Problem of plenty: Milk farmers stuck between less demand, more supply

Maharashtra’s dairy farmers are on an indefinite strike to seek Rs5/litre subsidy to make up for crashing prices

By Rajil Menon
Published: Wednesday 18 July 2018

The international market prices too have had an impact on milk prices in India. Credit: Wikimedia CommonsAround 5,000 milk farmers were arrested from all over Maharashtra within a day of the Swabhimani Shetkari Sanghtana, a farmers’ organisation from western Maharashtra, announcing to protest over milk subsidy. The members of the organisation are on an indefinite strike since July 16 to demand subsidy to compensate for the crashing prices.

MP Raju Shetti, leader, Swabhimani Shetkari Sanghtana, says, “We want Rs 5/litre subsidy for milk into our accounts. The milk producing farmers, especially those who give cow milk, are getting a price of Rs 15/litre, when his actual cost comes to Rs 35/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 an 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 the milk powder export has also reduced. The cost of butter has also not increased. This has had a special effect on Maharashtra. The condition is such that excess milk other than that sold in pouches used to be converted to milk powder or butter, but 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,” says  Shetti.

The organisation has, several times, approached the government to increase the subsidy, but to no avail. While talking about one “strange” suggestion he got from the Union agriculture minister, Shetti says, “Radha Mohan Singhji 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 Kerala and Goa governments give a subsidy of Rs8/litre and the Karnataka farmers get Rs 4/litre, the Maharashtra government is not ready to give any. They instead gave a subsidy on skimmed milk powder and caused problems.

“The government tried giving a subsidy of Rs 3/litre for conversion of skimmed milk into powder. From May 13 to June 30, Rs 53 crore of tax payer money was wasted as milk prices fell down by Rs 2 instead of rising. They then promised to give a subsidy of Rs 50/kg for skimmed milk powder exported. This means that milk companies got milk for Rs 14-15/litre and since they needed 11 litres of it to make 1kg of powder, they got a subsidy of Rs 83/kilo of powder.”

The reasoning farmers give for demanding the subsidy is that since they don’t expect the government to pay them the cost they incur, which is Rs 30/litre, they want a fixed subsidy of Rs 5 per litre on the surplus 20-23 litres of milk. “So we 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 won’t sell it. Till the state government promises to give Rs 5 into the accounts of milk farmers, we will continue the strike and won’t sell 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 on July 17, the organization 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 forced to take these drastic steps.”

The Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit (MRSDMM), which procures milk from member milk unions and distributes it to consumers, is the apex federation of district/ taluka milk unions. SD Wagh, dairy manager of Mahananda from MRSDMM, says, “Our total state production is about 1 crore 35 lakh litres per day and of that nearly 70 per cent are 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/litre for cow milk for farmers but private players are key to fixing rates. The rates were up to Rs 31/litre and then since the rates of butter, oil and skimmed milk powder in international markets reduced to 60 per cent, no exports have happened for 1 year now.”

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

In Maharashtra, there are private players, agents, small plants, but no structured cooperatives to ensure 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 Karnataka Milk Federation that a single state-level marketing federation to deal with marketing.

When 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/litre, the skimmed milk powder will cost Rs 250/kg and butter will be Rs 320/kg. But the current rate is Rs 120/kg and butter is Rs 230/kg.  This is why they stopped converting surplus milk and that led to 10 per cent more surplus milk this year than last year.”

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