Maharashtra’s farmers gain but dairies spill milk price hike over to consumers

Dairies belonging to private firms and cooperative groups, which were asked by the Maharashtra government to pay more to farmers from whom they purchased milk in exchange for sops, have instead started passing the cost burden of extra costs to the end customer.

Some brands have already increased the price of milk by ₹2 to ₹3 per litre while others are contemplating hiking it by as much as ₹4 in the coming weeks.

After dairy farmers protested against low prices paid by the companies in July, the state government decided upon a minimum procurement price of ₹25 per litre for their benefit (it was hovering at ₹20 per litre for several months). It announced a subsidy of ₹5 per litre for milk-based byproducts, including milk powder, to compensate dairies so that they would pay the minimum procurement price to farmers and avoid increasing their retail price. But that did not happen.

Kolhapur Zilla Sahakari Dudh Utpadak Sangh Ltd, better known through its Gokul brand of dairy products, first hiked its retail price, leading to a domino effect from other cooperative and private milk brands.

Experts and government officials feel the price hike was inevitable as the lobby of the distributors and dealers was too strong to slash hefty commission paid to them.

“The distributors and dealers have been taking away a large chunk of up to ₹11 per litre against the legitimate share of ₹5 per litre,” said Ajit Nawale, general secretary of Maharashtra’s Kisan Sabha which led the farmers’ protests for the last two years. “This is because of brand wars and the commission raj in the industry. A single brand across the state on the lines of Gujarat and Karnataka is the solution to end these malpractices.”

Mumbai Grahak Panchayat’s Shirish Deshpande said, “We are closely examining the overpricing and the commission given to middlemen. The issue will soon be taken to the government.”

Vinayak Patil, former chairman of Mahanand Dairy and director of Rajarambapu Patil Sahakari Dudh Sangh Ltd, said, “The government wanted us to bear the burden of procurement price rise, but it’s not feasible with the falling prices of milk powder. We have decided to increase retail price by ₹2, cut commission of the distributors by Rs2 and bear the remaining losses. Even after subsidy on milk powder, dairies are sustaining huge losses. The decision was taken after rounds of meeting over the last two to three days.”

Kiran Kurundkar, secretary of Maharashtra’s dairy development and fisheries department, said, “We have been giving subsidy on the 30% milk which is converted into the skimmed milk powder and other byproducts. There is no government control over retail prices of milk because it’s driven by market forces.”

First Published: Aug 05, 2018 00:54 IST

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