Millennium Post

Dairy's problem of plenty

Stuck in a tug of less demand and more supply – Maharashtra’s dairy farmers are on an indefinite strike seeking subsidies that would compensate for crashing prices, discusses Rajil Menon.

Dairys problem of plenty

Around 5,000 milk farmers were arrested from all over Maharashtra within a day after the Swabhimani Shetkari Sanghtana, a farmers' organisation from western Maharashtra, announced the beginning of its protest over milk subsidy. The members of the organisation have been on an indefinite strike since July 16 to demand an adequate subsidy to compensate for the crashing prices in the market.

MP Raju Shetti, leader, Swabhimani Shetkari Sanghtana, says, "We want Rs five per litre subsidy for milk into our accounts. The milk producing farmers, especially those who give cow milk, are getting a price of Rs 15 per litre when his actual cost comes to Rs 35 per litre. This is becoming a loss-making business. More than 5,000 of my workers, who are milk producers and farmers, have been arrested."

The international market prices too have had a severe impact on milk prices in India, says the MP. "Today, the rates of milk in the domestic market are very low because the international market prices of skimmed milk powder and that of the milk powder export have reduced. The cost of butter has also not increased. This has had a special effect on Maharashtra. Ealier, the excess milk other than that sold in pouches used to be converted to milk powder or butter, but now, since the industry has enough stock of milk powder and butter, the excess milk, which is 22 to 23 lakh litres per day, is making the cost of milk come down drastically," elaborated Shetti, discussing the backdrop of the pervading milk crisis that has agitated dairy farmers of Maharashtra.

The organisation has, several times, approached the government to increase the subsidy given to them, but this has been done to no good avail. While talking about one "strange" suggestion he got from the Union agriculture minister, Shetti says, "Radha Mohan Singh ji told me that I should tell my people to give away foreign cows and keep Indian bred cows as the desi variety will give enough good milk."

The farmers claim that despite the fact that the Kerala and Goa governments give a subsidy of Rs eight per litre and the Karnataka farmers get Rs four per litre, the Maharashtra government is not ready to give any to its own farmers. They, instead, gave a subsidy on skimmed milk powder and caused further problems.

"The government tried giving a subsidy of Rs three per litre for the conversion of skimmed milk into powder. From May 13 to June 30, Rs 53 crore of taxpayer money was wasted as milk prices fell down by Rs two instead of rising. They then promised to give a subsidy of Rs 50 per kg for skimmed milk powder that is exported. This means that milk companies got milk for Rs 14-15 per litre and since they needed 11 litres of it to make one kg of powder, they got a subsidy of Rs 83 per kilo of powder."

The reasoning that farmers provide for demanding the subsidy is that since they don't expect the government to pay them the cost they incur, which is Rs 30 per litre, they want a fixed subsidy of Rs five per litre on the surplus 20-23 litres of milk. "So, we have decided to stop selling milk. If anyone needs milk, they can come to our villages and request farmers, who will give it for free but we won't sell it. Until the state government promises to give Rs five into the accounts of milk farmers, we will continue the strike and won't sell any milk. The farmers and milk producers can take the law into their own hands if the government tries to bring milk from the other states," says Shetti who is in Palghar to ensure that no milk tanker enters the state.

Within a day of marking its protest, on July 17, the organisation had sent back 30 tankers of milk that were going to enter the state from Gujarat. Ravikant Tupakar, secretary, Maharashtra State Swabhiman Paksh, says, "Since the milk farmers in the state are being forced to commit suicide, we are compelled to take these drastic steps."

The Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit (MRSDMM), which procures milk from member milk unions and distributes it to the consumers across the state, is the apex federation of district/taluka milk unions. SD Wagh, dairy manager of Mahananda from MRSDMM, says, "Our total state production is about one crore 35 lakh litres per day and, of that, nearly 70 per cent includes private players, 29.5 per cent are co-operative societies and 0.5 is the government. So, there's no price control system as we are selling only 2.5 lakh litres of milk per day."

Another officer of the Mahananda, who did not want to be named, says, "Last time, the government fixed Rs 24 per litre for cow milk for farmers but the private players are key to fixing rates. The rates were up to Rs 31 per litre and, since then, the rates of butter, oil and skimmed milk powder in the international markets have reduced to 60 per cent, no exports have taken place for one year now."

The domestic prices of skimmed milk powder dropped from Rs 260 per kg to now Rs 120 per kg and butter from Rs 340 per kg to Rs 220 per kg. In India, the stock of skimmed milk powder reached 2.05 lakh and butter to 88,000 metric tonnes, which is 84 per cent more and 216 per cent more than the previous year's. This induced private players to stop converting the excess milk into milk powder and butter. This more-supply-less-demand scenario had led to the sudden dip of prices, which continues even now.

In Maharashtra, there are private players, agents, small plants, but no structured cooperatives to ensure that farmers get reasonable rates for their produce. Maharashtra contributes only 1.5 per cent to the total milk produced in the organised sector. Other states like Karnataka, have their own Karnataka Milk Federation, which is a single state-level marketing federation to deal with the marketing of dairy.

What if the government was warned in advance, Wagh said, "Almost 80 per cent of states have a powerful cooperative society structure. Our state does not. So, the rates in Maharashtra suffer because if you purchase cow milk at the government rate of Rs 27 per litre, the skimmed milk powder will cost Rs 250 per kg and butter will be Rs 320 per kg. But the current rate is Rs 120 per kg and butter is Rs 230 per kg. This is why they have stopped converting surplus milk and that led to 10 per cent more surplus milk this year than last year."

(The views expressed are strictly personal)

Rajil Menon

Rajil Menon

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