Some dairies in Maharashtra are planning to introduce a further correction in the procurement price of milk. From April 16, some private dairies have decided to pay farmers only Rs 25 per litre as against the prevalent rate of Rs 27 per litre.
This is the second price correction dairy farmers would have to bear in less than a week. On April 11, dairies had announced a reduction of Rs 3 per litre, slashing prices from Rs 30 to Rs 27 per litre. This was a direct reaction to the dip in demand for milk due to the partial lockdown in the state. As offices, hotels, restaurants and tea shops remain closed, demand for milk has dipped, leaving dairies with excess milk stock.
“The production cost of the present stock of skimmed milk powder (SMP) is Rs 270-280 per kg. Domestic prices of SMP has since then dipped to Rs 200-210 per kg so it would not be possible to sell the same at a profit. We have no other option but to announce a further Rs 2 per litre price correction from April 16,” said a private dairy owner from Pune district.
Asked about the possibility of a price correction, Dasarath Mane, chairman and managing director of Indapur-based Sonai Dairy, did not rule it out. But he was quick to add that it would be temporary.
“We have decided not to go below Rs 25 per litre as the procurement price. Any further correction would be detrimental to farmers in particular and the trade in general,” he said. Mane expressed hope that demand for milk and dairy products would pick up post June, once the lockdown norms eased and Covid-19 cases dropped.
“At present, the international prices of SMP are quite good. Exports of SMP and white butter can help the dairies maintain their bottom line,” he said.
However, R S Sodhi, managing director of the Gujarat Cooperative Milk Marketing Federation — the cooperative giant which retails under brand Amul — ruled out any immediate correction in procurement prices. “Our prices are in the range of Rs 27-29 per litre and we will continue paying the same. A lockdown would certainly have an impact but that would be temporary. Overall, there is a shortage in milk in the country which should keep procurement prices high,” he said.
Amul, at present, is reporting 2.65 crore litres of milk collection per day which, said Sodhi, was 15 per cent above its normal collection. This cooperative giant procures 15 lakh liters of milk in Maharashtra alone.
Most cooperative dairies also seemed lukewarm to the idea of an immediate price reduction. Ravindra Apte, chairman of the Kolhapur Cooperative Milk Producers Union(Gokul), said they continue to pay their farmers at the rate of Rs 27 per litre.
Vivek Ksheersagar, managing director of Pune District Cooperative Union (Katraj), said they would also be wary of reducing their prices below Rs 27 per litre. Cooperative dairies are worried that once private players slash their prices, a lot of milk would be diverted towards them, which they can’t afford to procure.
Rajiv Mitra, CEO of Lactalis Prabhat, said the dairy is committed to paying a fair and transparent price to their farmers. “In spite of the rise in Covid caseload, and the partial lockdown, we are committed to paying milk producer farmers fairly. Their well-being is most essential for sustenance of the dairy industry in the medium and long term,” he said.