Vadodara District Cooperative Milk Producers Union, popularly known as Baroda Dairy, has reduced the procurement price paid to its dairy farmers considerably from Rs 700 per kg to Rs 640 per kg of fat, a senior official said today.
Before taking the decision, the Baroda Dairy had written"to all its 1,237 village societies in this regard explaining as to why the price was dropped to Rs 640 from Rs 700, its vice president Ganpatsinh B Solanki told PTI here.
There are"nearly 1.25 lakh milk producers in three districts of Vadodara and the tribal-dominated area of Chhotaudepur and Narmada, according to him.
Terming the move "unavoidable", Solanki said this decision was taken in a bid to avoid Baroda Dairy getting into worsening financial conditions due to change in global marketing conditions.
Justifying the reduction in price, Solanki explained that Baroda Dairy collects around 7 lakh kg per day (LKPD) of milk from the 1,237 village societies, out of which around 2 LKPD is sent to the Gujarat Cooperative Milk Marketing Federation after meeting requirement of 5 LKPD of the people in Vadodara city.
"The compensation received from the federation for supplying surplus milk to it, is less than its (Baroda Dairy's) purchase price from the village societies, and its conversion into butter and milk powder causes economic loss to the dairy," he said.
The drop in the procurement price for farmers is seen after a fall in the global skimmed milk powder (SMP) rates.
This crash in SMP paired with the increased price of procurement by dairy unions has led to the abundance of milk with the dairy union, according to Solanki.
He also said that due to change in circumstances, milk dairies of other districts across Gujarat have brought down procurement prices.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)