Dairies in Maharashtra have been witness to an unusual phenomenon of late. The winter months are when milk production and procurement rises, peaking in January. But this time round, shortages have developed precisely in the ‘flush’ period from September to March, when more milk naturally flows from the udders of animals. “We could procure only an average of 73,000 litres per day this January, as against 79,000 litres in the same month last year,” says Mahavir Patil, chief executive officer (CEO) of the Kolhapur-based Swabhimani Agro Products Producer Company Ltd. But his worry is for the period ahead, when milk output drops in the natural course with the onset of the ‘lean’ summer season. Patil fears that his plant’s daily procurement could dip to 50,000-52,000 litres by May.
As summer rolls in, dairies across Maharashtra are bracing up for serious shortages of their basic raw material. What is striking, though, is that the ‘lean’ has manifested itself right in the middle of the ‘flush’ season. This preponement of the lean season is the lagged effect of two successive drought years. Unlike other crops, the impact of drought on milk production is usually not visible in the same year. This has to do with farmers conserving fodder, reserving it for the cattle/buffaloes already in milk at the expense of calves and dry animals. That, however, has a bearing on milk production in the following year, even when the rains turn out normal.
But Maharashtra’s current shortages have also been exacerbated by the low milk prices that farmers received right through the drought period. “The prices paid to farmers did not cover even fodder and feed costs. So, they started selling their animals. Cattle numbers have clearly fallen in the last two years,” believes Vivek Hindurao Ksheersagar, managing director of Pune District Cooperative Milk Producers Union that markets dairy products under the ‘Katraj’ brand. The Katraj dairy’s own procurement in the current ‘flush’ has been 10 per cent below its normal level of 1.5 lakh litres per day (LLPD).
For Maharashtra as a whole, average procurement by dairies this February stood at only 117.40 LLPD, as against 161.82 LLPD in the same month last year. Procurement by both private as well as cooperative dairies have registered sharp dip, from 107.65 LLPD to 81 LLPD for the former and from 53.27 LLPD to 36.23 LLPD for the latter. This drop has been despite dairies now paying Rs 29-30 for a litre of cow milk with 3.5 per cent fat and 8.5 per cent SNF (solids-not-fat), as against Rs 16-17 only eight months back. “The present crisis is something Maharashtra’s dairies have, to a great extent, brought upon themselves. They should have kept procurement prices during 2015 and much of 2016 at reasonably remunerative levels for farmers. Instead, they passed on their problems from low milk powder realisations entirely to the farmers and are paying the price for it now,” an industry insider points out.
Even the Maharashtra government raised the official procurement price for 3.5 per cent fat and 8.5 per cent SNF content milk from Rs 19 to Rs 22 per litre only on June 28 last year. Private dairies continued to pay lower rates even after that. Only from January have they started paying more, waking up to the shortage suddenly seen in the midst of the so-called flush season. Indapur Dairy & Milk Products in Pune district and the Satara-based Govind Milk & Milk Products Ltd, for instance, declared procurement prices of Rs 29 per litre with effect from February. Before that, they were paying barely Rs 22 per litre. Since September-end, domestic skimmed milk powder prices have firmed up from Rs 150-160 to Rs 230-240 per kg. Prices of white butter (82 per cent fat) have also risen from around Rs 285 to Rs 330 per kg during this period.
R G Chandramogan, managing director of the Chennai-based Hatsun Agro Product Ltd — India’s largest private sector dairy with procurement operations extending to Maharashtra — feels that the current tight supply situation should considerably ease after September. “The flush season in Tamil Nadu will commence in April, while starting from August in North India and towards September in Maharashtra. The worst will be over by then,” he adds However, for the consumer, the next few months could well pinch.