A month since govt announced special package Dairy farmers continue to reel under effect of low prices

Industry sources said till the time the unsold inventory reduces by means of export, chances of rise in procurement prices are slim. (File/Representational)

A month since the state government announced a special package to help dairy farmers realise better prices for milk, farmers continue to face the effects of low prices. In some parts of the state, farmers claimed that the dairies have slashed procurement in the past few weeks.

In June last year, the state government had increased the procurement price of milk, with 3.5 per cent fat and 8.5 per cent solid not fat (SNF), to Rs 27 per litre. Since August, dairies have started slashing procurement price for farmers, as they cited a slump in global prices of Skimmed Milk Powder (SMP) and imposition of Goods and Services Tax (GST) on byproducts. Now, dairy farmers in the state are being paid between Rs 17 and Rs 25 per litre.

Affected by the low prices, the farmers started protesting in May by distributing milk free of cost. Lakhganga village in Aurangabad’s Vaijapur taluka had passed a gram sabha resolution to that effect. The All India Kisan Sabha had started a month-long agitation in the state to protest against low realisation of milk. Following the agitations, Mahadev Jankar, the state minister for dairy development, fisheries and animal husbandry announced a Rs 32 crore special package aimed at increasing farmers’ earnings.

Under the scheme, SMP producers were to be given a subsidy of Rs 3 per litre, provided they managed to exceed their normal production by 20 per cent. The scheme that was to run for a month wraps up on Monday with the state recording around 13,000 metric tonnes of SMP so far. However, both dairies and farmers said there has been no effect on the procurement price.

Dhananjay Dhorde, member of the body that spearheaded the protest, said most farmers continue getting the same price. “It has come to our notice that in some cases, the dairies have gone ahead and reduced the procurement price by Re 1 or so,” he said. Dhorde said the scheme has had no effect on the ground. Internationally, SMP prices continue to be not feasible for exports.

Since May 2017, SMP prices at GlobalDairyTrade, the fortnightly online auction platform owned by New Zealand’s dairy giant Fonterra, continues to hover around $2,000 per tonne. In the domestic market, it translates to SMP realisations of Rs 130 to Rs 140 per kg. Given that the production of SMP is pegged at Rs 220 to Rs 230 per kg, exports, at present, are loss making for the sector. With exports stalled, dairies have run up huge inventories, which has further reduced the prices. It is estimated that Maharashtra alone has around 27,000 tonnes of SMP that now has but increased unsold stock.

Industry sources said till the time the unsold inventory reduces by means of export, chances of rise in procurement prices are slim.