Falling farmgate prices of milk seen squeezing dairy sector investments

Falling prices of milk at the farmgate is becoming a cause for concern. For, this can not only affect farmer incomes but also stress the industry’s ability to invest and survive, said National Dairy Development Board (NDDB) Chairman T Nanda Kumar.

Though there won’t be any shortage of milk, the Board is worried that the situation will hit the growth rate this year.

Poor rainfall in several parts of the country could add to the woes of dairy farmers.

Recognising the problem, the Board has deputed teams to Maharashtra and Uttar Pradesh to assess the impact of the deficient monsoon by collecting information from the vast network of co-operatives.

“There is discomfort at the farmer’s level on falling farmgate prices. This is largely where the co-operatives are not present. Co-operatives have managed to hold prices. Though prices have come down for farmers, the benefit has not been passed on to the consumer,” he told BusinessLine .

He cited the example of Maharashtra where the price (for the farmer) had fallen below ₹20 a litre (cow milk) at some places.

Farmers selling buffalo milk were relatively better off, thanks to the higher fat content fetching better prices.

“What could happen (because of falling prices) is farmers may start reducing the feed quantity. The dairy industry’s ability to invest and survive too would be impacted. This is one concern we have,” he said.

The dairy industry, which registered a production of 138 million tonnes (mt) in 2013-14, added 7 mt last year.

“We may not see a similar growth this year,” Nanda Kumar said.

He felt that the situation was not alarming but there was a cause for concern, particularly with regard to small farmers having one or two cows.

The NDDB Chairman felt that falling prices (for consumers) due to the intense competition among the dairy players in some markets was not sustainable.

“You need to have a balance in the long run. It is not sustainable,” he pointed out.

He said the industry had no problem with the quality standards prescribed by the FSSAI (Food Safety and Standards Authority of India).

“We absolutely have no issues with compliance. There were some reports of adulteration. Incidence of adulteration is minor. But these (lots) are stopped outside. There will be community level punishments on the erring suppliers,” he said.

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