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Friday, March 05, 2021

In times of surplus, milk is no longer honey

Even the best-run dairies are being forced to slash procurement prices paid to farmers

Written by Parthasarathi Biswas | Kolhapur |
Updated: June 28, 2018 8:38:06 am
In times of surplus, milk is no longer honey Mohan Gholap at his dairy farm in Chipri village of Kolhapur district, Maharashtra. (Partha Sarathi Biswas)

Two years ago, when Mohan Gholap invested Rs 22 lakh in his dairy business, little did the 27-year-old realise that the decision to rear crossbred Holstein-Friesian cows instead of buffaloes would cost him dearly.

But it did make sense then, given that a crossbred calf came into milk in just over two years, compared to 3.5 years for buffaloes. Also, the average annual milk yield from crossbred cows was over 4,000 litres, as against 1,500-1,750 litres from buffaloes. This, even as buffalo milk contained more fat (6-7% versus 3.5% for cow) and solids-not-fat or SNF (9% versus 8.5%).

“When I started, Gokul Dairy (as the Kolhapur District Cooperative Milk Producers’ Union is called) was paying Rs 25-27 per litre for cow milk. Even with daily sales of 130-140 litres from my 18 animals (not all of them in milk), I could gross a monthly revenue of Rs 100,000,” says this farmer from Chipri village in Kolhapur district’s Shirol taluka.

Gholap grows elephant grass (napier) and fodder maize on his entire two-acre holding. By doing that and not engaging any outside labour — his two brothers work along with him — he has been able to restrict the monthly expenditures, mainly on dry fodder, feed concentrates, supplements and medicines, to about Rs 30,000. The net income from milk sales has, thus, sufficed to meet the equated monthly installments of Rs 17,480 on a loan of Rs 15 lakh from the Bank of India, which had financed his purchase of animals and associated investments such as cowsheds, chaff cutters, milking cans and feeding troughs.

However, on June 23, the Kolhapur union, which — unlike dairies elsewhere in Maharashtra, both private and cooperatives — had never reduced milk procurement prices over the last two years, announced a cut from Rs 25 to Rs 23 per litre. “We grow our own green fodder and also supply the labour. But with the procurement rate for our milk now being lowered, even we are worried about our business and paying loan installments,” he sighs.

Gholap is a pure dairy farmer. But even for others in the sugarcane bowl districts of western Maharashtra, dairying has been a secure source of additional income. It has been even more so in Kolhapur, where the Gokul Dairy was till recently paying Rs 25 per litre for cow milk with 3.5% fat and 8.5% SNF content, even when others — including in neighbouring Sangli district — had slashed rates to Rs 17-22 per litre over the last one year.

A woman dairy farmer pours milk at the Gokul Dairy’s collection centre at Chipri in Kolhapur district. Partha Sarathi Biswas

Kolhapur was traditionally a buffalo milk belt. In 2001-02, the Gokul dairy recorded an average procurement of 5.19 lakh kg per day (LKPD), out of which buffalo milk constituted 3.49 LKPD or 67 per cent. But in 2017-18, out of the total average procurement of 11.92 LKPD, 6.19 LKPD or almost 52 per cent came from cows. This was indicative of more farmers opting for commercial dairying, based on rearing of high-yielding crossbred cows, as opposed to buffaloes.

The last couple of years, however, have seen dairying also come under stress, similar to sugarcane cultivation. Gokul Dairy’s average procurement price for buffalo milk with 6% fat and 9% SNF fell from Rs 42.64 per litre in 2016-17 to Rs 36.50 in the last fiscal. Cow milk rates also came down marginally from Rs 26.84 to Rs 25 levels during the same period.

“We were actually paying Rs 27 until August 30 last year, before reducing it to Rs 25 and now to Rs 23,” states Dattatray Vishwanath Ghanekar, managing director of Gokul Dairy. He attributes it mainly to the large skimmed milk powder (SMP) stocks with most dairies. Gokul Dairy alone is currently holding around 5,000 tonnes, equal to 125 days of its daily SMP production capacity of 40 tonnes. Worse, this is before even the start of the main “flush” season for milk from September.

The accumulation of unsold stocks has led to SMP prices crashing to Rs 130-135 per kg, from Rs 170-180 a year ago. “We don’t know how to get rid of our stocks ahead of the coming flush season and expect to report a loss of Rs 90 crore-plus this fiscal. And given that the very survival of the dairy is at stake, we have been left with no alternative other than reducing the procurement price for milk,” admits Ghanekar.

The build-up of stocks has also to do with the fact that the fall in milk production during the “lean” months (March-August) isn’t as sharp as it used to be. Buffaloes tend to produce more after September, when the availability of both fodder and water improves, along with reduction in temperature and humidity levels.

“Previously, the drop in lean season production was 40 per cent or more, whereas it is hardly 20-25 per cent now. This is partly due to better dairy husbandry practices and also to increasing replacement of buffaloes with cows by farmers,” points out Girish D Chitale, partner of M/S B G Chitale, which runs the Sangli-based Chitale Dairy. His dairy, which collects around 6 LKPD, has already slashed its milk procurement price to Rs 20 per litre. “Ten years ago, 80 per cent of the milk we bought was from buffaloes. That proportion has dropped to 60 per cent and with it, the flush-lean variations have also come down,” he adds.

The Gokul Dairy is now seeking to encourage farmers to go back to rearing buffaloes, as milk fat prices haven’t collapsed as much as SMP rates. Dairies have been pleading with the Centre to either procure or provide incentives for export of the surplus SMP stocks in the country, currently estimated at over 3 lakh tonnes. But it has been in vain so far.

“Is it our fault that we invested in buying cows, increased milk yields and also grew our own fodder?,” asks Gholap. That’s a question that other dairy farmers, too, are asking.

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