Given the reduced demand and slump in global SMP prices, dairies have started reducing milk prices, Thackeray said. (File/Representational)

Chief Minister Uddhav Thackeray has written to Prime Minister Narendra Modi, asking him to direct the National Dairy Development Board (NDDB) to create a decentralised buffer stock of skimmed milk powder (SMP), which will help dairy cooperatives pay better prices to farmers.

Since the last week of July, dairy farmers in Maharashtra have been protesting to draw attention to lower returns. Dairies, which were earlier paying farmers Rs 31-32.50 per litre for milk with 3.5 per cent fat and 8.5 per cent Solid Not Fat (SNF), have slashed procurement price to Rs 17-22.50 per litre. Only dairies in Sangli and Kolhapur continue to procure milk at Rs 26-25 per litre.

Due to the drastic reduction in procurement prices, farmers’ organisations had asked for a direct subsidy of Rs 10 per litre and Rs 50 per kg export subsidy for SMP. The BJP had joined the protest on August 1 with party leaders leading the agitation in various parts of the state.

Due to the lockdown-induced demand destruction, dairies have reported a dip of 30-40 per cent in sales. Demand for milk and milk products has dropped to an all-time low as bulk consumers like hotels, restaurants, sweet shops and catering businesses remain closed. Dairies are now stuck with unsold stock of SMP and white butter. The situation is expected to worsen as the flush season – the time when animals naturally produce more milk – is set to commence from September.

In his letter sent on Monday, Thackeray said that Maharashtra has implemented a scheme to procure 10 lakh litres of milk per day and convert it into SMP and white butter. Till July 25, at least six crore litres of milk has been procured, he said.

Given the reduced demand and slump in global SMP prices, dairies have started reducing milk prices, Thackeray said. In this context, he has asked for reintroduction of the NDDB’s scheme to create a decentralised buffer stock of SMP and white butter with cooperative dairies.

This scheme, Thackeray said, was a regular of NDDB till 2000 and helped in managing seasonal imbalances. The butter stock, the letter said, could be auctioned off during periods of scarcity while in times of excess productions, it would cushion dairies from price slump. The state government, the letter said, will help in immediate correction of prices.

Thackeray has also asked for increase of export subsidy of SMP from the present 10-20 per cent, which will help dairies offload excess stock. At present, the country has unsold stock of at least 2 lakh tonnes of SMP of which Maharashtra had 35,000 tonnes, he said.