70
S
tate
of
I
ndia
’
s
L
ivelihoods
R
eport
2015
production. Milk prices fell in Tamil Nadu
when Government of Kerala banned milk
25
from the state citing adulteration. Farmers
in some states like Maharashtra and UP
faced reduction in price reportedly due
to fall in prices of skimmed milk powder
(SMP). Private dairies in North India which
primarily manufacture SMP, ghee etc., are
reportedly paying farmers
`
30–31 per litre
for buffalo’s milk against
`
39–40 a year ago.
InMaharashtra, dairies are getting cow’smilk
delivered to the plants at
`
20–21 per litre.
They procure it from the farms at
`
17–19.
A year ago, these prices stood at
`
29–30 and
`
26–27 per litre, respectively.
26
Considering
the woes of dairy farmers, Government of
Maharashtra is considering declaring amini-
mum support price for procuring milk.
27
However, this minimum support price is
mandatory only for cooperatives and private
sector is not governed by this. Cooperatives
cannot procure all milk produced in the state
as their capacity to handle milk is limited.
Farmers also found that the market for
milk is national and not just within a state.
Farmers in Telangana mentioned that the
recent initiative of the state government
to invite Nandini (Karnataka), GCMMF
(Amul) and two other private companies
from Tamil Nadu to sell milk in the twin
cities of Hyderabad and Secunderabad
made them face some uncertainty. These
large dairies brought in milk from other
states for marketing in Telangana which
caused local dairies to temporarily stop
buying milk from the farmers (Box 4.7).
25
Kerala bans milk from Tamil Nadu,
Deccan Herald
, published on 12 June, 2015.
26
Crashing milk prices worldwide is latest farmer worry at home by Harish Damodaran,
Indian Express
, published
on 5 April 2015. Available at:
-
is-latest-farmer-worry-at-home/#sthash.DEVurtfC.dpuf.
27
Brace for milk price hike as government plans to fix MSP at
`
20 by Sujit Mahamulkar and Bella Jaisinghani,
Times of India
, published on 20 May 2015.
The industry attributes the downturn in
prices paid to dairy farmers to world prices
of skimmed milk powder. Skim milk powder
rates at Global Dairy Trade averaged $2,467
a tonne on April 1, 2014 down from $4,126
a year ago and the peak of $5,142 two years
ago. In 2013–14, India exported nearly 1.3
lakh tonnes of SMP whereas during 2014–15,
hardly 30,000 tonnes got shipped out. India
produces an estimated 6 lakh tonnes of SMP
annually, equivalent to about 70 lakh tonnes
of milk (about 50 per cent of milk produced
in the country). Of the total 6 lakh tonnes of
SMP, roughly 4.5 lakh tonnes is produced by
private dairies inNorth India andMaharashtra.
The balance is by cooperatives and South-based
firms like Hatsun Agro and Heritage Foods.
Low global prices, apart from rendering exports
difficult, have impacted domestic market.
There are dairy units that only trade or
convert milk to milk powder having little
touch with consumers. Many milk processing
plants were set up in the boomperiod. With the
change in fortunes, they are unable to switch
their marketing strategy and start selling to
consumers directly. Dairies are selling SMP at
around
`
180 per kg at present, against
`
270 a
year ago. Ex-factory prices of ghee have similarly
dropped from
`
310 to
`
260 a kg. At
`
180/kg
SMP and
`
260/kg fat price, dairies would realise
slightly over
`
3,300 from processing 100 litres
(103 kg) of buffalo milk containing 6.5 per
cent fat and 8.5 per cent SNF. After excluding
`
200–
`
250 of processing and packaging costs,
they can barely pay
`
3,100 or
`
31 per litre for
milk delivered. SMP exports falling from 1.3
lakh tonnes to 30,000 tonnes would leave a
surplus of 1 lakh tonnes. Without any outlet
for this powder, either through exports or a
government-mediated commodity grant aid
programme for South Asian neighbours, there
will be a glut. The farmer will pay dearly for the
global price fluctuations.
Source:
(
a) Round Table on smallholder dairy
farming held at BAIF on 17 August 2015 (b)
Crashing milk prices worldwide is latest farmer
worry at home by Harish Damodaran,
Indian
Express
, published on 5 April 2015.
Box 4.7:
Global downturn in SMP prices and small farmers
