Huge SMP stocks in Maharashtra checks the farmer’s milk prices

The SMP inventory levels have crossed 50,000 tonnes in the state and unless these are sold; the sentiment in the dairy sector will remain weak.

Excess stocks of skimmed milk powder (SMP) have become a matter of concern for Maharashtra’s milk sector. The state’s inventory of SMP has reached nearly 50,000 tonnes. As a result, dairy-owners in the state say that they are not in a position to hike milk-procurement-prices for farmers. Dairies in the state pay farmers Rs 23-24 per litre. Before the lockdown, dairy farmers were being paid a relatively higher procurement price of Rs 30-35 per litre.

Dashrath Mane, chairman, Sonai Group, the largest private-sector player in the state said ;due to the mismatch between demand and supply caused by the ongoing pandemic; demand for milk and milk products was lower. “On one hand there is less demand in the market-leading to stockpiling of unsold milk powder; and on the other hand we cannot turn back farmers who come to us. It has become difficult to manage payments. If this situation continues, procurement prices may go down further,” he said. Dairies in the state now pay farmers Rs 23 per litre to Rs 24 per litre. Before the lockdown, dairy farmers were being paid a procurement price of Rs 30-35 per litre.

5000 MT of SMP stocks

The SMP inventory levels have crossed 50,000 tonnes in the state and unless these are sold; the sentiment in the dairy sector will remain weak. The state had faced a similar problem in the year 2018 following which the government had announced an export subsidy of Rs 50 per kg. Exporting milk powder will lift demand and improve sentiment, he said. Dairies in the state and other Milk Federations in Karnataka, Tamil Nadu, Rajasthan, Punjab have been seeking export subsidies as well, he said.

Satej Patil, head of the Kolhapur District Co-operative Milk Producers Union, which owns Gokul; the largest-selling milk brand in Maharashtra; said that dairies in the state have been seeking export subsidies from the Centre to overcome the problem of excess milk powder stocks. Gokul alone has stocks of 4,000 tonnes of SMP. He said the dairy is attempting to sell at least 1,000 tonnes through the National Cooperative Dairy Federation of India (NCDFI). According to Patil, a subsidy of Rs 100 per kg is needed to overcome the current crisis in the sector.

Gokul announcing a price raise

Last week, Gokul announced a hike in prices in the State, by Rs 2 for buffalo milk and Rs 1 for cow milk. Last month, however, farmer organisations agitated for higher procurement prices for milk. The state government relented and announced that Fair and Remunerative Price (FRP) would be considered for the dairy sector on the lines of the sugar segment.

Maharashtra State Milk Producers and Processing Professionals’ Welfare Association Secretary Prakash Kutwal said that SMP prices have reduced to Rs 170-180 per kg as compared to Rs 260 per kg before the lockdowns in the state. Now if the third Covid wave hits the state as predicted, the dairy sector shall be badly affected and it will become difficult for dairies to pay farmers, he said.