Cattle economics: When milk turns sour for parched and singed Marathwada

Marathwada’s dairy farmers are facing a double-whammy from drought and lower price realisations.

Written by Kavitha Iyer | Beed/ Osmanabad | Updated: March 17, 2016 3:50:08 am
Villagers near Beed selling milk at the Bashir Ganj area in the city. The farmers simply stand with their cans on the streets from 6 am and negotiate a price-per-litre directly with end-users.  (Express Photo: Amit Chakravarty) Villagers near Beed selling milk at the Bashir Ganj area in the city. The farmers simply stand with their cans on the streets from 6 am and negotiate a price-per-litre directly with end-users. (Express Photo: Amit Chakravarty)

Kantilal Bhosale has no idea that skim milk powder (SMP) prices at the New Zealand dairy giant Fonterra’s global e-auction platform have collapsed to $ 1,731 per tonne from the all-time-high of $ 5,142 less than three years ago. Nor is the 38-year-old, who farms two acres at Kasari village in the severely drought-hit Ashti taluka of Maharashtra’s Beed district, aware of India having an 18 per cent share of global milk production.

All he knows is that the milk that fetched him Rs 24 a litre last year today commands just Rs 15.

Bhosale would be willing to sell one of his three cows, but for the fact that there are no takers for them. The Maharashtra government’s comprehensive ban on cattle slaughter and beef consumption, imposed last March, has made it tough to find even transporters, with stories doing the rounds of police cases being slapped against van-drivers ferrying animals to markets.

While the ruling Bharatiya Janata Party’s legislator from Ashti, Bhimrao Dhonde, was quickly shushed after he voiced his dissent against the ban earlier this month, the closure of a significant income avenue via sale of non-productive animals — especially in these times of drought and crashing milk prices — is an irritant for many farmers like Bhosale.

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“You paid Rs 20 for that one-litre bottle of water, right? I sold a litre of milk for Rs 17 today,” says Rajendra Giri, 40, displaying his receipt from the Dattakrupa Dairy in Tawalwadi, which is just a kilometre away from Kasari. He will be paid at the end of the week, a ‘pagaar’ (salary) that will help bring the vegetables and lentils for the next meal.

Bhosale and Giri are spending a scorching afternoon huddling under the hay-roofed shed of a cattle camp near Kasari. There are currently 297 such camps in Beed, Osmanabad and Latur, the three most-parched of the eight districts comprising the Marathwada region that also includes Nanded, Parbhani, Hingoli, Jalna and Aurangabad.

Unlike the two Kasari residents, who have no choice but to sell to the local dairy at Tawalwadi, Bhausaheb Aagam is somewhat better placed. He lives just 8 km from Beed city — as against 90 km for Kasari — where milk is retailing at Rs 32-35 per litre. At 10 am in the crowded Bashir Ganj area, Aagam has been standing for over three hours with a large aluminium jerry can at his feet, its lid snugly closing around the half-litre measuring ladle hooked at the mouth.

“I get at least Rs 10 per litre more than what it would be at the village,” Aagam says of the Rs 30 price he has managed to hold on to, even with customers who drive a hard bargain. Aagam drives the 8-km distance to the city in his own mini-van, while counting himself among the lucky few with an easy access to a market that doesn’t require dealing with procurement agents or a cooperative set-up: “The only people in Marathwada still able to make a living out of milk are people like me, working alone”.

For the region’s milk producers, facing their third drought in four years, the price that a litre of milk can get depends not just on its fat and solids-not-fat content, but also on whether they are selling to an agent stopping at the farm, going on their own to a dairy, or able to directly access a market of end-consumers.

“There aren’t any big private dairies in Marathwada or Vidarbha barring one or two, while the cooperative milk sector is almost non-existent in these two regions,” notes Dattatray Vishwanath Ghanekar, managing director of the Kolhapur Zilla Sahakari Dudh Utpadak Sangh, which owns the popular ‘Gokul’ milk brand and is based in western Maharashtra. Out of the estimated 80 lakh-plus litres per day of milk procured by organised dairies in the state — with near equal shares for the private sector and cooperatives — the Marathwada region’s
contribution is less than five lakh litres or so.

According to Ghanekar, most farmers in Marathwada and Vidarbha have only local non-descript animals. Now, with drought and low milk prices delivering a double-whammy, the few who maintain cross-bred cows and high-yielding buffaloes are making distress sales. Healthy three-year-old cross-bred milch cows are today being sold at Rs 22,000-24,000, compared to Rs 45,000-50,000 in normal times. The buyers here are mainly from western Maharashtra.

It is the low-yielding indigenous/non-descript breeds that have no takers, including traders who were earlier supplying to slaughter houses. These animals are the ones mainly populating the cattle fodder camps sponsored by the state government.

Santosh Chavan, a BJP leader from Ashti who has the contract to run the Kasari camp, points out that the village had some 1,000 animals until a year-and-a-half ago, when milk prices, too, were good. That number is down to 550-600, as some have died and others sold off. Also, of the five dairies operating in Kasari and nearby villages, the biggest one alone was procuring 6,000 litres a day of milk. “Now, they together purchase 1,500 litres. The remaining milk has no buyers. So, producers simply sell at lower and lower prices,” adds Chavan.

Ghanekar does not foresee any immediate improvement in the situation. The main reason is global dairy product prices: These would remain under pressure from China’s mounting economic woes, the Russian-West spat leading to surplus milk supplies in Europe and made worse by the end of the earlier regime of production quotas, and falling oil prices resulting in lower imports by West Asian countries.

India’s own SMP imports have fallen from a peak of 1.30 lakh tonnes (valued at Rs 2,717.56 crore) in 2013-14 to 34,490 tonnes (Rs 681.69 crore) in 2014-15 and further to 9,193 tonnes (Rs 174.21 crore) during April-December 2015-16. Maharashtra’s private dairies, unlike the cooperatives that have a strong liquid milk marketing business, are mainly into production of commodities like SMP and ghee. The crash in global prices has affected their operations, causing them to slash milk procurement and pay lower prices to farmers.

Meanwhile, in the cattle camps, nobody really cares about the wider economics. “Fix a minimum price for milk and a minimum purchase commitment by the government. For us, there is no other means of livelihood left,” declares Giri.

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