Milk Co-operatives to get up to 4% Interest Subsidy on Working Capital

Such conversion into high shelf-life products resulted in blockage of funds and caused difficulty in payment to the farmers. Due to decrease in demand for high-value products like ice-cream, flavoured milk, ghee, and cheese and also for curd and cottage cheese, dairies are facing severe strains. The scheme provides for interest subvention of 2 per cent per annum, with an additional incentive of 2 per cent per annum interest subvention to be given in case of prompt and timely repayment or interest servicing. It would be available on working capital loans taken by dairies and FPCs from scheduled commercial banks. Regional rural banks, cooperative banks and other financial institutions taken in the current financial year for conversion of milk into conserved commodities and other milk products, it added.

Due to the pandemic, a large number of small private dairies are reported to have closed operations resulting in diversion of milk to cooperatives. These small private dairies were mainly catering to milk-based sweet making shops and local supplies in towns. Due to the restrictions imposed, the supplies to hotels and restaurants by private dairies as well as cooperatives have been affected. As a result, milk procurement by cooperatives and FPCs increased by 8 per cent, while their sales dropped by 6 per cent. Currently, the gap between procurement is nearly 200 lakh litres per day.

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