Milk companies want more subsidy to reduce prices.

Date : 29 May-2015
Milk companies want more subsidy to reduce prices.

The Maharashtra government’s strategy of using coercive measures to control prices of commodities is not yielding results – after sugar and cotton seeds, it’s now milk.

Although the BJP-led coalition government in the state has asked dairies to reduce milk prices and pay farmers more, many producers haven’t complied. The problem stems from a decline in global prices of dairy products, with more than half the milk procured in the state being processed into milk powder, butter and cheese. Only producers of liquid milk have been able to pay farmers the state-mandated price of Rs 20 a litre or more, although they haven’t agreed to lower milk prices. Amul, the apex organisation of dairy cooperatives in Gujarat that has become one of the main brands in Mumbai, has ruled out the possibility of cutting the retail price of milk.

Other brands had increased prices and were selling at higher prices than us by about Rs 2 per litre, Rs 3 per litre. Our milk price has been constant at Rs 38 per litre. So there is no question of reducing it further,” said RS Sodhi, managing director of the Gujarat Cooperative Milk Marketing Federation (Amul).

Although state agriculture and dairy development minister Eknath Khadse had asked the government-backed milk cooperative Mahanand Dairy to reduce milk prices by Rs 2 per litre, it hasn’t taken a decision

“We are thinking over it positively,” said Vishwas Patil, MD of Mahanand Dairy . The milk cooperative had increased the price of milk to Rs 40 per litre about a month ago.` Earlier, Khadse had tried to set prices of sugar and cotton seeds. He said legal action would be taken against sugar mills that don’t pay fair and remunerative prices for sugar cane. The minister had also asked private seed companies to slash the price of BT cotton seeds to provide relief to drought-affected farmers in the state.

Dairies based in the fertile Kolhapur-Sangli belt, which produce mainly liquid pouched milk for supply to Mumbai, have been paying the government rate to farmers. They , too, are non-committal about reducing retail prices. l about reducing retail prices.

Kolhapur-based Gokul Dairy , which collects 8 lakh litres of milk daily , pays farmers Rs 24.60 a litre and sells at Rs 39 a litre.

“We will take a decision about milk price in a meeting of our board of directors to be held on May 30,” said Vishwasrao Patil, Chairman of Gokul Dairy .

Sonai Dairy , based at Indapur in Pune district, specialises in the production of milk powder, butter and ghee, collecting about 24 lakh litres of milk a day . Sonai claims it’s been badly hit by depressed prices of milk powder in the international market.

As part of its marketing strategy , Sonai reduced its selling price by Rs 2 a litre even before the government’s orders.

However, sources said the move was aimed at forcing competitors in the liquid milk segment to reduce their procurement price.

Sonai expressed its inability to pay farmers a higher price.

“We cannot increase our procurement price to the government-prescribed rate in the current situation. It will be feasible only if the government gives us subsidy ,” said Dashrath Mane, chairman of Sonai Dairy . The dairy supplies about 3 lakh to 5 lakh litres of milk daily to Mother Dairy in New Delhi.Dairies producing liquid milk have been able to pay farmers the government-prescribed rate.

Source : The Economic Times