‘Hike in price of milk due to input cost, not supply'

‘Hike in price of milk due to input cost, not supply'

At a time when milk prices have been hiked 13 times over the past one year and another round of increase is in the offing, Agriculture Minister Sharad Pawar on Friday said that production is not a problem and there is sufficient milk in the country to meet demand. Pawar, during an event, said that price hike in case of milk is a function of increasing input cost.

However, Pawar contradicts the 2010-11 Economy Survey on demand and supply gap. The survey says there is a wide gap in demand and supply of milk.

The country is not able to keep pace with the demand which is growing at about 6 million tones (MT), while the annual incremental milk production over the last 10 years has been about 3.5 MT — a gap of 42 per cent.

With surging economic growth and consequently more money in consumers' hands, demand for milk and milk products has been going up constantly. According to Planning Commission estimates, the demand for milk is likely to be 172.20 MT by 2021-22. Currently the country produces 112 MT milk. According to rough estimates in 2010-11 the country produced around 116 MT milk.

Full-cream milk now costs `38 a litre, up from `30 in March 2010.

Overall cost of producing milk is going up drastically. For instance, cost of feed and fodder, which constitutes 69 per cent of the input cost, has gone up significantly in the last few years due to the minimum support price (MSP) phenomenon.

Farmers are focusing only on cash crops like wheat, rice and cotton which is leading to shortage of fodder crops. In addition, the cost of labour has gone up due to MGNREGA scheme, leading to unavailability of labour for dairying. Labour constitutes 20 per cent of the cost of production of milk. Labour crunch due to NREGA has also led to mechanisation of harvesting which is resulting in less dry fodder for animals, major reason for high cost of dry fodder.