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LATEST NEWS UPDATES | Global crash, local glut hit Gujarat milk market -Gopal B Kateshiya & Harish Damodaran

Global crash, local glut hit Gujarat milk market -Gopal B Kateshiya & Harish Damodaran

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published Published on Jan 23, 2018   modified Modified on Jan 23, 2018
-The Indian Express

Dairy farmers in Gujarat, till recently, were relatively insulated from the crisis faced by those growing cotton, groundnut or potatoes.

Rajkot/ New Delhi:
AFTER COTTON and groundnut, it’s milk that is turning sour for Gujarat’s farmers. A crash in global skimmed milk powder (SMP) rates, coupled with surging procurement by dairy unions affiliated to the Gujarat Cooperative Milk Marketing Federation (GCMMF), has led to an unprecedented glut.

In the last two months, the Rajkot district dairy union has slashed the procurement price paid to its farmers from Rs 647 to Rs 560 per kg of fat. For buffalo milk containing 6 per cent fat and 9 per cent SNF (solids-not-fat), this translates into a reduction from Rs 39.98 to Rs 34.61 per litre — 1.03 kg — and from Rs 30.55 to Rs 26.45 for cow milk with 3.5 per cent fat and 8.5 per cent SNF.

The Rajkot union is, moreover, rationalising its procurement operations. “We collect milk twice daily from our 761 village societies. But we shall now not procure in the morning once every week for all societies by rotation,” said Govindbhai Ranpariya, chairman. His union has stopped collecting from 47 societies that were together supplying around 45,000 litres daily. This has been done on “suspicion” that their milk is being poured mainly by traders, which could also have quality implications.

Ranpariya termed the measures unavoidable, as his union is currently procuring around 4.5 lakh kg per day (LKPD), of which around 60,000 LKPD is going to GCMMF. “The federation is unable to handle this surplus milk and has asked us to rationalise our supply,” he said.

But it isn’t Rajkot alone. The Kutch district milk union, which is now collecting 5 LKPD, has since the start of this month reduced its price paid to farmers from Rs 660 to Rs 600 per kg fat. The Porbandar union, which is procuring 4.75 LKPD, has cut its price from Rs 580 to Rs 540 per kg fat. The Saurashtra region’s biggest union, Surendranagar, with 7.2 LKPD of procurement at present, is paying Rs 580 per kg fat, below the Rs 610 rate two months back and Rs 650 five months ago.

Dairy farmers in Gujarat, till recently, were relatively insulated from the crisis faced by those growing cotton, groundnut or potatoes. That has, however, changed over the last couple of months, with district unions bringing down procurement prices — more so, after elections to the state assembly in early December.

Two factors have been at play here.

The first is international SMP prices, which are ruling just above $ 1,800 a tonne, compared to $ 2,600 a year ago and the peak $ 5,000-5,200 of April 2013. Low global prices have made SMP exports from India unviable, with these plunging from 1.3 lakh tonnes (lt) in 2013-14 to 16,100 tonnes in 2016-17. With dairies producing 5-5.5 lt annually and domestic consumption only at 4-4.5 lt, it has resulted in accumulation of stocks.

Secondly, while dairies in other states responded to falling SMP realisations by sharply cutting both milk procurement volumes and prices, the Gujarat unions continued to pay farmers well, with their average rate going up from Rs 535 to Rs 680 per kg fat between 2013-14 and 2016-17. They could do this because their milk was being largely retailed as liquid milk in pouches under the GCMMF’s ‘Amul’ brand. Branded pouch milk has steady demand and not prone to price fluctuations, unlike SMP, white butter/ghee and other dairy commodities.

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The Indian Express, 23 January, 2018, http://indianexpress.com/article/india/global-crash-local-glut-hit-gujarat-milk-market-5035387/


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