Monday, January 1, 2018

Let us re-imagine Farm gate prices in New Year 2018 (52nd DP 16 to 31 Dec, 2017)


Dear Friends,

A very happy new year to all of you. Since last one month there have been a lot of farmer's agitation across the country against the  lower prices being offered to them in this time of flush. Every one is talking about on how to subsidize them or strategies to resolve their problem.

At the outset , I would like to share 3 ways of re-imagining this situation and finding some out of the box solutions.

a. Bring back the milk shed concept which got dissolved way back in 1992 when dairy industry got delicensed. This way the actual owners of the allocated milk shed will be responsible for the betterment of the farmers by offering them best price and also take care of differential milk quantities being produced by them during flush and lean. Such milk shed would define the ownership of milkshed and a set of large players from cooperative and private would be taking care of farmer's needs.

b. To fix a quantity of milk (to which higher prices will be paid) with an empirical multiplier based on the average milk being given by the farmer during the lean period e.g if a  farmer has given average of 5 liters of milk per day in a specific week /fortnight or month during the lean period then during flush he would be getting a good or appropriate price for upto 1.5 to 1.6 times that of 5 liters i.e from 7.5 to 8  liters per day . Any quantity above could be bought by the private or cooperative at a rate which could be decided on the basis of demand -supply prevailing at that time. This way the farmer would be insured against any price fluctutaions for the equivalent of the milk being sold by him to the cooperative during lean  period .

c. We have researched the  IFCN data of over 50 countries ( IFCN.org) and found that  a liter of milk  must at least fetch a farmer enough to buy 1.5 Kgs of cattle feed/ balanced ration to be sustainable. It has been proven that if the farmer could buy 1.5 Kg of compound feed or cattle feed of best quality at a price of 1 Kg of  cow milk then he would not be in loss. It means if the cattle feed price is Rs 25 per kg for the best quality feed then a farmer must get not less than 1.5 times i.e Rs 37.50 per liter of milk so that a liter of milk fetches him 1.5 kgs of this feed. If he is getting the feed at Rs 20 then milk price should not be less than Rs 30.

For buffalo milk most of the times a farmer gets a better price because the pricing is based on fat and he gets a higher price even in worst scenarios.


Now I leave it to all the policy makers and stakeholders to consider any of these three or a combination of these three ways. You all are also open to think more solutions towards making dairy farming sustainable. However subsidizing farmers directly as done by few states is not a sustainable solution and must be discouraged.

I also propose to have a round table on this subject with like minded stakeholders some time in LAte Feb or early  2018. Interested  members could contact us back with a one line acceptance and then we will fix the venue.

I once again wish all of our readers a very happy new year ahead full of purpose and accomplishments.

Happy e reading

with best regards

Kuldeep Sharma
Chief Thinking Officer
Suruchi Consultants (ISO 9001:2008 Company)
C-49 Sector-65
Noida 201307

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