This has been a roller coaster year for the dairy industry across the world . Indian dairy industry in particular is experiencing “a scream of excitement, exhilaration, fear and pure heaven ”. The year started with fairly good farmers prices and comparatively lower availability of milk. Russia -Ukraine war in February along with early onslaught of summer fuelled the high-inflationary-pressures on cost-of-milk-production as well as processing. In September 2022 India organised World Dairy Summit and proved its legitimacy to be the world’s leader in milk production.
The situation further got aggravated due to Lumpy Skin Disease and heavy shortage of fodder. On the other hand the global prices created an unprecedented opportunity for Indian dairy exports. The exporters added value with volumes doubling up against the last year same period. The decision of GST-council to cover fresh-dairy-products and farm-technologies also under the GST regime loaded the prices further.
Most of the dairy companies corrected their consumer prices of milk and milk products around 4 times in this year. States like Rajasthan Haryana, Kerala, Telangana , Punjab, etc came out openly to protect their farmers linked with the state federations. They offered huge milk subsidies to their registered farmers only.
Is the responsibility of government limited to cooperative societies of a state dairy federation only ?
Most of the states started to protect their registered farmers only while ignoring other cooperatives and FPOs . Actually it is a big blow to the principles of inclusion of the government. I hope that the newly formed ministry of cooperation may take cognisance of this issue. The problem doesn’t ends up here.
For the first time the consumers in the non election states are feeling the brunt of higher milk prices. Media reports that the largest dairy in the country didn’t increase milk-price of some variants in Gujarat due to elections.
Tamil Nadu government also showed reluctance in getting the milk procurement as well as consumer prices increase in the state.
Karnataka federation have been announcing an increase in consumer milk prices but the state government is not accepting it. Even the legislators in the assembly from the ruling party are opposing it.
Rajasthan has created history by giving highest milk prices to the selective farmers linked to the state federation . This thus created a great imbalance in level playing filed for other cooperatives, FPOs and private dairies in the state.
Our actions in past build our present
The current chaotic situation in dairy industry has nothing to do with what we have been doing now. It is rather an outcome of poor milk pricing policies for both farmers and consumers. We always tried to make the urban population enjoy lower dairy-and-food prices at the cost of the poor farmers. This ongoing correction is inevitable.
Over involvement of any government as well as politicians is not good for dairy sector. The very foundation of cooperative is to let it run by the farmers alone. India is looking at 10000 FPOs in next few years. Such interventions by the federal system in dairy sector may not be a healthy practice.
That reminds me of Dr Kurien who once said that ; “ I am one of those who firmly believe that our cities thrive at the expenses of our villages; that our industries exploit agriculture. In today’s scenario it is the state level politics which is impacting the profitability of dairy sector .
Government may not run the dairy sector
At the end I would like to share what Dr Kurien’s perspective of government running businesses in India. He said that “I began to see then that when the government enters business, the citizens of India get cheated. The greatest repercussion of the government entering into business is that instead of safeguarding people from vested interests, they themselves become the vested interest.”
I feel that this is high time for the dairy sector to make corrections in terms of farmers as well as consumers prices. No one ever talked about the fluctuating prices of other food commodities, communication, steel, fuel, power, logistics, and so on. Let the industry sets the right paradigm based on national and international demand supply situation. India with 23 % share of global milk production can play a more serious role in global dairy sector and that too when most of the regions in the world are in bad shape in terms of milk production except USA in particular.
I seek your comments on how to handle current situation so as to create a long term win win for farmers as well as consumers.