Maharashtra: Dairies Brace for Further Losses as Lockdown returns in Urban Pockets

Dairies in Maharashtra were bracing up for further losses this season as major urban centres have decided to go for another round of lockdown in the wake of rising Covid-19 cases. Despite the state government’s scheme of procuring excess milk, dairies said reduced sales have eaten away their profit, which has forced them to slash the procurement price for farmers.

On Saturday, the Kolhapur District Cooperative Milk Producers’ Union, which retails pouched milk under the brand name Gokul, was the latest to revise its procurement price. The cooperative union, which procures milk mainly from Kolhapur and nearby districts, was till date paying Rs 27 per litre for milk with 3.5 per cent fat and 8.5 per cent Solid-not-fat (SNF). Effective from Sunday, the union will pay farmers at the rate of Rs 26 per litre. Arun Narke, director of the union, attributed it to continued losses as well as requests from other dairies in the region. “Our sales have taken a hit as urban areas have again gone for the lockdown. Unfortunately, the lockdown came at a time when sales had just picked up after three months of strict nationwide lockdown,” he said.

Gokul is the latest in the list of dairies to effect a correction in the milk prices despite the state government extending its scheme of procuring excess milk from dairies and converting the same into Skimmed Milk Powder (SMP). Almost all dairies, both private and cooperative, are now procuring milk at the rate of Rs 17 to Rs 22 per litre. As institutional buyers like hotels, sweet shops, tea shops, etc remain closed, dairies report a significant dip in milk sales. Though, dairies convert the excess milk into SMP, but given the low demands both in domestic and international markets, they said thy had no other option but to store the same.

Of the 11.50 lakh litres of milk it collects daily, Gokul dairy said, it was forced to covert around 1 lakh litres into SMP. “This is an improvement from the situation in April- May, when our sales had dipped by 2-2.5 lakh litres per day,” he said.

Narke said at present Gokul has 2,700-2,800 tonnes of unsold SMP, while the overall stock in Maharashtra is around 70,000 tonnes. “The cost of production of SMP is around Rs 300 per kg and the present prices in the domestic market is around Rs 170-180 per kg. Thus, dairies have no other option but to pile up their stocks,” he said, adding that dairies across the country have a total stock of around 2 lakh tonnes of SMP.

The unlocking process started by the central and state governments had improved sales as hotels, roadside tea shops and industrial canteens had started opening up. But as Covid-19 cases started rising, many urban centres like Pune, Pimpri-Chinchwad, Aurangabad and Thane have enforced lockdown again, which has seen milk sales plummet. The latest to join the fray is Kolhapur, with district Guardian Minister Satej Patil announcing a week-long lockdown from Monday. “Our sales will be hit and given the mounting losses, we had no other option but to reduce our procurement prices,” he said. In case the lockdown is extended, Narke said there could be a further reduction in prices.

Meanwhile, various farmer organisations have called for the suspension of milk procurement on July 21 to protest against the price cut.

Former MP and president of Swabhimani Shetkari Sanghatana, Raju Shetti, has called for a complete suspension of milk procurement, demanding a Rs 5 per litre subsidy to the farmers directly. Similarly, the All India Kisan Sabha and the Rayat Kranti Sanghtana of former minister Sadabhau Khot have called for agitation in view of the low milk prices.

Source: The article is extracted from The IndianExpress, July 18, 2020.