Karnataka Milk Federation (KMF) chairman Somashekar Reddy’s statement on a possible increase in milk price by Rs5 a litre has upset consumers as well as milk co-operatives.
While the lay man, already burdened by the rise in prices of essential goods, fears that he may be milked by the KMF, cooperatives see no greener pasture emerging out of Reddy’s proposal.
Functionaries in the government and the apex dairy development bodies, on their part, think that subsidy raj is ruining the chances of big time investment in dairy development and value addition in the state.
Sources in the National Dairy Development Board want Karnataka to invite private initiatives and move away from the subsidy raj.
The state has excess milk production and by creating an ‘artificial monopoly’ using a political umbrella, the KMF cannot strangle competition or help farmers in dairy development, they say.
According to a KMF source, Karnataka is the only state that gives subsidy to co-operatives and farmers. It boasts of giving Rs2 per litre to farmers. But with subsidy components from the Centre added, the total subsidy works out to `2.80 which is hurting the government coffers to the extent of Rs480 crores per year.
“Despite such huge sums being pumped in, the KMF was not able to create one decent value addition unit that gives high returns,” he said. The KMF has a stock of over 18,000 tons of skimmed milk powder (SMP) in the current fiscal which is fast aging on the shelves. This works out to 18 crore litres of milk which is equivalent to milk procurement for 45 days, sources say.
In such conditions, the dairy economists in KMF say that the state should get heavy investments from the private sector for milk value addition. But it is not happening.
The National Dairy Development Board, in its 2010-11 report, had noted that the private sector, multinational companies and retail chains were rapidly expanding their operations in the dairy business. But while the private sector will continue to grow, co-operatives should retain their existing 50 per cent share of milk handled by the organised sector to ensure inclusiveness and livelihoods of small holder milk producers, the report said.
Meantime, in another development, KMF is taking up the re-processing of the existing stock of the skimmed milk powder (SMP). It means 18,000 tons of SMP will be added to water and made liquid milk to make SMP again and restore the stock on the shelf with new validation marks and expiry dates.
“This re-processing will bring down the quality of the product and we do not yet know what would be its effect on the health of consumers. To prevent such a situation, we encourage individual milk societies in our state to supply to the private sector who have processing and value addition units,” said NR Rao, a milk co-operative leader from Andhra Pradesh.
“Why buy milk when we already have excess and re-process it at stupendous costs,” he asked.