The virtual exit of private dairies from procurement this year has led to a drop in milk prices by up to 15 per cent, mainly in the southern and western parts of the country.
Even in the North, where the peak flush season is set to begin with the onset of winter (when buffaloes start giving more milk), the outlook is bearish.
Excess stocks
The main factor behind the fall in milk prices is the huge stocks of skimmed milk powder (SMP) with private dairies, coupled with dwindling realisation from export of casein.
This has led to a situation where private dairies are no longer keen to buy more milk and farmers are pouring in their entire surplus to co-operative dairies. The latter, in turn, have responded by reducing their procurement prices.
“Private dairies have stopped collecting milk this year,” said sources at Karnataka Milk Federation (KMF), whose procurement touched an all-time high of 54.8 lakh litres a day during the first week of November. KMF’s average daily procurement stands at 53 lakh litres, about 20 per cent more than last year.
In Andhra Pradesh, the co-operatives have sought the Government permission to reduce prices. In Maharashtra, the private dairies have cut the procurement price by Re 1 , while co-operatives are under pressure to reduce.
In North, the dairies are currently paying Rs 380-400 for every kg of fat against Rs 450 last year.
Smp exports
R.S. Sodhi, Managing Director, Gujarat Co-operative Milk Marketing Federation, however, claimed that the worst was over and prices were unlikely to fall further. The pick-up in pace of SMP exports on rising demand and prices should help boost milk prices, he added.
SMP exports, since June this year, have stood at 17,000 tonnes. In September, the Government had estimated SMP stocks at 1.12 lakh tonnes. The industry has requested the Government to consider increasing the incentive for exports from 5 per cent to 10 per cent under the Vishesh Krishi and Gramin Upaj Yojana to facilitate export of accumulated stock. “We expect SMP exports to be between 10 and 12,000 tonnes every month going forward,” Sodhi said.
The export prices of SMP are turning attractive to quality producers, say, in the range of Rs 150-160 a kg, R.G. Chandramogan, CMD of Hatsun Agro, said. Besides, the appreciating dollar is an advantage, he added.