After onion fiasco, government to meet dairies to discuss milk prices, availability

Parthasarathi Biswas

The Centre has called a meeting of all leading dairies, both cooperative and private, next week “to review the milk situation in the country”. The meeting comes in the wake of the recent Rs 2-3 per litre increase in pouch milk prices by the Gujarat Cooperative Milk Marketing Federation (GCMMF, better known as Amul), Mother Dairy and other major brands. There are also reports of most dairies registering lower milk procurement this year, including in the “flush” period after October, when animals normally produce more because of better fodder and water availability as well as reduced body stress from high temperatures and humidity levels.

The meeting, to be held on January 3 and chaired by the secretary of the Department of Animal Husbandry & Dairying, will discuss the overall availability of milk and also stocks of conserved commodities — mainly skimmed milk powder (SMP) and white butter — with dairies. It will also review the trend in procurement rates being paid to producers and consumer prices of milk and milk products, The Sunday Express has learnt.

After the onion fiasco, where the extent of shortfall in production wasn’t anticipated well in time and led to retail prices of the bulb crossing Rs 100/kg levels, the Narendra Modi government does not want to take chances with milk. Dairies usually convert the surplus milk they get during the “flush” season (October-March) into SMP and white butter/fat. These conserved commodities are then used or reconstituted into liquid milk for the “lean” summer and monsoon months (April-September). That is the time when demand for milk goes up – consumption of curd, lassi/chaach, ice-cream and other products is higher during summers – even as production, especially by buffaloes, drops.

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This year, however, has been different. Prolonged unseasonal rain beyond September has led to fodder not growing properly and accumulating enough dry matter. As a result, the “flush” season has barely taken off, with SMP prices currently ruling at over Rs 300 per kg, double their levels at this time last year. The procurement price paid by dairies for standard cow milk with 3.5 per cent fat and 8.5 per cent solids-not-fat (SNF) has also increased from Rs 19-21 to Rs 29-31 per litre in the last one year.

Last week, ice-cream and frozen dessert manufacturers met the Union Animal Husbandry, Dairying and Fisheries Minister, Giriraj Singh, seeking slashing of import duties on SMP and butter oil, which are now at 60 per cent and 40 per cent, respectively. Ice-cream contains around 21 per cent milk solids (10 per cent fat and 11 per cent SNF/SMP), while frozen dessert has 11 per cent SNF from milk and 10 per cent vegetable fat.

Domestic dairies led by Amul have, however, opposed imports, while pointing out that farmers suffered low milk prices for three consecutive years from 2016-17 to 2018-19. Even retail prices for consumers went up by a mere Rs 4 per litre during this period. Opening up imports now, when prices are just recovering, will hit farmers hard, more so given that their cost of the feed itself has shot up by roughly 30 per cent. All this will dis-incentivise production to the detriment of consumers. The dairies further claim that the onset of winter and the rains, too, stopping should help normalise milk supplies, thereby easing the price pressure on SMP as well. For the government, balancing the interests of milk consumers and producers is going to be a tough call.

Source: Financial Express