Why are Dairy farmers dumping milk in Maharashtra?

Dairy farmers in Maharashtra have started a series of protests from Monday against the low prices dairies are paying them at present. For two days now, dairy farmers across Maharashtra have been dumping milk in different ways.

Some have poured it on the road; some on stones and idols, calling it the traditional religious practice of ‘abhishek’; while some have handed over milk bottles to the local tehsildar in a symbolic gesture of dumping their stock with the government.

Dairy farmers and Swabhimani Shetkari Sanghtana workers pour milk on portraits of PM Narendra Modi and Maharashtra CM Uddhav Thackeray as a sign of protest
Photo Credit: PTI

As farmers take to dumping their milk on roads and stopping milk supply to urban areas, dairies blame the COVID-19 pandemic and the frequent lockdowns as the reason behind the recent price corrections. The dairy farmers have been hit hard by the lockdown and, led by multiple farmers’ organisations, have taken to the streets to demand that the state government grant each of them a subsidy of Rs 10 per litre.

Dairies claim the pandemic has severely affected their capacity to pay. During the initial days of lockdown, dairies saw products like ghee, cheese, butter, ultra heat-treated milk (sold in cartons) fly off the shelves as people stocked up. However, the closure of institutional buyers like ice cream manufacturers who have halted production, sweet shops etc saw dairies reporting a sharp decline in their milk sales. Another reason for that caused a steep drop in the demand for milk is that the restaurants, sweet shops and bakeries were shut, and there were no weddings or other community functions.

The rapid spread of the pandemic has seen many urban centres and states again go for a lockdown. Further social distancing norms have put brakes on marriages and other social gatherings. Festivals normally see dairies doing brisk business as sales of ghee, sweets etc peak, but the pandemic hangs over both the upcoming Raksha Bandhan as well as the Ganesh Chaturthi later in August.

Since the last week of April, dairies in Maharashtra have started slashing acquirement prices they pay to farmers for their milk. In May, dairies in Tamil Nadu had effected a similar cut in aquirement prices with the Karnataka dairy unions also announcing price correction by Rs 2 per litre.

In case of Maharashtra, farmers who were paid at the rate of Rs 30 per litre for their milk with 3.5 per cent fat and 8.5 per cent SNF (solid-not-fat) saw a steady decline in their realisations with dairies now paying between Rs 17-22.50 per litre. This steady decrease in their prices has led to the present protest with multiple farmer organisations taking to the streets.

Ajit Navale, a functionary of the All India Kisan Sabha, said: “Before the lockdown, farmers were getting almost Rs 30-35 per litre for cow’s milk. Today, though the situation is slightly better than the first few months of the lockdown, farmers are getting just about Rs 17 per litre. This is nothing as compared to the rising production costs.”

Navale added: “Today, we are pouring milk on stones. Tomorrow, if the government does not take a serious note of the issue, we will dump milk on the doorsteps of members from the ruling parties.”

The opposition BJP in Maharashtra has also joined the fray with the party calling for state-wide agitation from August 1 in this regard.

Sunil Kedar, Congress leader and Maharashtra’s minister in-charge of the animal husbandry and dairy development department, held a meeting of all stakeholders — farmer leaders, cooperative and private dairies — Tuesday afternoon.

Anoop Kumar, principal secretary of the department, told ThePrint: “Their main demands are a per-litre subsidy directly into the farmers’ accounts and the state’s intervention in facilitating the export of skimmed milk powder. The minister heard them out, but no decision has been reached yet.”

An official who works with Kolhapur’s Warana dairy said: “Our sales dropped by almost 30-40 per cent. We have been converting our excess supply into skimmed milk powder.”

However, with all dairies facing the same problems and taking the same options, there is a glut of skimmed milk powder now available, causing its prices to crash as well.

“Milk powder price fell from Rs 300 per kg to almost 160 per kg. That is not affordable for us. Most dairies are storing milk powder as much as possible instead of selling them at this price, but storage capacities are also limited,” the Warana dairy official added.

Excess milk is converted by dairies into skimmed milk powder (SMP) which they either trade on commodities platforms or reconvert into liquid milk when their collection goes down. Estimates by the dairy industry have pegged that at present the country has around 2 lakh tonnes of SMP which is further hitting their bottom lines.

Before the lockdown, SMP in the domestic market was around Rs 270-300 per kg but since then prices have collapsed to the present Rs 160-170 per kg, which has seen dairies having no other option but to incur storage cost on it. In addition, the return of the lockdown has seen businesses such as sweetshops, roadside chaiwallahs, industrial canteens again closing down which has led to a further decrease in milk demand. A combination of both lower sales and unsold commodities have led to the present crisis with dairies not ruling out further price correction in the days to come.

At present farmers are demanding a direct subsidy ranging from Rs 5-10 per litre which will ensure their realisation is between Rs 25-30 per litre. This will compensate their cost of production, which is around Rs 22-23 per litre not taking in consideration labour charges.

The government of Karnataka has a scheme, which sees the government paying a subsidy of Rs 6 per litre directly into the account of farmers, which cushions them for drastic price corrections. Farmers in Maharashtra have asked for the introduction of a similar scheme in the state. Dairies have asked for an export subsidy which will enable them to offload their unsold stock of SMP and thus enable them to create more demand and hence pay farmers a better price.

To help farmers tide over the excess milk crisis, the state government has launched a scheme for dairy cooperatives to procure up to 10 lakh litres a day, and convert it into skimmed milk powder and butter. The scheme, which was initially for two months until the end of May, was extended for another two months until 31 July.

Anoop Kumar of the animal husbandry and dairy development department said: “About 16-18 dairies participated in the scheme and we were able to handle the issue of excess milk to a great extent and provide relief in the main catchment areas. We were able to procure almost 5-6 lakh litres of milk daily.”

He added that the state government has procured 5.61 crore litres of milk as of 19 July, and that the total allocation for the scheme is about Rs 200 crore.

The idea of the state scheme is to auction the skimmed milk powder and butter on a central government portal. However, as prices of skimmed milk powder crashed, dairy owners, especially those that were not part of the scheme, suffered heavy losses and milk procurement prices dropped, Kumar said.

Navale, meanwhile, claimed the scheme did not do much the remedy the situation.

“Almost 78 per cent of the total milk in Maharashtra comes from private dairies, which were not included in this scheme. As a result, farmers from just 12 talukas benefitted from the scheme partially,” he said. “The government could procure only half of the ten lakh litres per day that it had promised.”

Dairies have asked for an export subsidy, which will enable them to offload their unsold stock of SMP, thus enabling them to create more demand, and hence pay farmers a better price.

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