High cost of fodder led milk price hike

First pulses, now milk. The common household is compelled to give up on its easy sources of protein. RAVLEEN KAUR found rise in fodder prices, not rise in demand, is pushing up the cost of milk

By Ravleen Kaur
Published: Wednesday 30 June 2010

High cost of fodder led milk price hike

Birmashri Rathore knows exactly how much water to add to milk so that it can still be accepted as milk.

As the price of this essential commodity shot up across the country over the past two years, so did the level of dilution in the family’s daily milk. Three years ago, Rathore bought two litres every day from the Mother Dairy outlet near her slum cluster in West Delhi’s Vikaspuri area; today she buys only 250 ml, which occasionally goes up to 500 ml. Half the milk is used for making tea which her family of six has twice a day (her husband died five years ago); the rest she mixes with two glasses of water and gives her five children to drink. She does not boil the milk because that reduces the quantity, she said. But her younger children won’t be fooled that easily. “It’s just water, where is the milk?” Kiran, 11, asks her mother.

“For people like us whose monthly income is not more than Rs 1,500-2,000, the budget for milk cannot go beyond Rs 600,” Rathore said; her 17-year-old son, who works in a shoe factory, is the breadwinner of the family.

imageBetween January 2007 and March 2010 the price of milk rose seven times in Delhi. “In the past one year, prices went up from Rs 17 to Rs 22 a litre. First we stopped eating pulses because it became so expensive and now even milk is becoming difficult,” Rathore said. On a year-on-year basis, the inflation in pulses was 32.60 per cent and in milk 21.12 per cent.

“A growing child of 10-15 years of age needs at least 500-750 ml (two glasses) of milk per day while an adult body needs a minimum of 250 ml per day,” said Kumud Khanna, principal of Institute of Home Economics. The government must make milk available for mid-day meal programmes, said Veena Shatrugna, retired from the National Institute of Nutrition in Hyderabad. “If the government can build massive airports, why can’t it subsidize milk?” she asked.

Rising price drove Rathore’s neighbour Guddi and her husband to change their line of business from selling kulfi to selling vegetables. “Time was when we would get about 10 litres of milk every day at Rs 3 per litre. Now, with both sugar and milk prices soaring, there is simply no money to be made by selling kulfi,” Guddi said.

First we stopped eating pulses, and now milk too is costly
Mother of five
“There is a gap of 1.8 million tonnes (MT) between demand and the current milk supply,” Sharad Pawar, Union agriculture minister, told a conference of state ministers for animal husbandry and dairying in January. On March 17, the Centre allowed duty-free import of up to 30,000 tonnes of milk powder and 15,000 tonnes of butter oil. Milk powder imports till now attracted 60 per cent customs duty and butter oil 30 per cent. The imported milk powder and butter oil were for reconstitution as milk meant for supply in the summer months when shortage peaks because that is when livestock produce very little milk, informed N R Bhasin, president of Indian Dairy Association in Delhi. The import was allowed because Mother Dairy and other dairies in north India were facing a crisis.

More demand, less supply

“The demand for milk is rising with increase in salaries of government employees after the sixth pay commission in 2008,” said Amrita Patel, chairperson of the National Dairy Development Board (NDDB). The demand rose in rural areas too after the government wrote off farm loans in February 2008 and introduced the National Rural Employment Guarantee Scheme (NREGS), she explained. “Rising demand in rural areas means there is less milk available in urban areas,” Patel added. “We were quite comfortable with the milk available till about three years ago. A 4 per cent growth rate in milk production, double the growth rate of the world, was good enough because demand was more or less the same as supply,” Patel said.

The demand for milk is rising with the rise in government salaries, the demand has gone up in rural areas too after NREGA
chairperson, National Dairy Development Board
But that is changing. “Families that did not add milk in their tea because they could not afford it, now give their children at least one or two glasses a day,” said Kailash Yadav, founder of Jaipur’s milk mart. This happy development makes Patel’s task that much more difficult, but it is not rise in incomes that is tipping the balance in milk supply.

Rising cost of production is. The main reason behind the rise in milk prices is the increasingly higher cost of fodder. “Inflation has been high in the last few years, the cost of fodder too increased. Yet milk prices remained where they were. Only in last two to three years, have the prices shot up,” said B M Vyas, managing director of Gujarat Co-operative Milk Marketing Federation.

The drought in north and northwest India in 2009 made matters worse. A low agricultural yield led to low fodder yield, and prices hit the roof. About 70 per cent of the cost of milk production goes into fodder; this includes dry wheat, millet or paddy stalks and green fodder. Then there are concentrates like de-oiled cakes and molasses, among others. The remaining 30 per cent are medical and labour costs.

“There are reports that some milk producers find it more profitable to sell their animals for meat instead of continuing with milk production,” said Amrita Patel in her address to the Dairy Industry Conference held in Bengaluru in February this year. This is because there is a 4-6 per cent incentive on the export of buffalo meat.


Dairy factfile

  • imageMilk production in India went up from 20 million tonnes in 1960 to 106 million tonnes in 2007, so did consumption. According to Food and Agriculture Organisation (FAO), it increased from 57.7 kg per person per year in 1995 to 65.2 kg in 2005.
  • Dairying engages 18 million people, 5.5 per cent of the national work force. Milk is the main source of income for the landless, holding 1.5 to 2 animals per household.
  • India followed a mixed farming system. Crop residue went to livestock while it gave manure in return. The transition to a commodity specific system is underway because of increasing demand. According to FAO, this has led to more puchased inputs and less non-traded ones.

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