Ironically, low demand has been compounded by a glut in production because of decent rains. The Karnataka Milk Federation (KMF), the apex body of milk unions, receives about 87 lakh litres daily as against normal inflow of 73 lakh litres. Daily sales, on the other hand, have dipped from 60 lakh to 49 lakh litres.
Although the government had extended business hours for milk parlours from 6am to 6pm during the lockdown, sales have slumped largely because bulk purchasers like hotels are closed and big weddings have been banned. KMF is now converting excess supply into skimmed milk powder, which is going into storage since there are no takers for that product too.
“This distressing situation has prompted us to reduce the purchase price. We hope farmers will cooperate,” said Narasimha Murthy, president, Bengaluru Milk Union Limited (Bamul) that covers three districts — Bengaluru Urban, Bengaluru Rural and Ramanagar. Hassan and Mandya milk unions too have decided to cut purchase price, while many of the other 11 unions are expected to follow suit.
Farmers on the other hand are want the government to hike incentive for milk producers from Rs 5 per litre to Rs 10. And some milk unions, including Bamul, are urging the government to increase the retail price of milk from Rs 37 per litre to Rs 45.
“Because of rising prices of animal feeds, production cost has gone up to Rs 28-30 per litre. The government should hike incentives, otherwise milk unions’ decision to reduce the procurement price will deal a death blow to dairy farming,” said T Yashwantha, milk producer and state committee member, Karnataka Prantha Raitha Sangha.
However, the government is unlikely to heed the demand. “Financial constraints do not permit us to hike incentives for now. Let me discuss the issue with milk unions and try and find a way out,” said Prabhu Chauhan, animal husbandry minister.
KMF, which is under pressure to continue procurement, has appealed to the Centre to allow milk unions to borrow under the interest subvention scheme on the lines of its package for last year’s lockdown when the milk unions availed Rs 800 crore.
“We sorely need something like the interest subvention scheme as we need to make purchases despite low demand and pay farmers,” said KMF managing director Satish BC, who participated in a video conference with the Union animal husbandry secretary on Friday. “The Centre has assured us it will extend the scheme to the present lockdown and unions may be allowed to borrow around Rs 900 crore,” he added.