Jordbrukare > Indian Diary Sector > Milk glut in India likely to deepen

Following weak purchases from institutional buyers such as hotels, restaurants and sweet shops, coupled with subdued consumer demand because of a fall in incomes, private dairies have cut procurement prices

NEW DELHI: When anguished dairy farmers emptied milk tankers in Maharashtra earlier this week, it made for a sorry sight. For the past few months, these farmers have been selling cow milk for ₹15-20 per litre, less than the cost of bottled water, as institutional demand plunged following a stringent pandemic-induced lockdown. The protests will likely intensify in the coming months as milk production rises with the onset of winter.

While dairy farmers in states like Gujarat are part of milk cooperatives and thus receive fair prices, those in Maharashtra and Uttar Pradesh largely supply to private dairies and thus worse off. Following lower purchases from institutional buyers such as hotels, restaurants and sweet shops, coupled with subdued consumer demand because of a fall in incomes, private dairies have sharply reduced procurement prices.

For instance, Ganesh Barge, a dairy farmer from Baramati district of Maharashtra, now sells milk for ₹20 per litre compared with ₹31 in early March. “I am selling milk at a loss of ₹5 per litre or close to ₹700 per day. As production rises (with the onset of the flush season) my losses will also increase,” Barge said.

The dominant farmer union in the state, Swabhimani Shetkari Sanghatana, is now planning to organise larg- scale protests next month.

“The protests this week were symbolic and if our demands are not met before 5 August, we will intensify our protests,” said Raju Shetti, former Member of Parliament and the leader of the Sanghatana.

The union has demanded that the state government pay farmers to direct cash support of ₹5 per litre, abolish GST on dairy products to spruce up demand, and provide incentives for export of milk powder by dairy companies. “The Centre should also cancel the import of 10,000 tonnes of skim milk powder it allowed in June at a concessional duty since India has stocks over 1,50,000 tonnes,” Shetti said.

Interestingly, the dairy sector could be in for another shock if India gives trade concessions to Washington. As part of a new trade the deal, India is offering to open its dairy markets to the United States while seeking concessions for generic drug exports, Reuters reported earlier this week.

India is the largest producer of milk globally and the largest consumer of dairy products as well. Around 70 million rural families in India are engaged in dairying—a regular source of income for them unlike earnings from crops which are seasonal.

“Under no condition, India should allow free trade in dairy products since it would impact millions of small farmers,” said R. S. Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation, which sells its products under the popular Amul Brand.

According to Sodhi, direct cash support to farmers will not solve the problem. States and Centre should provide financial support for converting milk into powder together with export incentives. “Milk powder should also be made part of the mid-day meal take-home rations for children to increase demand,” Sodhi added.