Forced to sell skimmed milk powder (SMP) at about 20 per cent less than the production cost and saddled with huge stock, the Karnataka Milk Federation (KMF) has sought financial assistance from the government.

While the production cost for converting milk to SMP is about Rs. 160 a kg, the market price is between Rs. 125 and Rs. 130. With the average shelf life of SMP being one year, the federation is left with very few options.

Currently, 13 unions of the federation are sitting on unprecedented milk product stock of more than 12,000 tonnes, worth over Rs. 250 crore. About 80 tonnes is added to this daily.

“We have sought government intervention seeking its nod to sell the powder at the market price. The difference between this and the production cost could be borne by the government,” a top KMF official told The Hindu.

Fewer buyers

He admitted that selling SMP had become difficult for the federation, as normally milk-deficit States had also reported adequate stock. “Amul is sitting on 40,000 tonnes, while the SMP stock in both NDDB and Rajasthan federation is also quite high,” the official explained.

Another official said that the situation was aggravated by increased milk procurement on one hand and the ban imposed on the export of SMP by the Union government in February last year, which was subsequently lifted this June. “The ban raised the stocks with all federations resulting in the glut,” the official said.

Last year, the KMF reported 23 per cent rise in milk procurement, which stands at about 51 lakh kg daily now. “Nearly 16 lakh kg is being converted into powder daily. We also have problems of stocking powder,” the official said.

The KMF has also set up a task force to find buyers for SMP “on a war-footing”. The members have been directed to chalk out plans for selling the powder to major SMP consumers such as biscuit, chocolate and bread industry.

In midday meals?

In its bid to find market for its milk, the KMF recently proposed to the government to add milk to the midday meals. This way, 6 lakh litres of milk could be supplied to schools.

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