The state government’s decision to extend its Rs 5 per litre subsidy scheme for dairy farmers till January hasn’t quite mitigated the crisis in the industry. Cooperative and private dairies say that operational constraints and delay in payment of the subsidy has made the scheme unviable for them. Many of them are thinking of withdrawing from the scheme.
Under the scheme, dairies have to pay farmers Rs 20 per litre for milk, while the Rs 5 subsidy has to be transferred directly to the bank accounts of the farmers. While the scheme was supposed to last till November, the state government has extended it till January 2019. To date, 42 dairies have taken part in the scheme and subsidy worth Rs 100 crore has been paid to them.
Usually, dairies pay farmers Rs 25 per litre, and the government reimburses them for the subsidy after verifying the bank accounts of farmers.
Subsidy fails to break low price cycle in dairy sector
The low international price of Skim Milk Powder (SMP) in the last few months has hit dairies in Maharashtra, as income from this once-exportable commodity has all but dried up. Excess milk collected by dairies is converted into anhydrous SMP which, till two years ago, was a viable commodity for exports. With barely any additional income from SMP exports, dairies are struggling to pay farmers who, in turn, receive an inadequate amount for their produce. While Gujarat had announced a Rs 300-crore export subsidy for SMP, the Maharashtra government has decided to pay a Rs 5 per litre subsidy for milk procurement. But the scheme, meant to help farmers get better realisation, has not helped dairies much as SMP prices remain low in international markets.
But dairies say the insistence on transferring the subsidy amount directly to bank accounts of farmers has made it difficult for them to participate in the scheme. Cooperative dairies, which generally deal with village-level Dairy Cooperative Societies (DCSs), say it’s difficult to get bank accounts details of farmers, and many of them want to be paid in cash.
Most bank branches are located at talukas and travelling all the way there, to withdraw cash, is not feasible for many farmers, said Prakash Kutwal, secretary of the Milk Producers and Processors Association. “Dairies with less than 10,000 litres of milk have not participated in the scheme,” he said.
Kutwal said another worry before the dairies was the delayed payment of subsidy by the government. “… Till now, we have received payment for only 40 days. Subsidy worth Rs 100 crore is yet to be paid,” he said. Delay in payments adds to the financial burden of the dairies, said Kutwal. “We are holding a meeting on Thursday to take a final call on the matter,” he said.
Officers of Gokul — the Kolhapur District Cooperative Milk Producers Union- said they could procure bank account details of only 10-20 per cent of the farmers registered with them. This union, which sees collection of around 12 lakh litres per day, says it has almost Rs 6.5 crore in subsidies, which is yet to be paid as it didn’t have bank account details of farmers.
But Vivek Ksheersagar, managing director of Katraj, the Pune district cooperative milk producers union, said officials have managed to collect details of 95 per cent farmers’ accounts till date.