This blog is dedicated to women farmers of our country.
This year brought lots of challenges for the dairy sector. The challenges came in other sectors too. The happenings around us are not a problem. The problem is with how we react to those happenings. It is not action but our knee jerk reaction in both our acts and language.
Dairy industry faced the menace of climate change, fodder shortage, poor milk production, weak demand, Russia-Ukraine war, inflation and cattle pandemic like Lumpy Skin Disease, etc with lots of courage. The sentiment remained a bit down but still bold steps like increasing milk prices multiple times kept the ball rolling. It is fair to protect profits for the sustainability of any business.
The big question remains whether this profit distribution is equitable amongst all stakeholders across the dairy value chain. There are three major stakeholders in the dairy sector. They are farmers, processors and the consumers. The farmers and the processors saw the highest value realisation during this year but the consumers took a beating.
Finally it happened
If it is bound to happen then it will certainly happen. Dairy industry has a long history of not paying the farmer’s their due. A formal audit of farming activity in India will tell the truth. Which of the milk prices is more , Rs 25 in 2012 or Rs 41 in 2020? Considering a paltry inflation at 7% , Rs 25 per kg is more in terms of its value than Rs 41 in 2020.
We are still not debating on whether the farmers were making some profits at Rs 25/kg in 2020. The answer is No if he converts all imputed costs into computed costs. Adding rural women income in the costs will change the whole equation. Exploiting rural women and depriving her of her income rights is no less than human trafficking .
Shrinkflation- A smart strategy to cheat
This year most of the companies came out with very smart solutions. They reduced the volume of most of their packages by maintaining the same price point. This reduction was camouflaged in the batch printing rather than overtly printing it on the package. They consider it to be a marketing disruption. A new term b
Most of the dairy companies adopted the strategy of shrinkflation. The volumes of most of the products are reduced by keeping the same price. Earlier we used to have more volumes at the same price but now we have lesser volumes at the same price. Giving more for less is called a promotion as it modifies the buying attitude positively. What shall we call giving less for more ?
It is less harmful to give less at the same price in case of other FMCG like Soap, shampoo and detergents. In the case of dairy and food products it may be a deterrent as it is depriving the consumers for their right to get enough nutrition. There has been a reduction in milk and curd volumes from 10-150 ml.
The need for disruption
I think this is the time to ensure high nutrition at the same or low prices. There is no harm redesigning milk for tea, coffee or for kids to drink even with less fat but a moderate level of proteins. Reducing volumes at low prices may not serve the purpose. Milk is a healthy food but still may not be considered as nectar. Whatever we do to the milk, it will still remain as a commodity, unless we do some disruption in creating milk high in protein at lower cost. Which may even lead us to exploring possibilities of filled milk.
There is no harm in raising the price of milk provided you are equitable in sharing the profits with the farmers. If the lower price segments are not working on a cost-volume matrix then there is no harm coming out of Rs 5-7-10 segments. 125 ml of DTM at Rs 10 is serving no purpose other than selling DTM at Rs 80 per liter instead of its standard price of Rs 45-48. It is a whooping 65-70% premium but nutritionally it is penalising the customer. I think the government must ban the sale of milk below a certain volumetric level of 150-200 ml .
At the end I recall the words of Mark Twain that it is never wrong to do the right thing. So please increase the price and give the consumers their nutritional dose and women farmers their long time dues.
Source : Blog by Kuldeep Sharma Chief editor Dairynews7x7.com