Milk price hike may do little for Maharashtra dairy sector

Fadnavis’s 70:30 formula, with farmers assured of 70% of proceeds, will hit state’s already struggling co-ops, as key infrastructure issues remain unaddressed.

Written by Kavitha Iyer | Updated: June 13, 2017 11:42:56 am
Milk price, Milk price hike, milk rate hike, maharashtra dairy, maharashtra milk price, fadnavis, indian express news, india news, explained Maharashtra currently pays Rs 24 for every litre of cow milk it procures — this is estimated to be revised to Rs 27.

FROM the point of view of urban consumers, the week-long strike by farmers in Maharashtra affected two commodities, vegetables and milk, whose supply and prices were affected to varying degrees in cities across the state. A meeting between the farmers’ leaders and a ministerial committee on Sunday ended with the declaration of India’s biggest-ever farm loan waiver by a state government — a blanket waiver of all crop loans across the state, with minutiae and ceilings to be announced shortly.

In response to another demand by farmers, the government also promised better prices to milk producers, a likely increase of Rs 2 or Rs 3 per litre. Maharashtra currently pays Rs 24 for every litre of cow milk it procures — this is estimated to be revised to Rs 27. Once the government hikes its procurement rate, the others will simply have to follow suit, and do better.


Also, significantly, Chief Minister Devendra Fadnavis announced that milk societies would now have to adhere to a 70:30 revenue-sharing system as followed by sugar cooperatives, with farmers assured of 70 per cent of the proceeds, the rest being shared by milk-collecting societies and unions.

The cooperatives, already incurring losses or barely breaking even, will be dismayed by the new mandate. Unlike the Amul pattern, Maharashtra’s cooperatives package milk under multiple brand names, each with its own costs for branding, marketing and overheads. Of Maharashtra’s 14,921 cooperative dairy societies and 85 cooperative dairy unions, approximately 37 per cent and 29 per cent, respectively, are loss-making entities, most of them controlled by politicians.

Milk cooperatives have also been assailed by allegations of corruption — the most memorable in recent years has been the Mahanand brand, a venture of an apex body of district and taluka-level milk unions. Originally established to implement an Operation Flood-like programme in Maharashtra, the brand itself has been almost run to the ground, even as a PIL was filed a decade ago alleging deep-rooted corruption in its operations. An administrator currently looks after Mahanand, with its board of directors dismissed. Mahanand was controlled by senior NCP leaders, as are several cooperatives across Western Maharashtra, where the state’s milk production is the highest.

Given this situation, the Chief Minister’s directive to milk cooperatives is a small political counter-punch bundled into the relief package for farmers. Corruption, inefficiency and wasteful expenditure in cooperative bodies will simply have to be curtailed.

Not surprisingly, former Mahanand chairperson Vaishali Nagawade of the NCP said the government should supplement Sunday’s announcement for milk producers with a state subsidy. “States such as Goa, Haryana and Karnataka give milk farmers a subsidy. So if the union pays Rs 20 a litre, the state gives an additional Rs 2 or Rs 4, paid directly into farmers’ accounts,” she said.

“The subsidy can be funded through an animal husbandry tax imposed on milk coming into the state from outside Maharashtra. We procure milk from Nandini in Karnataka and Amul in Gujarat, so why no tax on them?” Maharashtra sends milk to Goa, and pays such a tax, Nagawade said. Also, there was nothing in Sunday’s announcement about how to control cheaper milk from other states, or a comprehensive milk policy that cooperatives have been seeking.

Ironically, while milk producers were among those celebrating on Sunday evening, the announcement may do little in the long term for the dairy sector, which is struggling despite Maharashtra being the country’s fourth largest producer of milk.

Milk being a perishable commodity, profits from it are closely linked to accessibility of infrastructure, including a cold chain, pasteurisation facilities, processing units for milk powder, and more. Milk that is not chilled within four or five hours of production begins to curdle, which denies producers of thousands of litres every day in remote villages in Marathwada and Vidarbha, where dairies have not picked up profits that are available to milk of the same quality produced in Nashik, Ahmednagar or Pune.

“The government will eventually have to take a view of the entire situation,” said D V Ghanekar, managing director of Gokul Doodh in Kolhapur in Western Maharashtra. “Maharashtra has lost important years after 1991. We have not woken up to the call of liberalisation, not provided infrastructure, including cold chains and modern machinery, that is urgently needed for the sector. Babus cannot decide a price for produce; there has to be a pricing policy. There are, after all, international forces, national forces, factors such as production cost, market costs.

“Every drop of milk produced by our farmers should be poured into a government, private or cooperative dairy. Just declaring a price will not be enough.”

Having declared Rs 27 a litre, the question is whether the government will procure butter and skimmed milk powder, should international prices crash. At the height of the 2016 summer, for example, amid a global oversupply of milk, farmers who got Rs 24 a litre at their doorstep in the previous year were suddenly not able to realise prices that were anywhere close. In remote villages of Marathwada, farmers availing free fodder and water at government-established cattle camps were selling milk for as little as Rs 16 or Rs 17 a litre — less than the price of a bottle of packaged water. The problems are varied and complex, ranging from access and transportation to the unorganised nature of their market. All of them were seeking a minimum support price for milk.

Sunday’s announcement will mean little to them.

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