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Dairy deficit: Schools, homes and businesses left wanting

Government and aided schools in over a third of Karnataka's districts have not received milk supply for the past three months under the Ksheera Bhagya scheme
Last Updated 02 April 2023, 04:27 IST

Two friends, aged 11 and 12, wait eagerly each morning to receive a glass of milk when they reach their government school in Badami taluk, Karnataka. Since January, their wait and that of their schoolmates has been endless, and their cups have remained empty.

In these three months, students have also been unable to muster the courage to ask their teachers why they are not receiving milk. “What if they scold us, or take offence?” asks Ranjith*, a student.

Government and aided schools in over a third of Karnataka's districts have not received milk supply for the past three months under the Ksheera Bhagya scheme. The plight of the schoolchildren will not change anytime soon, as they have now entered their summer vacations, unsure if they will return in June to their regular, eagerly awaited daily glass of milk. Several schools have reported a drop in attendance following the milk shortage.

This disruption is particularly a matter of concern as milk remains central to the public nutrition programme. “In Kalyana Karnataka, malnutrition is a pressing problem. In previous years, the nutrition programme emphasised the importance of consuming milk along with the mid-day meal. Ironically, this very necessity is not available,” says Shantappa Yaligi, a primary school teacher from Gurumitkal taluk in Yadgir.

Several studies had predicted that Karnataka would experience an acute shortage of milk after 2021, as production would not catch up to increasing consumption.

In the country, milk production has been on the rise. At a recently held dairy industry conference in Gandhinagar, Union Home Minister Amit Shah said that the sector had progressed at an annual rate of 6.6% in the last decade. According to Food and Agriculture Organisation data, India contributed about a quarter of global milk production in 2021-22.

Despite these encouraging numbers, a majority of states have been facing a severe shortage of milk. The reasons are manifold. According to experts, the sector has not recovered from the slump caused by Covid-19 in 2020.

This health crisis was followed by Lumpy Skin Disease (LSD) in cattle and a rise in inflation rates, forcing dairy firms to increase milk prices multiple times in the last year.

Input costs

Rising input costs of feed, healthcare and maintenance of cattle have culminated in the saturation of markets like Gujarat — which accounts for nearly 30% of the country's total milk procurement. Farmers in Gujarat complain that their profit margin has dipped significantly over the last couple of years.

"The milk situation is no doubt a little tight in the country. Due to Covid-19 outbreak and LSD, there was also a delay in artificial insemination of the cows," says R S Sodhi, president of the Indian Dairy Association. Sodhi recently retired as managing director of Amul.

The country, he says, is facing a crisis there is a wide gap between the demand and supply of dairy products.

The severe shortfall of the commodity is also sweeping through Karnataka, Kerala and Tamil Nadu.

Low procurement

Among other causes, low procurement rates have also impacted the gross production of milk. Angered by the lack of competitive pricing, dairy farmers in Tamil Nadu have been emptying canisters of milk on the streets in protest over the last few weeks.

The total production of milk in Tamil Nadu is about 2.30 crore litres per day. Currently, the state has a daily deficit of 9 to 10 lakh litres. Aavin, the government-run milk union federation, procures around 30 lakh litres per day. It utilises around 0.5% to 2% of its total procurement to produce by-products

In Kerala, "there is a decline of around nearly 10% in procurement this summer," says Kerala Co-operative Milk Marketing Federation (Milma) chairman K S Mani. Milma has a membership of about 10 lakh dairy farmers but only around 3 lakh farmers regularly supply milk.

"The remuneration given to farmers in the south is quite less compared to Gujarat and Rajasthan. Although there is a government subsidy for such farmers, cooperatives should increase prices to encourage farmers to produce more milk like private players," says Sodhi.

Despite being the second-highest producer of milk, Karnataka provides the lowest procurement rates to farmers. “While farmers in neighbouring Tamil Nadu and Andhra Pradesh get Rs 38 to Rs 40 per litre of milk through unions, our farmers get only Rs 33, including incentives. This is the lowest in the country,” says an office bearer in Bengaluru Milk Union Limited (BAMUL).

In Karnataka, a crisis

The Karnataka Milk Federation (KMF) is India’s second-highest milk procurer. Through its 14 milk unions and 14,000 plus milk co-operative units in over 22,000 villages, the KMF procures, on average, 84 lakh litres of milk daily.

During the peak season, milk procurement can reach nearly 92 lakh litres daily. However, during the lean period (during summer), procurement plummets to 75 lakh litres a day. This year the procurement has reduced further to 70 lakh litres a day.

According to a market research study, major dairies, including KMF, Tirumala Dairy, Dodla Dairy and Heritage Dairy transacted Rs 79,870 crore in 2021 in Karnataka. By 2027, this market could grow to Rs 1,886.7 crore.

This booming market is not a source of hope for farmers and milk society members in the state. Instead, they see a bleak future ahead. Troubled by rising input costs, a section of small and marginal farmers are quitting dairy farming, as they feel it is not profitable.

For a litre of milk, KMF pays a farmer Rs 27.9. The state government pays an additional Rs 5 as an incentive for cattle feed.

However, a farmer shells out anywhere between Rs 30,000 and Rs 50,000 to purchase a cow, according to Prakash K Morab, a farmer at Hebballi village in Dharwad district. He has been supplying milk to KMF for the last 13 years.

Each cow requires 50 kg of feed per week to stay healthy. The feed bags, which KMF supplies to farmers, cost Rs 1,020 four months ago. However, each bag now costs Rs 1,230.

After investments in maintenance, feed, vaccination and labour, “one can save only Rs 800 to Rs 900 a week. Instead, if we work as labourers, we get Rs 500 to Rs 700 daily,” he says.

Morab had four cows in 2019 but had to sell one in 2020 to recover from the financial crunch caused by the twin blows of Covid-19 and LSD. Another cow eventually succumbed to LSD.

“Dairy farming is like a gamble. Cows are prone to diseases like foot and mouth disease, bovine mastitis, bovine brucellosis and other ailments. Treating them is a costly affair. For such less revenue, one has to take a high risk,” says Raju Navlekar, a farmer based in Dharwad.

On top of these troubles, farmers accuse the government and KMF of clearing bills late. The KMF clears bills once every 25 days, according to Nirmala Hunasikatti, secretary of KMF Hebballi society. Several farmers also complain that the incentive price of Rs 5 per litre is cleared once every two to three months. Troubled by the delay, a few farmers have decided to supply milk to private dairies.

For instance, in Hebballi, out of 400 dairy farmers, only 135 supply milk to KMF. The rest supply to the private Navalur Dairy.

“We are a cash and carry business, which is why a majority of farmers supply milk to us, even though my rate is lower than KMF,” says Erranna, a private dairy collector at Maradagi village, Dharwad district. He pays farmers Rs 25 to Rs 35 for a litre during lean seasons. During the peak, the private dairy pays Rs 20 a litre.

At least two managing directors of milk unions conceded that there has been a delay in debiting the incentive amount directly to farmers. An office bearer at BAMUL says, “At a time when the cost of producing milk is going up, the government did not bite the bullet of increasing the prices in the election year. If we do not give farmers a profitable rate, then how can we expect them to continue dairy farming in loss?”

The consequences

For the last two months, the four-storey milk-powder manufacturing plant of Dharwad Milk Union Limited (DAMUL) has remained silent. The plant has the capacity to manufacture 10 tonnes of milk powder but has hardly functioned since January this year.

DAMUL would process 2.10 lakh litres of milk per day during peak dairy-producing season. Of this, 70% of milk (including curd) was sold in retail, while 20% was used for the manufacture of by-products such as butter, ghee and Dharwad peda. The remaining 10% was used to manufacture milk powder which is supplied to the government schools under the ‘Ksheera Bhagya’ scheme.

For the past three months, DAMUL has been able to procure only 1.15 lakh litres of milk per day. The unit has almost stopped the manufacturing of by-products.

“Every day we need around one lakh litres of milk and another 9,000 litres of curd. We are unable to meet the market demand in four districts (28 taluks) that come under our jurisdiction due to a shortage in supply. So, the question of preparing milk powder or by-products does not arise,” says DAMUL President Shankar Mugad.

As a result of this, government schools are experiencing a dairy deficit. “An informal survey of schools in our area reveals that children have not received milk in three months as schools have not received milk powder,” says Basavaraj Layadagundi, a member of the Grameena Koolikara Sangha.

Besides schools, this scarcity is striking tea shops, small businesses, hotels and households. The consequences of milk shortfall are evident at several levels — for farmers with regard to their livelihoods, for the food and nutrition of families and for the daily operations of businesses. In the absence of reasonable competent pricing and measures to address rising input costs and bovine ailments, India’s consistently growing milk industry will run dry.

(*Some names have been changed on request)

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(Published 01 April 2023, 17:07 IST)

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