Milk procurement prices vary across different milk unions in Karnataka, despite the Karnataka Milk Federation (KMF) selling it at a uniform price across the state.
Each of the 15 milk unions in the state has its unique considerations for determining milk procurement prices, taking into account factors like profit margins, expenditure, facilities, and projects.
This complex landscape has led to varying procurement prices, with some unions paying as high as ₹33.40 per litre and others paying as low as ₹29.10 per litre.
The Karnataka government has hiked the price of milk by ₹2 on every sachet by adding 50ml additional milk. Chief Minister Siddramaiah claimed that the government hiked the milk price as the procurement was high and would benefit farmers.
Now, the Kolar-Chikkaballapur Cooperative Milk Union’s decision to reduce the procurement price by ₹2 per litre has sparked protests among dairy farmers, who are already struggling with increasing production costs and delayed incentive payments.
As the dairy industry grapples with these challenges, the question remains: What determines the price of milk procurement, and who bears the brunt of these fluctuations?
Also Read: Karnataka farmers decry delay in milk incentives
Varying milk procurement price
According to the KMF, “There are 15 milk unions spread over 31 districts in Karnataka. As many as 26.89 lakh people, mostly farmers, who produce and supply milk, are KMF members.”
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“On an average, the KMF procure around 82.92 lakh litres per day. The average milk sale stands at 46.27 lakh litres per day and curd sales is at 9.45 lakh litre per day, the Federation said.
An average ₹28.82 crore is paid to farmers every day. The KMF reported a total turnover of ₹21,330 crore in 2023-24, where it was mere ₹8.82 crore in the first fiscal year 1976-177,” it claimed.
Bengaluru, Mysuru, Chamarajanagar, Kolar, Dharwad, Belagavi, Raichur, Kalaburagi, Mandya, Tumakuru, Hassan, Haveri, Vijayapura, Dakshina Kannada and Shivamogga have milk unions.
Belagavi Milk Union procures milk at ₹29.10 per litre, Dharwad procure at ₹31 per litre, Hassan and Raichur at ₹31.50 per litre and Kolar at ₹33.40 per litre.
“Farmers supply milk to local milk cooperative societies, which transport them to the plants. The milk union makes payment to the cooperative society and then they pay it to the milk suppliers or farmers,” a manager of a union told South First requesting anonymity.
“The union pays around ₹1 to ₹2 per litre extra for the local milk cooperative societies for maintenance. The price varies from one milk union to another because the production, transportation and expenditure varies. It does not vary too much compared to other unions,” he said adding that the government has no plans to make prices uniform across the state.
How procurement price is fixed?
Multiple factors come into play in procuring milk. From profit margins to expenditure, facilities, and projects, each milk union has its own unique considerations that influence the price of milk procurement.
In this complex landscape, milk unions walk a tightrope to balance their finances, making adjustments to procurement prices to ensure sustainability and viability.
“We do not intervene in fixing the price for procuring milk. It is the milk unions that fix the price of procurement,” KMF Managing Director MK Jagadish told South First.
“The main reason for the differences in price is because the milk union decides the price based on its profit, expenditure, facilities and projects it has taken up,” Jagadish added.
“The intention is to balance the finances of the milk union. For instance, if the union rolls out any new projects such as construction of new plants or deposits, it will be concentrating on recovering the investment cost,” he said.
“Business, transportation cost and other expenses will also be considered. These are the major parameters that come into play while fixing the price of milk procurement in the milk unions,” Jagadish added.
“If the procurement is less than the cost for procuring one litre milk will be high, the procurement price will go down. It is dependent mostly on the demand and supply. The main intention to revise prices is to balance the finances of the union and there will be no other reasons,” milk union’s manager said.
Farmers protest
Condemning the Kolar-Chikkaballapur Cooperative Milk Union’s decision to reduce the procurement price, the farmers staged a protest in Kolar on Thursday, 4 July.
The milk union’s move to reduce by ₹2 per litre has shocked the milk suppliers, especially farmers in Kolar and Chikkaballapura.
“The milk union used to pay ₹33.40 per litre to farmers. The union has suddenly shocked everyone with reducing procurement price by ₹2 per litre. We vehemently oppose this.” farmers’ leader Narayangowda told South First.
“Before the elections, the government and union promised farmers of safeguarding their rights and increasing the procurement price of milk. After victory, they barely address the concerning issues of farmers or milk suppliers.”
“The cost of production of farmers is skyrocketing every year. It has been almost over five years, and the government has not increased the incentive as well. When will farmers get free from financial stress? Why won’t they consult stakeholders including farmers while fixing the price?” Narayanagowda asked.
He also accused the government of delaying the payments to farmers.
“I have 3 cows, where only two cows give milk. I supply around 14 to 15 litres of milk daily to the local cooperative society. I used to earn ₹18,500 to ₹20,000 every month,” dairy farmer Ambareeshappa N, a resident of Kithandur village in Kolar, told South First.
“Now the milk union has reduced procurement prices, which will affect the monthly income by a minimum of ₹1,500. The production cost has also skyrocketed as the price of all the cattle feed prices have been hiked.”
“I have to spend anywhere between ₹ 3,500 to ₹4,000 per month for the maintenance of each cow. The milk union decision will take a severe toll on farmers like us,” Ambareeshappa said.
“In my present financial condition, I am able to afford quality education only to my daughter and am compelled to put my son in a government school. Importantly, the government has not paid incentive for procuring milk for the last 13 months,” he said.
“The milk union has to increase the procurement price instead of reducing it. The costs of essential goods are going up as well. If the milk union gives such a shock, whom should we ask? Why will the government not come to the rescue of farmers like me?” Ambareeshappa asked.
