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Dakshina Kannada Milk Union reduces procurement price by ₹1/litre

Our Bureau Mangaluru | Updated on June 20, 2020 Published on June 20, 2020

Demand falls by 25 per cent in 3 months, SMP production piles up

With the sales of milk and other related products falling by 25 per cent in the last three months due to Covid-19 and the subsequent lockdown in the country, the Dakshina Kannada Cooperative Milk Producers’ Union Ltd has decided to reduce the procurement price from farmers by ₹1 a litre.

Following this, the farmers will get ₹28.67 a litre for the milk they sell to the Milk Producers’ Union with effect from June 21.

Raviraj Hegde, President of Dakshina Kannada Cooperative Milk Producers’ Union Ltd, said that the other milk producers’ unions under the Karnataka Milk Federation (KMF) have reduced the procurement price between ₹2.20 a litre and ₹4.70 a litre.

The Milk Producers’ Union, which has jurisdiction over Dakshina Kannada and Udupi districts, has been procuring more than 5 lakh litres of milk a day from its members. But the demand for the milk and milk-based products has come down by 25 per cent leading to a reduction in the turnover of around ₹30 crore in the last three months.

The Milk Producers’ Union may witness a reduction of around ₹120 crore in its total turnover during the current financial year, if the situation continues like this. This may lead to a loss of around ₹20 crore to the Milk Producers’ Union during the year.

He said that the most of the hotels and canteens are not working to their full capacity. Educational institutions are not working due to lockdown. Apart from this, religious programmes and other social gatherings have come down drastically. All these factors have contributed to the decline in the milk consumption in these districts.

Milk powder glut

He said around 1.22 lakh litres of milk a day is being converted as skimmed milk powder. This incurs a cost of around ₹11.35 for every kg of powder produced. The price of skimmed milk powder was ₹340 a kg in the market in March. This has come down by ₹160 a kg due to the piling up of the milk powder in the country. The Dakshina Kannada Cooperative Milk Producers’ Union is estimated to have a stock of around 15000 tonnes of milk powder by September.

He said the godowns of KMF are full with the stocks of the milk powder, and the Milk Producers’ Union will have to rely on private godowns to store milk powder. This will add to the cost of the union. The closure of educational institutions is affecting the sales of milk powder.

Stating that the price of the butter has also come down in the market, he said Dakshina Kannada Cooperative Milk Producers’ Union is likely to have a stock of around 950 tonnes of butter by September.

The continued piling up of milk powder and butter will lead to the scarcity of working capital for the union.

Considering all these facts, Dakshina Kannada Cooperative Milk Producers’ Union Ltd decided to bring down the procurement price by ₹1 a litre with effect from June 21, he said.

Referring to the situation in Karnataka, Hegde said KMF collects around 86.73 lakh litres of milk every day. Of this, 39.54 lakh litres is being consumed in the market, and the remaining stock is being used for the preparation of skimmed milk powder.

There is a decline of around 25 per cent in the sales of milk and other related products at the state-level also, he added.

Published on June 20, 2020
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