About 10 days ago, the Maharashtra government announced — through a government resolution (GR) — the setting up of a consultative body for the dairy sector. Comprising representatives from both private and cooperative dairies, this body is scheduled to meet once every two months to discuss issues, and also advise the government on steps that need to be taken.
The Indian Express explains why the panel was needed for better coordination between the government and the sector.
Not a cohesive unit
With an estimated daily production of 2 crore litres, organised dairies in Maharashtra account for nearly 50 per cent of the daily milk collection. Of this, around 60 per cent is collected by private dairies like Lactalis Prabhat, Parag Dairy, Indapur Milk and Milk Products Limited (which retails its dairy products under the brand Sonai) while the rest is collected by cooperative unions including the Kolhapur District Cooperative Milk Producers Union (which sells pouched milk under the brand Gokul), Pune District Cooperative Milk Producers Union (brand Katraj) and Sangamner taluka Cooperative Milk Producers Union (Rajhans).
Mahanad, the state apex milk marketing federation, is almost defunct with little or no milk collection or sales. Unlike Gujarat or Karnataka, Maharashtra’s dairy sector doesn’t present a unified picture, with dairies vying for their share of procurement as well the retail market. At times, this competition has been unhealthy, leading to a price war which has benefited farmers. But farmers have also been hit hard by price corrections. Dairies, especially private ones, have been affected during times of large-scale production. Private dairies are mostly into commodities like skimmed milk powder (SMP) and white butter, and thus are more susceptible to price vagaries. Cooperative dairies, which are under the purview of the dairy commissioner, are unable to implement price corrections, which eats into their bottom line.
The fractured mandate has also seen the industry finding itself at odds while presenting its demands before the government on major policy issues. Dairy sector representatives, however, have complained that their voices are often not heard in many forums. Some cooperative dairies have talked about the non-viability of schemes aimed at the sector.
Why the committee was formed
During the Nagpur session of the state Legislature, dairy industry heads had urged the government to understand the need for better coordination with the sector. It was agreed that a committee consisting of the dairy industry and officials from the National Dairy Development Board (NDDB) will be formed to help act as a bridge for the sector. The 15-member committee has five representatives from the cooperative sector and four from the private sector, while the rest are government officials and representatives from NDDB.
The main aim of the committee is to advise the government on various dynamics of the sector and trade. The GR talks about how this committee will take stock of the situation and advise steps, which will help both farmers and consumers.
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Dairies welcome the move
Dairy owners across the state have welcomed the move, and said this was a much-needed step to help formulate policies for the sector. According to them, the government had no method to collect information about issues related to the sector. Maharashtra government is entrusted with fixing farmgate procurement price of milk and the dairy development commissioner has the power to dismiss the board of directors of cooperative dairies who fail to implement the same. In the past, many cooperative dairies had moved the Bombay High Court to stop such processes.
Dairies have long been demanding that the government help them get over the cyclic nature of the ‘flush and lean’ phases of their businesses. There is also a strong demand to implement a direct production incentive for dairy farmers in Maharashtra, as has been done for Karnataka farmers, to protect them from price shocks. The industry’s suggestion — to set up an alternate mechanism to absorb excess milk by introducing the same in mid-day meals — has not found much traction in government circles. The committee’s mandate is to “advise” the government on such issues. The sector hopes it will be able to push for policy reforms. Various measures such as setting up of plastic recycling units for used pouches are expected to be taken up by the committee.
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