Partial lockdown pushes down procurement price of milk in Maharashtra

Dairy farmers in Maharashtra have started facing the financial repercussions of a partial lockdown, with dairies slashing their procurement prices by Rs 3 per litre. Starting from April 11, dairies have decided to pay Rs 27 per litre for milk as against the Rs 30 they were paying till the end of February. Further reduction in milk prices have not been ruled out if the state government decides to go ahead with its plan for a complete lockdown in the days to come.

In earlier months, with gradual opening up of the economy and more demand for milk and milk products, dairies had started a price war to corner as much milk as possible. On February 13, the Milk Producers and Processors Welfare Association – an umbrella body of both private and cooperative dairies in the state – had advised its members not to procure milk for less than Rs 29 per litre. This was a result of increased demand and lesser milk available in the markets. Faced with a drastic slash in procurement prices during the lockdown last year, farmers had either reduced their herd size or cut down on feed and nutrients, which had resulted in lower milk production.

Now, with rising Covid-19 cases, non-essential shops shut in Pune and weekend curfew in place across the state, the demand for liquid milk has started falling. As hotels, restaurants and tea shops remain shut, dairies have reported a significant dip in their sales.

For the Pune District Cooperative Milk Producers Union — which retails milk and dairy products under the brand Katraj – the fall in sale has been as high as 1 lakh litre per day. “At present, our procurement is 2.5 lakh litres per day, of which around 1 lakh litre is now excess,” said Dr Vivek Ksheersagar, managing director of the dairy. Like other dairies, they too have reduced their procurement price by Rs 3 per litre on April 11.

“If the lockdown persists, we might further reduce the prices,” he said.

On an average, Maharashtra reports collection of 1.5 crore litres of milk per day, of which 95 lakh litres are sold as liquid or pouch milk. At present, sale of the latter has come down to around 50 lakh liters, with dairies forced to convert the excess milk into anhydrous skimmed milk powder (SMP).

Dasarth Mane, chairman and managing director of the Indapur-based Sonai Dairy, said the accumulated SMP stock in Maharashtra would be around 60,000 tonnes, while nationally the stock could be around 1-1.5 lakh tonnes.

Ironically, the price correction comes even as SMP prices are touching all-time high prices in international markets. On April 6, SMP auctions on Global Dairy Trade, the online platform of New Zealand’s dairy giant Fonterra, had closed at $ 3,367/tonne, a five-year high. Domestically, SMP prices were trading at Rs 275 per kg before correcting to the present Rs 250-mark.

Mane, however, said they are yet to see any demand for SMP in domestic markets due to the reduced consumption of ice creams and sweets.

While most dairies have reduced their prices, Lactalis Sunfresh Agro Industries Limited (Prabhat ) continues to pay their farmers at the rate of Rs 30 per litre. Rajiv Mitra, CEO of the dairy, said their collection is around 30 lakh litres per day and the higher prices they are paying will continue despite the lockdown.