Dairy dilemma: Surplus milk, scarce profits

With fluctuating milk prices and high input costs, farmers question the sustainability of their dairy operations

Bengaluru: Nine years have passed since Rakesh T N (28) chose dairy farming over factory work. The ITI-trained technician from Thovinakere, Tumakuru district, became conversant with dairy farming in 2015 when he worked as a caretaker at a cow shelter set up by the government as a drought relief measure. 

Rakesh believed that his income from dairy farming would be better than his take-home salary of Rs 8,000 per month. Today, he rears four crossbred cows. “In a good month, I earn a net income of around Rs 15,000. In a bad month, it falls to Rs 6,000,” he says. The gradual decline in milk prices over the last six months has forced him to revisit his decision to shift from factory work.

Compiled by Seekruthi K

Currently, around 90 members sell milk at the Thovinakere Milk Cooperative Society. Forty are below the age of 40. Over 20 are women.

Many small-scale farmers have turned to dairy farming to supplement their income and ensure crucial cash inflow during crop cycles. However, of late, fluctuating costs and low procurement prices have posed a threat to milk producers and unions. 

Milk procurement rates are decided by milk unions and prices vary. Despite their efforts, milk unions in the Karnataka Milk Federation (KMF) are struggling to give farmers a price that exceeds or even matches the input cost of milk. Additionally, crucial government support initiatives — like one that provides Rs 5 per litre directly to milk producers — have not been disbursed for five months this year. 

“Prices fluctuate slightly depending on the season. Whenever there is a profit we give the registered members bonus and dividend,” says Raja Nayaka, secretary of the Thovinakere Milk Producers Cooperative Society. 

The Tumkur Co-operative Milk Producers Societies Union is among the top seven unions in the state, which contribute 65% of the KMF’s total milk production. 

Today, the KMF has over 26 lakh dairy producer members. Of them, over 9 lakh members sell milk every day in over 15,700 milk cooperative societies across the state. The Karnataka Milk Federation is the second-largest dairy cooperative in the country and makes a daily payment of over Rs 28 crore. The KMF has 150 products, under the brand Nandini. 

More than 90% of farmers registered with the KMF rear Jersey and Holstein Friesian crossbred cows. 

A steady increase in milk production over the years has now resulted in a surplus supply in many milk unions. The Mandya District Cooperative Milk Producers Union, for instance, procures over 10 lakh litres per day. However, only around 5 lakh litres of milk is sold.

“We cannot turn away milk producers. The remaining milk is used to manufacture skimmed milk powder. We have around 3,500 tonnes of skimmed milk powder in stock. We are waiting for good rates. There is profit only when liquid milk sells. Entering the Delhi market later this month will help improve our sales,” says B Boregowda, president of the milk union in Mandya.

Similarly, Tumakuru, Hassan, Mysuru and Belagavi milk unions have found markets in Mumbai, Hyderabad, Chennai and Goa respectively. Increased milk production might not indicate that more people are involved in dairy farming.

For instance, the number of farmers who sell milk to the cooperative society has halved in Gopalpura, on the outskirts of Mandya. The quantity of milk has remained the same.

Those who have other means of income have sold their cattle. Small farmers and landless producers are major contributors and continue to improve their capacity.

Regular cash flow is the main reason for small and marginal farmers to stick to dairy farming without getting into the calculations of profit or loss. Milk unions make the payments once every week or once in 15 days.

“Small farmers form the backbone of KMF as big dairies find it difficult to sustain due to increased input costs, particularly fodder and feed,” says Dr P Srinivasu, additional director of the Department of Animal Husbandry and Veterinary Sciences. As per KMF data, 90% of dairy farmers are small and marginal farmers who sell less than 20 litres of milk per day.

High input cost

Today, these small and marginal farmers face the threat of price rise. Depleting green grass diversity, shifting cropping patterns with a focus on commercial crops and extreme weather events have resulted in the scarcity of both green and dry fodder. Many producers buy both green and dry fodder. To meet the dietary requirements of cattle, milk producers purchase at least two types of feed.

Labour and medical expenses are also often not covered in the procurement rates, according to Rakesh. “We feel we can get this amount back in the form of manure,” he says.

This is one of the reasons dairy farmers generally do not keep an account of expenses and income despite regular financial transactions.

“Dairy is for daily turnover. Loss and profit calculations will add to the distress. Also, do we have any other choice?” asks dairy farmer Lakshman.

As costs increase, farmers tend to compromise on cattle feed and nutrients, says Dr N B Shridhar, a professor at Shivamogga Veterinary College. “There are adulterated products available in the market across the state. Milk producers naturally tend to buy cheaper products that fit into their budget,” he says.

In turn, nutritional deficiency affects ovulation, conception and the quality of milk. “Up to 30% of cattle, irrespective of the breed, have repeat breeding syndrome these days. Proper diagnosis and scientific intervention, including hormone-based treatment are necessary to address the problem,” says Dr Shridhar. The veterinary doctor leads a programme called Gogarbha scheme to treat cows that face repeat breeding syndrome.

Vasanthi Shetty, a milk producer in Moodabidri taluk, Dakshina Kannada, is one among many who have faced the consequences. Vasanthi rears three cows and four calves. Recently, she sold two cows that had repeat breeding syndrome — the cows did not conceive even after seven to eight rounds of insemination. “Four out of 10 cows in my area face this problem. Selling off the cows is the only way out for farmers in such cases,” she says.

Cattle trade is not easy now, says another dairy farmer, pointing out the lengthy procedure after the implementation of the anti-cow slaughter legislation.

The failure to conceive could be a consequence of drifting away from the natural methods of cow rearing, which included free grazing and natural conception, says Vasanthi. “We do not have any common land left for cow grazing. We need to buy everything from outside,” she says.

Vasanthi, who is the secretary of Biravu Milk Producers Cooperative Society, says that the society is able to run despite dwindling revenue, mainly because of local sales. “Unpacked milk is sold at Rs 50 per litre locally. This helps us sustain,” she says.

Dakshina Kannada has seen a steady decline in the number of milk producers over the years. The Milk Union comprising Dakshina Kannada and Udupi districts produces 3.2 lakh litres of milk per day while the demand crosses 5 lakh litres. The union procures milk from the Mysuru Milk Union to meet the demand.

Technology

In 2022, the Karnataka Livestock Development Agency released sexed semen, a technology where a farmer gets to choose the gender of the calf with a 90% success rate. According to experts, the implementation of anti-cow slaughter legislation and farmers’ preference for female calves catalysed this initiative. Veterinarians say that this will improve milk production in the future. However, concerns regarding the consequences of tampering with a natural process remain.

No technology seems to change the notion that dairy is a loss-making enterprise in some parts of the state. Sagar taluk in Shivamogga is one such example. “People here prefer to get packet milk along with the morning newspaper rather than tending to the cattle,” says farmer and entrepreneur Nagendra Sagar.

“The crops grown in this region are not suitable for cattle, we do not grow green fodder separately. As a result, cattle rearing becomes difficult. A farmer can opt for it only if we get Rs 40 per litre. Now they get between Rs 30 and Rs 35,” he says.

Nagendra Sagar runs a farmer-producer company focusing on the local Malnad Gidda breed of cattle. According to him, there were around 50 milk cooperative societies in Sagar 10 years ago. Now the numbers have come down by half.

Private players

While the milk unions of KMF dominate procurement and sales in south Karnataka, private players have started to prove tough competitors in north Karnataka.

There were around 400 members in the Hanumasagara Milk Producers’ Cooperative Society in Koppal district two decades ago. Now, 200 have shifted to private companies, while 100 have continued with the KMF. Another 100 have stopped dairy farming.

Progressive farmer Siraaj Mulimani was a director at the cooperative society. He reared 20 crossbred cows until seven years ago. As maintenance costs increased, he started cutting down on the numbers.

Now, Mulimani has four cows. Apart from the expenses, what has affected him the most is the low fat content in milk. “As the yield increases, the fat content comes down. This problem is common in all high-yielding cows. Even though the prices are slashed due to this, we have to continue making the same investment on cows,” he says.

Due to this, he stopped trading with KMF. Mulimani has been selling milk to a private company for the last six years. “They give us the amount equal to what we get after the government incentive at KMF. The government incentive is not deposited into our account regularly,” Siraj says.

Similarly, in Bannikoppa in Gadag district, milk collection has declined after a private company set up a collection centre in the area.

According to a top KMF official, there have been efforts to strengthen sales in north Karnataka through awareness programmes on quality.

Dynamic enterprise

In many drought-prone areas, it is common for farmers to downsize the number of cattle when there is a drought and increase the number when there are good rains. Consequently, production fluctuates during summer and monsoon seasons.

KMF has been putting in effort to manage surplus production. In June, the federation decided to increase the milk quantity in each packet by 50 ml at an additional cost of Rs 2 per packet. While this measure ensured that all the milk was procured, it did not help farmers with better prices.

“The north Indian demography is used to buffalo milk. We are working towards creating a favourable environment to introduce cow milk in north Indian cities,” a KMF official says.

Even as the KMF is trying to expand its market and the government is mulling increasing the price of milk, dairy farmers go about their business, finding hope in times of despair.