Friday, March 12, 2010

Milk price hikes

Amul is first off the block again. Barely had the finance minister made his announcements and Amul announced a price hike for milk and its other products, to give the farmer their dues in anticipation of price hikes in other inputs.
Now there are many of us who want to include our rural countrymen in India's march forward, but at the cost of the daily cup of milk for our own kids? the way Amul has been raising prices at the drop of the hat, the cost has shot to almost double and finding place in monthly budgets of the ordinary, aam aadmi is difficult.
It's either cutbacks on milk or other essentials. Or choices between who should have milk, kids, mothers or senior citizens? or back to the dudhwala and his watered down milk? Doesn't Amul, in any case, "take the shakti out of the milk?"
A friend had sent me an email which I had flipped at that time. Now I wonder why I didn't pay more attention. In an internation survey of breast cancer, it was found that Chinese women have the lowest fatalities. The cause was pinned down to the near absence of milk and milk products from their diet.
With Amul on an eternal rampage, should we start following that example?
In any case, Amul long ago put the farmers' cooperative image on the backburner to give the front burners to political bargaining like any respectable profiteering MNC.


MS Kamboj, Punjab said...

Apropos to your blog regarding rise in milk price, I would like to bring a few facts about price rise. The most crucial entity in “milk supply chain” (dairy farmers, milk procurement agents, milk processors, milk distributors/ retailers and end-consumers) is the “dairy farmer”; therefore, it is important to understand economics of milk production at farmer level. Feed & labour are two major costs for dairy farmers, apart from other minor costs like fuel, electricity, interest, medical care, land lease rent, water, shed, etc. Feed alone constitutes about 75% of total cost of production of milk.

Price of milk has increased by merely 18% in seven years from 98-99 to 05-06 (price of milk paid by Dudhsagar Dairy, Mehsana [which is one of the largest dairy in India procuring more than 18 lakh litres per day] to dairy farmers) where as price of feed ingredients have increased sharply by 59-83% during same period, which resulted in lower & some times even negative returns to dairy farmers. Labour & other input costs have also gone up substantially. Availability of employment urban areas particularly in services sector has increased substantially in last decade due to which farm labour has become quite expensive.

Another problem is that fodder crop has to compete with other crops which are more remunerative. Milk productions is a biological phenomenon, therefore, its production cannot be increased in short-term, therefore, it requires long term policy collectively from central & state governments to ensure fair & remunerative price to producers.

Price paid to dairy farmers for milk has remained un-remunerative for quite a long period due to which a large number of farmers have either not increased their herd size or have all together abandoned dairy farming.

MS Kamboj

Kusum Choppra said...

thank you very much for the lesson in milk economics. Perhaps one fact was forgotten: that price rise can only continue till the market can bear it, otherwise diminishing returns might set in. If milk is priced out of the aam aadmi's budget, they will stop buying and it will become a commodity restricted for the consumption of the elites only, like brocolli and lasagne etc etc. Is that what Operation Flood was all about?