The dairy sector is again on the warpath, with milk unions on the one hand mounting pressure on the state govt to hike retail prices, while milk producers on the other are demanding an increase in incentives.
Karnataka Milk Federation (KMF), which markets the commodity under the Nandini brand, raised prices by Rs 2 in June, while adding 50ml to every 500ml packet.
But milk unions argue that the increase is insufficient due to an excess in milk production. They say financial losses are mounting from an unsold stockpile of skimmed milk powder (SMP).
Many of the state’s 15 milk unions have reduced procurement price by Rs 2 per litre, angering farmers. Most unions procure from farmers at Rs 32.5 per litre, but in districts like Kolar, Mandya, and Ballari, the rate has dropped to Rs 30. Farmers are also frustrated that the govt’s Rs 5 per litre incentive has remained unchanged for over a decade, despite rising input costs.
Brass at Bangalore Milk Union Ltd (Bamul) plan to submit a memorandum to chief minister Siddaramaiah on Friday when a new administrative building in Magadi will be inaugurated. They are seeking approval for a Rs 5 hike in the retail price. Currently, Nandini milk is sold at Rs 42 per litre.
“It practically impossible for milk unions to pay a fair price to dairy farmers without hiking retail prices,” said Rajkumar HP, Bamul chairman. “While many unions have reduced procurement prices, Bamul and others have not done so to avoid troubling farmers. But an increase in retail price is inevitable, and we will request the CM’s permission.”
Milk unions, however, say they have not reduced milk intake despite surplus to avoid distressing farmers. Daily milk production has risen from 83 lakh litres to 93 lakh litres. The excess is converted into SMP.
“The unions are unable to sell SMP stock due to a price crash. While production costs are around Rs 300 per kg, the market price has fallen to Rs 220. We need to wait for prices to recover,” Rajkumar said.
Protest march planned
Contradicting the unions’ request, farmers are demanding the govt increase their incentive. Though Congress had promised a Rs 2 hike in incentives as part of its election manifesto, farmers want Rs 10 per litre as incentive. They have threatened statewide protests and a ‘Vidhana Soudha Chalo’ march if demands are not met.
“Input costs such as cattle feed have increased exponentially,” said Suryanarayana PR, president, Karnataka State Milk Producers-Farmers’ Welfare Association. “The govt must increase incentive as per the Swaminathan recommendation, which suggests farmers should receive 50% more than their input cost. This would ensure farmers get at least Rs 40 per litre.”
The govt has also faced criticism for delaying incentive payments. While arrears for four months were settled last month, the govt still owes farmers four months of incentives.
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