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Bamul cuts milk procurement price by ₹1.5 a litre, leaving farmers with a return of ₹24.5 a litre now

The milk farmers of the State, who saw their income decline during the COVID-19 pandemic last year, have continued to receive unstable income this year. Since May, the milk unions across the state have reduced milk procurement prices, with Bengaluru Milk Union being the latest to cut them citing mounting losses.

Since October 1, Bamul — one of the biggest milk unions in the State — has reduced the procurement cost by ₹1.5 a litre. A Bamul milk farmer, who was receiving ₹29 a litre about a year and a half ago, now gets ₹24.5 a litre. Across Karnataka, the procurement price ranges from ₹24 to ₹25 a litre, sources said. Since 2019, milk farmers have seen both an increase and rollback in procurement prices as the pandemic has affected the Karnataka Milk Federation (KMF) market adversely.

“The union had no choice but to decrease procurement price in the interest of Bamul and [to] ensure continuity in payment to farmers. We have been incurring losses close to ₹10 crore every month since April this year,” said Bamul president Narasimhamurthy. In fact, he pointed out that the other unions had started reducing the procurement price since May this year. “Because of a shrunken market, Bamul is saddled with 8,000 tonnes of milk powder and 4,000 tonnes of butter. While the cost incurred to convert milk into a kilogram of powder is ₹270, the current market cost of powder is ₹180 per kg.” He estimated that the KMF had a stock of about 25,000 tonnes of powder and 8,000 tonnes of ghee.

On the other hand, he said the State Government had refused to allow KMF to increase the sale price of milk, which is the lowest in the country at ₹38 a litre. In other states, the milk price ranges from ₹42 to 48 a litre. While the last milk price hike had been effected in 2018, the Karnataka Government has refused to allow the KMF to increase prices. “We have petitioned at least thrice. The overall cost of milk production has increased by about 35% in three years. Salary bills have gone up, petroleum price is pushing up raw material cost, and packaging cost has increased,” he said.

Double whammy

Amidst the tussle between the KMF and the State Government, it is the milk farmer who is suffering as a procurement price of ₹24.5 a litre does not even cover the production cost. It is a double whammy for farmers as recently, the cost of cattle feed too has gone up.

Mr. Narasimhamurthy said, “The cost of production of a litre of milk is calculated at about ₹35 a litre. Including the ₹5 incentive given by the State Government, a milk farmer in Bamul currently gets ₹29.5 a litre, down from about ₹34.”

Farmers maintain that the KMF should bring in efficiency in its management and reduce overhead charges. They have also accused the KMF of not being proactive in exploring new markets. In fact, the KMF is yet to completely capture the Bengaluru market, they said.

Source : The Hindu Oct 11 2021

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