rs 3 per litre in view of better prices of skimmed milk powder (SMP) and white butter in international markets. The last government resolution had indicated that the subsidy scheme would be continued till April.
With no clarity yet on whether the scheme would be continued, dairies say they have been forced to revise the procurement prices. Therefore, from May 1, dairy farmers are being paid Rs 23 per litre as procurement price. Prakash Kutwal, secretary of the Milk Producers and Processors Welfare Body, said around Rs 100 crore worth of subsidy is yet to be released by the government.
The slash in procurement price comes at a time the domestic and international prices of both SMP and white butter have been rising steadily. The SMP prices at Globaldairytrade — the online trading platform of New Zealand-based cooperative dairy giant Fonterra — has seen a steady rise in prices from January onwards. The last auction on April 16 saw the commodity trading at $3,269 per tonne. In the domestic market, SMP prices, which were Rs 120 per kg in June last year, crossed the Rs 230 per kg-mark in April. Similarly, white butter prices have improved from Rs 230 per kg to the present Rs 250 per kg.
The drought has also led to a dip in milk production. Most dairies say production is down by about 20 per cent. As fodder and water become scarce, most farmers are struggling to keep their livestock alive. In Marathwada and Solapur, where the drought is severe, most farmers have been reportedly living in fodder camps along with their animals.
A senior official of a national cooperative dairy said that the milk shortage in Maharashtra is going to get worse as the summer progresses. “Dairies, which have reduced procurement price, will be forced to hike prices up to Rs 30 per litre to meet demand. But by then farmers will not be in a position to provide milk,” he said. Kutwal, on his part, appealed to dairies not to slash prices given the hardships farmers are facing.