Stimulus That Can Spoil The Milk Sector

Karnataka government's financial stimulus to its dairy cooperative is benefitting 2.5 million farmers, but can destabilise the national market.

- Jitendra

DAIRY FARMERS in Maharashtra, Telangana, Andhra Pradesh and Tamil Nadu are grappling with a peculiar problem. While the quality and quantity of the milk their cows produce have improved over the years, the price they get is going down. “Till a few years ago, my five cows were yielding just 10 litres of milk a day. I improved the feed and today, they produce 22 litres of high-fat milk,” says H Venkanna Reddy, a small farmer from Telangana’s Jangaon district. This year he is getting ₹22-25 per litre of milk, which is close to 30 per cent lower than what he got last year. A similar story is narrated by Nilesh Chippde, a farmer in Maharashtra’s Beed District, when he says that while milk procurers are constantly quoting lower prices, cattle feed cost is gradually increasing. “I am struggling to rear my 12 cows now,” he says.

Deepak Deshmukh, a milk procurer for Vaishno Devi Food Private Limited in Maharashtra’s Osmanabad district, says even his commission has been lowered from ₹3 per litre in 2015 to ₹1 now. “Officers at the plant say the price crash has been triggered by state-backed cooperative Karnataka Milk Federation (KMF), which has flooded the market with products 5-10 per cent cheaper than competing brands,” says Deshmukh, adding that he does not understand how KMF manages to sell its products below the market price.

An analysis by Down To Earth shows that KMF has been able to keep the price of its products “artificially low” because successive Karnataka governments have been giving financial support to increase the state dairy cooperative’s procuring capacity over the past decade. Today it is the second highest procurer of milk in the country, after Gujarat’s Amul cooperative.

Politics over milk