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POLICY & REGULATIONS

Govt’s decision to raise MSP for farmers raises hopes of dairy farmers
Thursday, 08 March, 2018, 08 : 00 AM [IST]
Anurag More and Ashwani Maindola
The decision taken by the Government of India in this year’s Budget to increase the minimum support price (MSP) for farmers by one-and-a-half times the input cost has also raised the hopes of dairy farmers.

In recent times, dairy farmers from various places have rued that they haven’t earned enough remuneration for milk and are often forced to sell their produce at lower prices.

Experts have opined that there is a dire need for a MSP for the dairy sector, which, in recent times, has sharply turned away from the cooperative system.
 
They felt it was good that the government announced that the MSP of farm produce would be kept at one-and-a-half times the input cost and stated that milk also be considered a crop and be included for the determination of MSP at the aforementioned rate.

Currently, there is no formula to determine the cost of milk production and set a price for it. It is the market forces that determine its cost.

However, J P Meena, secretary, ministry of food processing industries (MoFPI), opined that although the dairy industry still has a relatively fair system of pricing, there is a need for a hike.

“Unless there is a good remunerative price for produce, the farmers will not be encouraged to produce more,” he added.

“One good thing with the dairy sector is that there is a very transparent pricing system in place,” Meena said.

“There is no issue with regards to price discovery, but sometimes the processors are unable to absorb the increased production of milk in their processing capacities. That creates a problem,” the MoFPI secretary added.

Meanwhile, experts opined that there were numerous international brands that had come up in India, becoming aggressive in terms of their penetration in the market.

The imports of milk and milk products in India is a threat to the Indian dairy farmers. There have been significant decreases in the procurement volumes demanded from the farmers by the procurement agents and private corporation and the remuneration received by the farmers.
 
“Farmers, in turn, have been advised to expand and modernise their practices. However, all this is not possible without proper investment. So the farmers take heavy loans and get trapped into debt and finally lose their livelihoods. Neither the Central nor the state governments have taken any serious actions on this crisis,” said Abhishek Saareen, executive director, Trident F&B Consultants Pvt Ltd.

“Small dairy farmers everywhere in India, particularly those who own cows, continue to struggle. This is a national crisis. Therefore, MSP will turn out to be a huge relief for the dairy farmers. If it is properly implemented, it will eliminate the exploitation of dairy farmers,” he added.

Saareen also suggested the formula for the fixing of the dairy prices. “Yes, there is a definite need to consider milk for MSP considering the current situation of dairy farmers,” he said.

“Milk should be included for determination of MSP at one-and-a-half times the cost. Moreover, we can take inspiration from the sugarcane industry, and therefore, the MSP for the dairy industry can be finalised keeping in mind the 70:30 profit-sharing ratio, where 70 per cent is for the farmers and 30 per cent is for the milk processors and middlemen,” he added.
 
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