Govt. ask NDDB to Revive Buffer Scheme to Help Raise Procurement Prices for Farmers

Caught between a slump in price of skimmed milk powder (SMP) and reduction in demand for milk and milk products, dairies and the state government are pushing for revival of the decentralised scheme by National Dairy Development Board (NDDB) for creation of a buffer stock of SMP. The state government as well as dairies feel this scheme will help get over the present crisis, which has seen a sharp drop in procurement price for farmers.

Unlike pulses, wheat or sugar, liquid milk is highly perishable with farmers and dairies having to dispose of their stock daily. Its only the fat (3.5 per cent in case of cow and 6.5 per cent in case of buffalo) and solids-not-fat (8.5 per cent cow and 9 per cent buffalo) in milk that can be stored. Dairies carry out this conversion when milk production peaks — or the flush period — and store the fat as white butter or ghee and the anhydrous powder as SMP, later reconverted to liquid milk during the lean period when production dips.

This SMP is also a traded commodity with India’s average annual exports being around 1 lakh tonnes. There has, however, been a global collapse in SMP prices due to the Covid-19 pandemic, which has left the country with an unsold stock of around 2 lakh tonnes. As SMP stock remains unsold and demand for milk and its products remain low, dairies have started slashing prices paid to farmers. Thus, in Maharashtra alone, farmers, paid Rs 30 per litre for milk with 3.5 per cent fat and 8.5 per cent SNF, are now being paid between Rs 17 and Rs 22.50 per litre.

Before 2000, NDDB maintained a decentralised stock of SMP with cooperative dairies, which was auctioned off as per market requirement. Maintenance of buffer stock helped stabilise the liquid milk market in times of excess production and the stock helped cushion the market when production dipped.

Senior state government officials have requested the central government to reintroduce the scheme. “During our discussion with central government officials, the matter was raised. NDDB chairman was also briefed about the matter,” said the official, adding that out of 2 lakh tonnes of SMP with dairies, around 40,000 to 50,000 tonnes could be demarcated as buffer stock.

“This will immediately bring up SMP prices and help dairies pay their farmers better,” said the managing director of a cooperative dairy.

Read: Maharashtra Dairy Farmers Protest, Demand Higher Prices for Milk

Source: The article is extracted from The IndianExpress, July 21, 2020.