Price hike: No cheers for dairy farmers

Increase in input costs offsets benefit; producers seek more subsidies, incentives

The recent hike in the sale price of milk by Rs 3 a litre has not brought any cheers for the dairy farmers of Kolar and Chikkaballapur districts.

Going by the economics of milk production, dairy farming is still a non-profitable venture for them.

 Out of the Rs 3 hike effected, the Kolar-Chikkaballapur Milk Union Limited will Rs 2.50 to producers and the remaining 50 paise will go to marketing. Even this hike in purchase price is for the period from January 8 to March 31, 2012.

The milk producers as of now get Rs 17.20 a litre and the recent hike means they get Rs 19.70 a litre of milk they supply to the Milk Union. What has gone unnoticed is the rider that the hike comes with. The increase in purchase price is applicable only to milk which has a fat content of 3.5 per cent and non-fat solid of 8.5 per cent.

The hike is thus linked to quality and farmers who supply milk below the stipulated standard will not get the hike. Thus the hike is not across the board. To that extent the benefit of increase in the purchase price is limited.

The increase in purchase price is invariably associated with the increase in sale price, and in turn burdens the consumer. However, dairy farmers always speak of loss when it comes to economics of their business.

The price of inputs for dairy farming goes up with the increase in the sale price.
Consider the business economics of a typical dairy farmer, Chalapathi of Kotiganahalli: His cow yields on an average of 10 litre per day. He gets Rs 2,750 for a fortnight.

The economics
The expenses he incurs are: Rs 750 for a sack of (50 kg) ‘boosa’ and Rs 480 for a sack of ‘hottu’(coarse food); 15 kg of cakes  (animal feed, each kg costs Rs 15), fodder jowar - Rs 300 (sometimes this quantity exhausts even before 15 days thus necessitating additional purchases). The total expenses thus comes to Rs 1,905 out of the revenue of Rs 2,750. The income thus stands at  Rs 800 per fortnight or Rs 1,600 per month, a pittance, compared to the rising cost of living.

The profit margin is affected substantially with increase in the cost of each input and this offsets any hike in the purchase price.

The producers thus always stand to lose. Kolar being a drought-hit region, milk producers are compelled to purchase even the green fodder at hefty prices, says N R Chandrashekhar, an organic farmer of Nenamanahalli.

“It is true that the government gives loan for purchase of cows. But you cannot purchase a cow with that loan amount. You have to put in more money. We have no other option but to approach private money lenders,” Anand, a farmer of Koteganahalli explains.

Vicious cycle
Ostensibly, the interest burden would eat into the profit. Any disease to the cattle brings down the milk quality and consequently, the purchase price too.  The producer thus is caught up in a vicious cycle on account of the factors beyond his control. 

Dairy farming is the only alternative avocation for the farmers of Kolar and Chikkaballpur, the backward districts without any irrigation facility. Kolar stands second in the State in terms of milk production.