Beginning next month, the consumers in Mumbai may end up paying more for milk.
The State government's desire to appease milk-producer farmers on the eve of the local self government elections may end up burdening the average consumer.
According to sources in the state's dairy development department, the government is considering increasing the purchase price of milk by Re 1 The proposal is likely to come up in the cabinet meeting next week.
If the proposal is approved, the purchase price of milk in current season will increase from Rs 8.25 to Rs 9.25. Thus, farmers a large number of them are in the dairy development business to supplement their income from agriculture will get a better price for the milk their cattle produce.
However, the other side of this proposal is that the consumer may have to pay more for every litre of milk.
Minister for Dairy Development, Anees Ahmed refused to comment. However, he said the State wants to increase the production of milk and encourage farmers to adopt dairy development by protecting their interests. "Maharashtra is the only state which has Milk Procurement Act which guarantees that the state will procure whatever the farmer produces," he said.
Dhanraj Khamatkar, Chairman, Mahananda Dairy, explained how increased purchase prices affect consumers: "If the purchase price increases, the selling price will also have to be increased. When the government increased the rates in June this year, we had to increase the selling price from Rs 15 to Rs 17."
While farmers may benefit, consumers could be at a loss. "If the purchase price increases, selling prices will rise across the board," Vinayakrao Patil, Chairman, Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit, a milk industry body, said.
The biggest stakeholders are consumers in Mumbai. The city requires nearly 45 lakh litres of milk a day. Of this, co-operatives provide 22 lakh litres. Mahananda dairy, which sells 6.5 lakh litres, is the biggest player among the milk co-operatives.
"Farmers' interests and the future of the dairy industry need to be coordinated and detailed discussion and study needs to be done before the decision is taken," CN Gulve, managing director, Warana Dairy, Kolhapur, said.
According to a senior official from a big player in the dairy sector, if this decision comes through, even conversion of milk into milk products will become costly. "We cannot increase prices of milk products overnight," the official said, on the condition of anonymity. "Mumbai is the country's biggest market but we don't want to exploit it."
The official also expressed fears that if private dairies have cheaper options then they may choose not to buy milk from Maharashtra. "In that case the government will have to give full guarantee that it will pick up what is left," the official said.