Saturday, June 16, 2018

Shall we produce more milk or find ways to increase avenues for more consumption (63rd Dairy Pulse 1st to 15th June, 2018)

Dear friends,

At the outset I apologise for kept you waiting for this newsletter a bit longer this time.

Last fortnight was full of news focussed on either slash in milk prices or finding ways to export the huge piles of Milk powder. On one side the Hon minister praising farmers to increase milk production while on the other the same farmer not getting even his cost price for the produced milk.

I found an  interesting correlation  in the state of Maharashtra . There has been good growth in milk production in this state but when it comes to getting good price then the farmer from this state  is getting the least price .A lot of resentment was being shown by the farmers through demonstrations and in a few cases with some positive steps like forming an FPO and trying to sell to modern trade and Horeca directly.

Maharashtra is a state with majority of milk being collected by the private sector (may be more than 80 %). A few questions arise out of this situation as follows :

Is weak state federation is the reason for this debacle ? 
Is it really necessary for every state to have a strong state federation to support farmers with a better price ? 
Is it because that the state federation are in better position to get subsidized by the government than the private sector ?
Are farmers considered a responsibility of public cooperative system only ?
Does government have any mandate to be inclusive towards private sector dairies also who are trying hard to support farmers as well as feed consumer without any federal support ?
And the bigger question resurface again on whether it is possible to divert huge funds from world bank or JICA for national dairyplan as well as dairy development in India to all stakeholders appropriately so as to sustain dairy industry structure in the country.

It is high time for industry to think on the milk pricing for dairy farmers as well as concept of milk shed areas which was prevailing before dairy got delicensed in 1992. 

Next three years are very important for Indian dairy industry and it might lead to a do or die situation for farmers. The farmers have already been facing the brunt since last two years and if something is not done appropriately with sustainable options then he might divert his activities to something else. A couple of options to review milk pricing system might be as follows :

a. Subsidizing the produce and not the producer or processor
b. Defined milk sheds with a charter of responsibility for the patron to take care of whole eco system including the dairy farmers and animals.
c. Policies to help farmer decrease their cost of production through capacity building and hand holding.
d. Making it mandatory for all Modern trade to keep fresh produce at a reasonably low margins and particularly for the one with FDI.
e. Finding more consumption opportunities for milk and milk products in various schemes like mid day meal, school milk program, women health programs, child and mother welfare programs, export subsidies ( thereby generating forex also)
f. A strong regulatory measure by defining analog and filled products in dairy segments by FSSAI so as to stop these products to eat away market share of dairy products as well as improve milk utilization of dairy farmers.
g. District center of excellence with community processing for farmers to get their produce converted into SMP,khoa, etc so as to handle their surplus better.
h. Charting out a model similar to msp but with a review mechanism for atleast 3-4 times in an year depending upon feed prices.
i. Extending credit to dairy farmers for purchasing and storing hay and silage through district based centers of producing the same.
j. Extending special subsidy for setting up cold chain and mini feed manufacturing unit with mineral mixtures. Existing Sampada scheme is too cumbersome and may not give benefit to all.
k. Lowering/abolishing gst on value added, nutritious milk products.

There may be so many more areas wherein interventions could be thought of to improve milk consumption as well and making dairy farmers as well as processors motivated enough to be in business.

I shall be deliberating on these issues one by one in my forthcoming issues starting with "The menace of analog dairy products and its impact of sustainability of dairy farming " in next issue.

Happy e learning

with best regards

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

Friday, June 1, 2018

12% of total milk production is lying as SMP stock : A boon or curse (62nd DP 16 to 31 May, 218)

Dear friends,

North India is getting really hot and so is the dairy industry. Before I talk a bit on the title of this blog ; the major news of last fortnight were launch of value added products by Prabhat, Godrej Agrovet and others particularly in milk beverage segment, Milk mantra becoming  a bigger player in Oddisha and Amul eyeing on crossing Rs 50000 Crore turnover by next year.

In an interesting interview the Mr Pawan Agarwal CEO FSSAI assured the public that most of the milk being sold is not adulterated and is free from unsafe adulterants like Urea and detergents.It is only 10-12 % of the total milk being sold which may pose some safety issues .  

Now let us look at over 200000 MT of SMP stocks in the country which is equivalent to roughly 12 % of the total milk production. The global prices are just USD 200 per MT short of Indian exporter's target which means that just a support of Rs 10-12 per kg from government may be a game changer.

Indian demand is also likely to increase looking at the heat wave and thus its impact on milk production. However the condition of farmer is really bad and in most part of the country he is not getting the price which he normally realized during this period. Amul has also clearly mentioned that they are not likely to increase the milk price this summer.

This year's scenario however has forced me to think on whether we really need this much production of milk in India? It is high time to match domestic consumption with available surplus of milk. Any further growth then must be backed up by a robust export policy for exporting milk products from India by considering it as a potential sector for exports (like being done for other verticals under food processing). Else we may be working hard on one side to increase production and farmers will be losing out in dearth of demand at all levels.

Happy e learning.

with best regards 

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