Karnataka's dairy farmers deserve urgent relief

The lack of price revision, rising input costs, and fierce competition from private dairies are driving dairy farmers in Karnataka, the second-largest milk producer in India, to despair. There are worries that the state, home to the largest number of dairy co-operatives and producer members in South India, could be lurching towards a crisis in the absence of immediate State intervention.

India leads the world in milk supply with 22 per cent of the global production. In 2020-21, Karnataka procured 7.8 million litres of milk a day, the highest after Gujarat, which procured 24.5 million litres of milk daily.

A 2018-19 National Dairy Development Board (NDDB) study in the Bengaluru and Belgaum districts of Karnataka put the average cost of milk production at approximately Rs 30 per litre. A primary field study carried out in collaboration with the Foundation for Agrarian Studies (FAS) in 2019 across the districts of Kolar and Mandya pegged the cost of milk production at around Rs 26-27 per litre. Dairy cooperative Karnataka Milk Federation (KMF) has been paying the producers Rs 26 per litre, with the state government pitching in with a subsidy of Rs 5 for a litre of milk. Dairy farmers across the districts receive a procurement price between Rs 27 and Rs 31, depending upon the district milk unions.

Pandemic Woes

In its wake, the Covid-19 pandemic brought a host of challenges to dairy farmers. Conversations with rural dairy farmers in the districts of Kolar and Mandya show that prices of concentrates for dairy cattle have vaulted 40 per cent from pre-pandemic levels. During the lockdown, a sharp fall in demand for milk from hotels and restaurants hurt small and marginal farmers, with many struggling to meet their daily expenses.

Competition

Besides low procurement prices from the KMF, intense competition from private dairy startups has further muddied the waters. Beset by low prices, many farmers in border districts such as Kolar are forced to supply milk to private dairies offering higher prices. Increased health awareness in cities is encouraging the consumption of organic milk sold by private dairies. Even as its health benefits remain debatable, the rising demand for organic milk is another body blow for small and marginal farmers.

Over the past seven-eight months, these issues have hurt milk production at the KMF. Estimates show that milk production continues to drop with output falling about 16 per cent from June to November. There are also increased instances of dairy farming turning unviable for many, forcing them to quit.

Price Revision

Karnataka’s dairy farmers haven’t seen a price hike for nearly three years. Rising input costs, slowing demand, and increasing instances of lumpy skin disease in cattle have forced the KMF to seek a hike of Rs 3 per litre in procurement price to alleviate their plight. However, the government is yet to accept their demand.

The KMF has cited higher procurement prices in neighbouring states to buttress the argument. The price for a litre of milk in Tamil Nadu, Andhra Pradesh, and Kerala is Rs 40, Rs 55, and Rs 46, respectively. Prices in Karnataka would still be lower comparatively even if the government accepts the demand for a price hike.

The state government has acknowledged the difficulties faced by dairy farmers, but is yet to address their demands. Further delay will force the farmers to shift towards private dairies that offer higher prices. Many may opt out of dairy farming as well.

For decades now, the KMF has played a vital role in ensuing fair procurement prices with State support and protecting the interests of consumers. The absence of State support could disrupt the production chain and cause irreparable harm.

Some of the immediate measures to be taken are that the dairy prices need to be revised to improve the lot of struggling farmers. Concentrates for cattle could be provided in the village dairies or the district milk unions at subsidised prices to help those hit by the rising input costs for the last two years. In the long run, the State can invest in setting up input (fodder) production units tied closely to the village dairies and district milk unions. These measures ensure the needed prices and the accessibility of inputs to dairy farmers.

(Vijayamba R is Research Fellow, Centre for Sustainable Employment, Azim Premji University.)

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.)