Consumers pay more but farmers get lesser? Why milk unions in Karnataka have different procurement rates and how it impacts all

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.

ByMahesh M Goudar

Published Jul 07, 2024 | 2:00 PM Updated Jul 07, 2024 | 2:00 PM

Karnataka KMF Nandini Milk Kolar Chikkaballapura Milk Unions Price

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.”

Click on the image to enlarge.

Click on the image to enlarge.

“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.

Also Read: Karnataka Milk Federation to sponsor Ireland, Scotland cricket teams

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.

Also Read: Karnataka records 134% excess rain; crops submerged, cattle trapped in Udupi

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.

Also Read: KMF hikes Nandini milk price by ₹2 as the quantity increases by 50 ml

Milk procurement price slashed

Nearly two weeks after the state government increased the milk price by ₹2 for adding an additional 50ml on every sachet, the Kolar-Chikkaballapur Cooperative Milk Union has shocked farmers by reducing the milk procurement price from 5 July.

Considering the hike in procurement of milk and finances of the union, the Kolar-Chikkaballapur Cooperative Milk Union revised the procurement price of the milk, reducing it by ₹2 per litre.

Earlier, the procurement price was at ₹33.40 per litre. Now it has been reduced to ₹31.40 per litre. Kolar Milk Union used to procure 9.65 litres of milk every day until January, 2024. It has increased to a record 12.37 lakh litres in June. Over 1 lakh farmers supply milk to this union daily.

“The procurement prices vary depending upon the supply and demand. If the supply is more and demand is less then we have to reduce the procurement price,” Kolar-Chikkaballapur Cooperative Milk Union Managing Director KN Gopalmurthy told South First.

“If the supply is low and demand is high then we will increase the procurement price. In recent months, the union is procuring anywhere around 12 lakh litres per day. This is excess.”

“We pay the highest procurement price for milk when compared to other top performing unions including Bengaluru and Mandya. We are the third biggest dairy after Bengaluru and Hassan. We are in the top four among the procurement of milk and making the highest payment for procuring milk,” stated MD Gopalmurthy.

“In 2022, this union used to procure around 7.5 lakh litres per day. In a bid to encourage farmers to take up dairy farming, we had increased the procurement price, which was a bit higher when compared to other milk unions,” he further stated.

“This initiative has yielded us overwhelming results as the milk production has increased by 5 lakh litres in the span of two years in this region. We have reduced the price for the time being. It will be increased looking at the market in the coming days,” Gopalmurthy added.

(Edited by Majnu Babu).

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