Demonetisation is reported to have wreaked extensive damage in the dairy sector and left about three-lakh farmers in dire straits.
The cascading effect of demonetisation on the cooperative sector is being cited as the prime reason for the deepening crisis in the dairy sector. The farmers who deliver milk at the 3,683 diary cooperative societies are finding the going tough as the functioning of cooperatives virtually remains crippled owing to cash crunch.
As per official statistics, on an average each society procures about 400 litres of milk a day at an average price of ₹30 per litre. A society requires about ₹85,000 a week to meet the procurement cost. The ceiling on bank withdrawals of ₹.24,000 a week for a society has disrupted their functioning.
The cooperatives could not make payments to farmers whose earnings are relatively meagre after meeting the cost of production and a majority of them have been rendered penniless. The operational hassles being faced by the cooperative sector have also pushed the dairy sector to the brink of a crisis. Since the sector meets about 80 per cent of the State’s milk requirement and societies account for about a fifth of the milk production, crisis in the sector will have serious ramifications.
According to an interim report of the expert committee appointed by the State Planning Board to study the impact of demonetisation on the State economy, livestock accounted for 27.6 per cent of the contribution of agriculture to the State’s GDP in 2015-16. When the agriculture and allied sectors registered a negative growth of 4.6 per cent, the livestock sector grew by 4.3 per cent. The growth rate is likely to dip in the wake of the crisis.
The restricted access to cash has also deprived the farmers of their capacity to purchase cattle feed. Since cattle feed sale is also one of the prime revenue and profit sources of the societies, the decline in sale has also added to the woes of the societies.
The Director of Dairy Development has taken steps to route the transactions of societies through scheduled commercial banks. But such steps alone would not be sufficient to save the sector from the impact of demonetisation, sources said.
