Karnataka Chief Minister D.K. Shivakumar has said that the state government will discuss the demand for a hike in milk prices in Cabinet before deciding on a final decision.
Cooperative milk unions and dairy producers have been calling for the price increase in procurement and retail prices and demand for price hikes on milk products to be increased as they say production costs are more than double and financial pressure on dairy companies are mounting.
In Bengaluru, Shivakumar said milk unions had contacted the government to ask for an increase in prices. The unions had initially put forward an increase of around ₹8 to ₹10 per litre and better returns for milk producers, he said. It has led the state government to look into the financial status of milk cooperatives and returns from dairy farmers.
The Chief Minister said the government was collecting comparative data from other states before making a decision. Some states on the list of those states which have been included are Tamil Nadu, Andhra Pradesh and Maharashtra. The government is also looking at milk procurement prices, retail rates and overall economics of dairy production to understand how Karnataka’s prices compare with those in other major milk-producing states.
More milk farmers are demanding price revision because of higher milk prices. Milk producers say they spend more on cattle fodder, veterinary medicine and other animal feed and medicines to feed dairy cows. Drought has also affected fodder supply in parts of Karnataka and the cost of milk production.
Milk unions also believe that Karnataka’s procurement prices are lower than those of any neighbouring state. In discussions with the government, Karnataka’s procurement price for toned milk was around ₹35 per litre, while figures cited for Andhra Pradesh, Maharashtra and Tamil Nadu were higher. The government reviews such comparisons in order to assess the impact of any price movement on farmers and consumers.
The issue is also with cooperative milk organisations’ financial situation. In recent days, local media reported that Karnataka’s 16 district milk cooperative unions were looking for price increases as drought, higher input costs and an increase in losses were causing them to seek the increase. But they eventually said they want a lower price increase of around ₹5 to ₹10 a litre and the demand was in the range of ₹8-₹10. The final amount will, if any, depend on the government’s decision.
Shivakumar has stressed that dairy farmers' concerns have to be taken into account with the financial position of the milk cooperatives and how any increase will affect consumers. Thus the government has sought detailed information on production costs, procurement, processing and prices in other states before moving forward.
The issue is of particular importance to Karnataka’s dairy sector as Nandini, the Karnataka Milk Federation brand, is widely used across the state. Any change in procurement or retail prices could affect farmers, cooperatives and household budgets. A price rise could also increase the amount producers are getting, and consumers would have to adjust to any corresponding price change in retail.
And the government’s strategy also underscored the need to balance competing interests of the dairy supply chain. Farmers are seeking better returns as their production costs rise and cooperative organisations are struggling. At the same time, retail milk is a common and essential food product and so the consumer impact is very important in pricing decisions.
At present, no final Cabinet decision on the proposed increase has been made. Shivakumar's comments indicate that the government will review the comparative data and discuss the matter in the Cabinet before deciding on the next step. The final decision will be whether Nandini milk prices are revised and, if so, how much of the increase and how the additional amount is spread across the dairy sector.
