Milk Price Going Up While Problems of Dairy Farmers Also Increase

milk production

In recent months leading dairies have been increasing the price of the packaged milk sold by them while GST on packaged milk products has also added to the woes of consumers. During the last six months or so, leading dairies like Mother Dairy and Amul have twice raised their price, each time by about Rs. 2 per litre, citing inctease in costs. While fresh milk is exempted from GST, GST of 12% has to be paid on condensed milk, butter, ghee and cheese while GST of 5%  has to be paid on milk products like  curd, lassi, butter milk and paneer when sold in pre-packaged and labeled form, and also on ultra high-temperature milk.

A higher price would not look so disturbing for consumers if one could be sure that this was adding to the prosperity of dairy farmers, particularly the smaller ones, but all indications appear to be that their problems too have been increasing, particularly in terms of steep rise in costs. On top of it some longer-term problems are also increasing for the dairy sector, aggravated by some highly questionable policies and projects of recent times.

Most of the dairy farmers in India consist of small landowner farmers and landless households in villages. Milk production is both an important means of nutrition and an important source of earnings. Whereas the income from crop comes after the harvest, income from milk production can come on short-term basis and is an important source of meeting routine daily expenses. Hence dairy development can be very important for most rural households if the base for this becomes strong.

One very important means of ensuring this is that there should be adequate feed for dairy animals. This consists of grazing fields or pastures, dry fodder and concentrate feed or oilcakes. Pastures and fodder trees have been in rapid decline in most parts of the country. Dry fodder is lesser in the case of exotic dwarf crop varieties compared to tall indigenous varieties of crops. With mechanization of crop harvesting, particularly wheat, the availability of dry fodder has decreased. As alternative industrial uses are becoming available, this too is reducing the availability of dry fodder. This year the increase in the price of dry fodder has been unprecedented due to a combination of all these factors. The landowner dairy farmers can still survive this by getting dry fodder from their own farms but the landless dairy farmer is suffering the most as he has to buy even dry fodder at a fast rising price. The trend of giving some free dry fodder to landless farm workers has also decreased.  As oilseed processing has moved almost completely from villages to big urban units, oilcake supply is prioritized for exports and big units while small village dairy farmers can get only very limited supplies at a higher price. In this context also problems are set to increase as future edible oil supply increases are to be obtained more and more from palm oil, as per a recent decision announced by the government, so that the shortfall of oilcakes of mustard or groundnut or other traditional oilseeds is likely to be aggravated.

As a result most small landowning farmers are producing milk at an increasingly lower margin. The landless dairy farmers may even be pushed into losses and hence pushed out of this livelihood support. The spread of lumpy skin disease among dairy animals has only added further to this depressing situation for dairy farmers.

Another reason why costs arise relates to breeding practices and inputs. More attention has been given to cross-breed cows in official policy but these require conditions which increase costs. Recently , particularly in the last six years or so, the government has promoted the technology of sexed semen in which semen is treated and tampered with to ensure that only female calves are born. It is strange indeed that a government that claims to promote holistic cow-protection has actually been pushing a technology that prevents male calves from being born! In the long run, pursuit of such a policy can prove disastrous. On the other hand the Chattisgarh government has shown wisdom by promoting, under its  Godhan nyay yojana, the procurement of cow dung as well as urine to promote organic enhancement of soil fertility, adding to income of farmers as well as increasing the value for them of even those cows who are not yielding milk.

As the recent pandemic has also taught us, arbitrarily imposed changes in animals, particularly when these are against what exists in nature, can have unforeseen hazards. It is hence very risky to promote such technological changes as sexed semen, particularly when this is done without longer term studies on wider risks.

In recent months there has been a big debate in the context of the adverse impacts of increasing corporatization on farmers. This debate is also relevant in the context of impact on dairy farmers. Increasing corporate control on dairy farmers can result in dairy farmers being asked time and again to buy particular high-cost equipment, feed or medications which can drive them out of business, paving the way for increasing imports of milk powder and butter oil etc.

This is why dairy farmers have been opposing those free trade agreements which would have led to increased imports of such milk products from Europe, Australia, New Zealand and the USA, apart from increasing corporatization trends.

Dairy Farmers have become more vulnerable with spread of recombined milk in which milk powder, butter oil etc. are combined with fresh milk. By changing the proportion in favor of powder and butter oil, adequate milk availability can be ensured for consumers even when procurement from farmers is declining. If and when cheap imports are available, then this tendency can increase. Hence there is careful need to monitor such trends, to ensure transparency and to protect the interests of small dairy farmers.

There have been indications that the tendency to increase domestic or imported milk powder/butter oil in recombined milk increased in COVID times and the worry is that this can become a longer term trend which will be harmful for farmers. Milk being a perishable product, there is need for a lot of care to ensure that dairy farmers operating at a low margin do not suffer losses due to sudden loss of market or fall in price received by them.

If small-scale processing facilities are set up within or very close to village, then risks for farmers can be reduced. In addition nutritious by products like chaach which were earlier available even to poorest sections can again become more abundant in villages. It is a matter of concern that the availability of chaach, which has been the cheapest source of protein which would often be given away free to others, particularly the poor, has decreased considerably in villages with the much reduced local processing.

Bharat Dogra is Honorary Convener, Campaign to Save Earth Now. His recent books include India’s Quest for Sustainable Farming and Healthy Food, Man over Machine and Protecting Earth for Children.

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