Cooperative and private dairies in Maharashtra have threatened to go a strike from December 1 unless the State government provides a subsidy of about ₹6 a litre on cow milk.

In mid-June, the government had increased the procurement price by ₹3/litre. For dairies, the cost of procuring cow milk increased from ₹24 to ₹27 a litre, and buffalo milk from ₹33 to ₹36 a litre. But the retail rate was kept unchanged.

Arun Narke, President, Indian Dairy Association (IDA), told BusinessLine that the decision of increasing the procurement cost but not the retail price was the start of all the trouble.

Dairies have also pointed out that the higher procurement price has made the sale of cow’s milk unprofitable, he said.

Agriculture expert Raosaheb Pujari said farmers are increasingly finding it difficult to maintain buffaloes. When compared with cows, the cost of maintenance is much higher, he said. But the consumers still prefer buffalo milk due to better taste and higher fat content. The fats are also derived from the milk and sold as mawa (milk intermediary) to confectionery makers. As a result, there is less demand for cow’s milk, he said.

Across the State, about 1.30 crore litres of milk is procured daily from dairy farmers. Private dairies procure about 60 per cent of the this quantity, and cooperatives the rest.

Narke added that due to milk powder oversupply in the global market, the offtake from Maharashtra-based dairies has dipped, which is eroding margins. The procurement price hike in June was not based on sound economic principles, but was more of a political decision. The State government managed to please the farmers, but it did not take into account the consequences, he said.

At the time of going to press, dairy associations and State government officials were still holding dialogues.

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