In want of government help, dairies in Maharashtra have threatened to stop procuring milk from farmers once a week to curtail their losses. This is the first time dairies are being forced to take such action owing to the dip in demand for milk, said Gopalrao Mhaske, chairman of the Maharashtra Dairy Farmers and Processors Welfare Association, the umbrella body of private and cooperative dairies in the state.
The immediate trigger for the dairies, for such a drastic step, is the lack of clarity on the future of the state government’s scheme to procure excess milk from them. Under the scheme, which was announced soon after the lockdown in April, the state government was going to procure excess milk from dairies at Rs 25 per litre and convert the same into skimmed milk powder (SMP) and white butter. It was estimated that around 10 lakh litres of milk would be procured by the government every day. Till July 10, nearly 5.61 crore litres of milk was procured, for which dairies were to be paid Rs 79 crore. The scheme, which has been extended twice, is set to end on July 27.
At the beginning of the nationwide lockdown, dairies in Maharahstra were paying farmers at the rate of Rs 30 per litre for milk with 3.5 per cent fat and 8.5 per cent solid-non-fat (SNF). The closure of hotels, restaurants and catering businesses had hit the industry hard, resulting in a massive drop in the sale of milk and milk products. The dip in demand brought about by the lockdown had seen dairies slashing their prices drastically to almost Rs 22.50 to Rs 17 per litre.
Dairies convert excess milk into SMP and white butter. However, over the last few months, the price of both SMP and white butter fell in both domestic and global markets, upsetting the economics of the dairies.
SMP, which was trading at around Rs 300 per kg before the lockdown, has now touched the Rs 160-170 per kg mark, resulting in major losses for dairies. Across Maharashtra, dairies have reported around 70,000 tonnes of unsold SMP, while nationally the unsold stock is close to 2 lakh tonnes.
Speaking about the ‘procurement holiday’, Mhaske said dairy owners will be forced to implement it in case the excess milk procurement scheme is stopped by the government. “The commodity players procure the excess milk from dairies, which deal mostly in liquid milk. Since the last few months, the price paid by them is in the range of Rs 17-20 per litre. Cooperative diaries are still paying Rs 25 per litre to their farmers, but they will not be able to sustain that for long,” he said.
Mhaske, a director of the Pune District Cooperative Milk Producers Union, which retails milk under the brand name of Katraj, said the union was procuring 30,000 litres of excess milk per day. “Our sales, which were around 1.15 lakh litres, have since come down to 90,000 litres,” he said.
During a ‘procurement holiday’, dairies suspend their milk collection and farmers are not paid for that day. Dairy farmers have to sell milk, a highly perishable commodity, every day and the ‘procurement holiday’ would mean straight losses for them. Earlier this week, multiple farmers’ organisations had taken to the streets to highlight the low realisation of dairy farmers. Most dairy farmers have asked the government to announce a Rs 5 per litre subsidy scheme on the lines of a similar programme being run in Karnataka and Goa. Mhaske said a similar scheme for the next few months will help dairies in Maharashtra tide over the crisis.
