The government’s move to increase the incentive for dairy farmers from Rs 2 per litre of milk to Rs 4 has hit the Karnataka Milk Federation (KMF) hard.
The decision has made farmers sell more to dairies, and the federation is procuring excess milk, leading to heavy loss. The federation has been incurring an estimated loss of Rs 40 crore per month due to increase in milk production.
The federation, for instance, procured 54-lakh litres of milk on Saturday – 10 lakh litres more than its normal procurement. The federation supplies 34 lakh litres to consumers every day, while it converts 10 lakh litres into milk powder. Due to excess production, KMF is currently getting additional 10 lakh litres of milk converted into milk powder from agencies outside the State, official sources said.
The federation is anticipating an increase in its procurement by another five lakh litres in the coming days. After the onset of monsoon, adequate fodder is available. The farmers are, as a result, finding it profitable to produce more milk, officials said.
The federation, officials said, incurs a loss of Rs six, converting a litre of milk into powder. The total loss due to conversion of an additional 10 lakh litres of milk into powder is estimated at Rs 40 crore per month, as it is getting milk converted into powder from agencies in neighbouring states of Andhra Pradesh, Tamil Nadu and Maharashtra.
Milk for schoolchildren
Fearing that the hike in incentive would upset the financial condition of the federation, the government is considering a proposal to supply milk to all government and aided schoolchildren in the State. It will provide a major breather to the federation.
Officials said the government has agreed in-principle to implement the proposal, which envisages supply of 150 ml of milk each to an estimated 60 lakh children each on all working days in the State.
About seven-lakh litres of milk per day is required to implement the proposal, officials said.
KMF Director (Marketing) Ravi Kumar Kakade said all necessary steps were being taken to utilise the excess milk production. “There is an increase in demand for milk powder. Hence, we will not incur loss due to excess production of milk in the long run,” he added.
