Dairy Industry: its time for real 'Manthan'

Pashu Sandesh, 26^th June 2018

From the editor’s desk:

Recently I was watching a beautiful movie “Manthan” made on the theme of establishment of Gujarat Milk Cooperatives. The lead actors Smita Patil, Naseeruddin Shah, Girish Karnad through their wonderful acting ably depicted the struggle of Dr Kurien the “father of White Revolution” in bringing the fragmented and exploited milk production system under the one umbrella of Milk cooperative. Now the same White revolution started by Dr Kurien is under threat from the problem of Surplus!!! Though it may seem surprising that a “problem of Surplus” in our country do exist which is struggling with deficiencies at many levels.

The White revolution started when Amul, for the first time in the world, manufactured skimmed milk powder (SMP) from buffalo milk. The breakthrough enabled the dairy cooperative in Gujarat’s Kheda district to accept all the milk that its farmer-members poured, especially during the ‘flush’ winter months when production by buffaloes rose one-and-a-half times or more. The surplus milk converted into powder could now be stored and re-constituted during the ‘lean’ summer, when production dropped. The powder plant guaranteed that all the milk poured by farmers got procured, making dairying a sustainable income-generating activity. And consumers, too, were assured of round-the-year supply. With this process the Cooperatives were able to keep the milk procurement prices stable all throughout the year.

With the advancement of technologies and innovations in the Dairy sector, India has achieved the status of the largest producer of Milk in the World with the annual production of 165.4 metric ton in 2016-17. With this level of production came the problem of surplus. Milk cooperatives across India are now sitting at over 4 lakh tons of SMP and with the international prices falling for SMP the problem is destined to get bigger as our production is continued at the same pace and the Cooperatives are bound to procure milk from the Farmers resulting in the falling procurement prices leading to further accumulation of milk powder stocks.

The procurement price of buffalo milk in Gujarat has come down from around Rs 41 per liter to Rs 35 per liter in the last one year. Private dairies in Maharashtra have, likewise, lowered cow milk rates from Rs 26-27 to Rs 17-18 per liter. Milk unions under the Karnataka Cooperative Milk Producers Federation Limited (KMF) have cut down the procurement price of milk by Rs 1.50 to Rs 2 per liter with effect from June 1. This cut in procurement price has affected nearly 24 lakh milk producers of the state associated with KMF.

We all as the Dairy industry analysts continue to stare at the same problem but, what is the solution? Here are few of the suggestions put forward by the experts:

• Create a buffer stock of 2 lakh tonnes of SMP through NDDB. 
• Introduce SMP in futures market platforms. 
• Bring SMP under the Merchandise Exports Incentive Scheme (MEIS). 
• Incentivise investments in value-added products in the organised sector, from curds, buttermilk, cheese, ice creams and other dairy products.
• Expand domestic demand for higher milk consumption through concerted campaigns, especially in 115 aspirational districts where malnutrition is high. 
• Creation of more markets in the milk deficient countries such as Nepal, Sri Lanka, Bhutan, Bangladesh, or even African and Central Asian countries by providing them initially with free SMP and help in development of Dairy infrastructure.

Pashu Sandesh view: As per our view, it’s high time for the Government to intervene and urgently formulate mechanisms to buy the surplus SMP for its own domestic use in the form of distribution through PDS as a part of Food Security Program. As such government is providing huge subsidies in the distribution of grains through PDS, then why not milk? On the one hand Cooperatives will have the domestic ready buyer in the form of Government and on the other it will ensure a high energy rich protein diet reaching to the plate of poor.

Government is making all out efforts to double the income of the Farmers by 2022 through Agriculture and Animal Husbandry and the Falling milk procurement prices are a serious blow to the vision.  Everyone should realize that the problem of surplus was bound to happen considering the magnitude of White Revolution and Operation Flood. Its high time for all the stake holders including the Ministry of Agriculture & Animal Husbandry, NDDB , IDA and the Cooperatives to sit together and avert the crisis with a permanent and sustainable solution. Now its time for real "Manthan".