A team of students from Vignan University in Guntur district of Andhra Pradesh after a ground-level study has suggested the dairy development authorities including animal husbandry in the Andhra Pradesh Government to provide an additional interest subsidy of 4 per cent towards working capital.
The team was impressed with the measures taken by Karnataka, where the working capital loan required by KMF and its unions to make timely payments to milk producers was given for a period of six months.
This helped them milk unions recoup and bear the cost towards reprocessing of old skimmed milk powder (SMP) to ensure that the powder does not deteriorate. The government can share 50 per cent of the loss from distress sale of SMP at a price lower than the cost of production for the current financial year.
The Government of AP said that the present crisis was due to the excess supply. In fact, this is not true, the team opined. If one goes by the per capita consumption of milk is only 275 gram in AP as against over 600 grams in Punjab, Haryana and Gujarat.
Bailing out measures
The State Government could take up some steps to bailout the dairy farmers in Krishna Guntur districts by tying up with the Tirumala Tirupati Devasthanam (which procures milk from Karnataka) and other temples coming under the Endowment Board.
Motivating the dairy farmers to go for rearing cows instead of buffaloes, which yield milk for a longer duration and grow fodder in their own lands instead of purchasing from the market as part of cost cutting measure, supplying to anganwadi and midday meal centers as also social welfare hostels and private college hostels.
One of the suggestions is: Regulate the private /cooperative dairies to convert it into skimmed milk powder and reconverting it into milk during summer.
A quick study carried out by a team of faculty and students of Vignan University, found the small dairy farmers in the Guntur district in severe distress. Dairy is an important source of subsidiary income to small/marginal farmers and agricultural labourers in the district. For the upland farmers, it is an important source of supplementary income.
Following a worldwide short fall in dairy supply in 2007-08 due to adverse weather conditions (such as El Nino and heat wave) in major dairy producing countries such as USA, Australia, and New Zealand, the milk prices went up nationwide. Responding to this challenge, the Government has drawn a scheme "Palavelluva" under which new mini dairies and bulk milk coolers were promoted and urged the farmers to cash this opportunity.
During the last three years dairy input prices have gone up steeply. The oil cake prices increased from Rs.1,300 to Rs.3,200 per quintal, bran from Rs.800 to Rs.2000 per quintal. Similarly, the prices of cotton seed meal, maize, diesel etc. have gone up. The labour costs have more than doubled, largely due to enhanced wage bargaining capacity of labour as a result of the launching of MGNREGS in rural areas. By late November, the state government and the AP Dairy Development Corporation declared that the dairy industry has been affected by the problem of plenty.
Private dairy sector has reacted that the problem is due to a cascading chain reaction at the national level as a result of banning of export of milk powder.
Due to the increased labour costs, several 6 - 15 animal size dairy units were closed in and around Tenali. Due to lack of investment capital, frequent power cuts and diesel price hikes many small dairy farmers could not think of any in-house cattle feed manufacturing unit.
With no hedge against the cattle feed price hikes, their incomes from dairy have become vulnerable to price fluctuations.
Since only 13 per cent of the dairy milk is procured by the organised dairies, many small dairy farmers are at the mercy of private dairies.