Mumbai: Cooperative and private milk dairy unions in Maharashtra have asked for government intervention to ease financial pressure they are facing due to subdued demand for by-products like butter and skimmed milk powder. Additionally, weighed down by payments to farmers for milk procurement, representatives of dairy companies have asked the government to pay a subsidy of 5 rupees per litre to farmers.
This, they say, will help reduce companies’ costs by sharing the price of procurement.
Milk union members have threatened to go on strike and stop procuring milk from December 1 if the government fails to fulfil their demands. Subdued demand for skimmed milk powder and butter after the end of the festive season in October, and lower prices of the items globally have also left dairy companies with ample stocks of by-products.
“More than 50% of the milk procured goes for making these by-products. A fall in demand, availability of excess stocks, and higher production cost are adversely affecting the budget of milk companies,” said S. M. Patil, board secretary of Gokul Milk, a Kolhapur-based milk union. Dairy companies have asked the government to procure the leftover milk after fulfilling demand for direct sale and production of milk powder or offer monetary incentives for the production of skimmed milk powder.
Explaining the cost benefit analysis of milk business in the state, Patil said that for Gokul, production cost of butter is 290-300 rupees per kg, while the market price is around 240 rupees. For skimmed milk powder, the production cost is 180-190 rupees as compared to market price of 140-150 rupees.
Procurement price of milk at 25 rupees per litre is not competitive in such a scenario, Patil said. In June, the state government had raised the price of milk procurement by Rs 2 per litre, after farmers went on a strike to demand higher procurement prices. The state government’s directives to procure milk at at least Rs 27 per litre in the state have increased the burden on milk companies.
Dairy bodies have asked the Maharashtra government to follow the Karnataka government’s example of transferring the subsidy amount directly to farmers’ bank accounts, so that the company’s procurement costs ease. Some dairies in the state that have cut procurement prices have received notices regarding the same.
The state government has constituted a three-member committee under Vikas Deshmukh, former agriculture commissioner of the state, to submit a report on possible measures to help the industry.
“The committee will study the competitiveness of the milk business all over the state and suggest measures that can help industry to run profitably without harming interests of either producers or consumers,” Dilip Shinde, member of the committee, who is also managing director of Mahanand Dairy told Cogencis.