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Maharashtra’s milky way: Dairy farmers become first casualty as times gets tough

The non-viability of dairy farming, where fodder costs and upkeep of animals overshoot milk rates, brought them out on the streets.

mumbai Updated: Jul 20, 2018 15:48 IST
Surendra P Gangan
Surendra P Gangan
Hindustan Times
Mumbai,Maharashtra,dairy farming
Swabhimani Shetkari Sanghatana activists protest at Shiradhon village in Ahmednagar, Maharashtra, on Monday.(PTI Photo)

For more than two decades, western Maharashtra’s milk belt, which includes dairy farmers and co-operative dairies, has been a success story of how farmers can diversify from core farming activities to improve their livelihood.

With 20 lakh farmers engaged directly in dairy farming across Maharashtra and a significant number of the state’s 1.37 crore farmers relying on it as a subsidiary occupation, the milk industry is worth crores of rupees, nearly on a par with the sugarcane industry. However, over the last couple of years, as dairy business in the state faces challenges such as oversupply and drop in global rates, farmers have become the first casualty.

The non-viability of dairy farming, where fodder costs and upkeep of animals overshoot milk rates, brought them onto the streets.

Behind the crisis is a story of abundance.

Although farmers linked with the organised milk sector produce about 1.30 crore litres of milk daily, another 1 crore litres of milk is produced for domestic consumption.

Over the past year, rise in fuel charges, labour cost and inflation have pushed up the production cost of milk. But the procurement rate fell by Rs6 to Rs8 in 2017, lowest being Rs17-Rs18 a litre. The increase in production cost prompted the government to increase the procurement price by Rs3 in June 2017, taking it to Rs27 a litre. None of the dairies paid this price to the farmers.

What aggravated the problem was a lot of farmers shifted to dairy farming. The availability of fodder, even in May and June, resulted in excessive production of about 22 lakh litres a day, extending the ‘flush’ season (the season when the production is high owing to availability of green fodder between September and April). This, on the one hand, led to conversion of milk into skimmed milk powder in large quantities, while, on the other, international rates of the powder dropped drastically.

The result was piling up of 40,000 metric tonnes of milk powder with various cooperative and private dairies in the state. Citing losses in production of powder owing to the Rs90-Rs100 gap between the production cost and selling price, dairies reduced procurement prices.

“Apart from the 90 lakh litres of milk in pouches, about 40 lakh litres of milk is used for byproducts, including powder, cheese, shrikhand, butter, with a profit margin ranging between 130% and 870%. The byproducts industry is much larger than milk industry and is on a par with the sugarcane industry. The state is talking about revenue-sharing with farmers in the ratio of 70:30, but is silent on the inclusion of these byproducts,” said Ajit Nawale, general secretary, Maharashtra State Kisan Sabha.

He pointed out, “Dairies have been vehement about the losses in milk powder, but are not talking about profits in other products.” The lack of direct control over private dairies, who share 60% of pouch milk business, has resulted in exploitation of farmers, say experts.

“The cooperative and private dairies have been directed to pay Rs25 a litre, but it is very difficult to regulate them. When we issued notices to them for not adhering to the procurement price of Rs27 last year, they moved court to get a stay. We hope the same is not repeated and farmers get their dues,” said an official from the dairy development department.

“In Europe, the subsidy is based on the number of cows a farmer keeps. Even in Maharashtra, various subsidies given to sugarcane farming come to Rs15,000 an acre. If the cash crop draws such heavy subsidies, why can’t it be given for milk,” asked Vijay Jawandhia, farm activist.

First Published: Jul 20, 2018 12:47 IST