After potato and onion growers, it is now the turn of milk producers to experience declining price realisations on account of rebound in production as well as a post-festive slump in demand.
Since Diwali, the landed prices of raw milk, containing 6.5 per cent fat and 8.5 per cent solids-not-fat (SNF), in most dairies in the North have fallen from around Rs 30 to Rs 24 a litre.
Even cooperative unions such as Mehsana affiliated to the Gujarat Cooperative Milk Marketing Federation (GCMMF) are apparently paying farmers now only Rs 420 for every kg of fat, against Rs 450 till two months back. For standing full-cream milk with 6 per cent fat and 9 per cent SNF content, that translates into a reduction from Rs 29.95 to Rs 27.95 a litre.
DRY PHASE
According to industry sources, much of this has to do with the strong rebound in milk procurement, following a ‘dry' 2010-11 that saw prices surge both at the producer and consumer end. GCMMF's member unions paid an average of Rs 400 for a kg of milk fat in 2010-11, compared with Rs 337, Rs 298 and Rs 284 in the preceding three fiscals.
The rebound, in turn, is said to reflect a stabilisation of the reproductive-cum-lactation cycle of animals from the drought-induced disruptions of 2009. Although the drought per se happened in 2009-10, its effects were felt only the subsequent year, when the earlier fodder deprivation led to delayed calving of pregnant animals. This is normal, considering that in droughts, farmers tend to accord higher feeding priority to the animals already in-milk or about to lactate.
HIGHER PROCUREMENT
“That dry period is now over and which is why we are seeing more milk coming in. Moreover, the price increases in the last 2-3 years have also incentivised farmers to invest more in their animals. And with the good monsoon in 2010 and 2011 also helping improve overall fodder availability and rein-in cattle feed prices, it is all adding up to higher milk procurement by dairies,” the sources pointed out.
GCMMF unions are currently procuring around 133 lakh litres per day (LLPD) of milk, including 117 LLPD from Gujarat alone. Last year, at this time, they were collecting only 108 LLPD, of which 104 LLPD was from Gujarat. Even Hatsun Agro Product Ltd, the country's largest private sector dairy, has reported a 10 per cent increase in procurement over last year.
NO PRICE CUT
The benefits of increased procurement and lower milk prices may, however, not benefit consumers. Neither GCMMF nor other liquid milk marketers such as Mother Dairy appear to be in any mood to reduce prices at the retail end.
Even prices of products such as milk powder or ghee have not fallen as much as raw milk. Skimmed milk powder, which was quoting at Rs 185 a kg three months back, has softened to Rs 165, much less than the Rs 6/litre decline in raw milk cost. Ghee prices have, likewise, gone down marginally from Rs 250 to Rs 240 a kg.
“It is not a good thing if lower realisation for farmers is not benefitting consumers. It would be even worse if sustained low prices would lead farmers to send their animals to the slaughter house. The right thing for the Government to do now is to lift the ban on milk power and casein exports,” the sources added.