Swabhimani Shetkari Sanghatna activists during a demonstration demanding a subsidy of Rs 5 per litre milk, waiver of goods and services tax on butter and milk powder among others. PTI Photo
Swabhimani Shetkari Sanghatna activists during a demonstration demanding a subsidy of Rs 5 per litre milk, waiver of goods and services tax on butter and milk powder among others. PTI Photo

While the Bharatiya Janata Party (BJP) has announced agitation on August 1 to demand higher price for milk, the Maha Vikas Aghadi government has been working on a relief package for the farmers, including a subsidy only to those who provide minimum Rs 25 per litre price to the farmers, buffer stocking mechanism on the lines of sugar and subsidy for skimmed milk powder only for the quantity that gets exported. This is necessary as the milk prices have fallen to Rs 22 per litre from Rs 36 per litre within a span of the last three months.

Out of the 12 million metric tonnes, around 120 lakh litre per day is the marketable surplus available for the organised dairy players to procure and convert into various products. Of the 120 lakh litre per day marketable surplus, around 35 lakh litre per day is the excess milk procured by the organised sector, which gets converted into dairy commodities. This translates into 300 metric tonnes of skimmed milk powder being produced on a daily basis, which is in excess at the moment.

However, due to the COVID-19 pandemic and the subsequent lockdown, the demand for milk and milk products, especially from the unorganised sector and out of home consumption segments, fell, leading to a glut of milk at the village level.

Dairy industry sources predict that milk production will increase from August onwards. If the situation persists, dairy players would be forced to reduce raw milk prices further, as they will not be able to sustain losses in the disposal of commodities for a longer period.

A Department of Dairy Development officer said the state government provided support for procurement of excess milk through local cooperatives under Mahananda and provided remunerative returns to the farmers. “Despite these measures, organised dairy players, including cooperatives, are in severe financial stress owing to much higher procurement of milk from the farmers on one side and lower disposal in the form of milk products on the other side. This led to the piling up of huge inventories of commodities like skimmed milk powder.

Last week, various farmer organisations held an agitation across the state, demanding higher price for milk and a subsidy of Rs 10 per litre. Minister of Dairy Development Sunil Kedar held a meeting with the representatives of these organisations as well as milk and milk product producers. The meeting concluded with Kedar’s assurance to soon come out with a farmer-friendly package. Free Press Journal reported that the government may directly transfer money to the farmers.

Even though the milk procurement situation in all the cooperatives and private sectors continues to be higher than last year, bulk commodity inventories are very high due to the lack of exports or domestic buyers in the market.

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