As procurement prices dip, dairy farmers look at revenue sharing model adopted by sugar sector to tide over crisis

As procurement prices dip, dairy farmers look at revenue sharing model adopted by sugar sector to tide over crisis

With procurement prices of milk dipping, dairy farmers are now exploring the C Rangarajan Committee revenue sharing formula (RSF), which sought to shield the sugar sector from price volatility and recommended ways to help mills pay growers on time, to overcome the current crisis.

However, sources said, there is no unanimity among the various stakeholders on allowing higher revenue to dairy farmers.

The RSF, adopted by the state’s sugar sector in principle, recommended that around 70 per cent of the total proceeds realised from the sale of sugar would be shared with dairy farmers while remaining 30 per cent retained by milk cooperatives and unions.

Former state agriculture minister, Anil Bonde, said the 70:30 revenue formula could be a lasting solution to address financial concerns of dairy farmers.

“While a farmer is paid Rs 15 or Rs 16 per litre for milk today, consumers are still paying Rs 40 to 48 per litre. The difference of Rs 24 to 26 per litre is pocketed by both cooperative unions and private dairy companies. If a revenue-sharing model is agreed upon, 70 per cent of revenue realised would go to farmers and 30 per cent towards the operational cost of milk companies,” he said. The formula, he said, would also help to check exploitation of dairy farmers.

Swabhimani Shetkari Sanghatana president Raju Shetti, however, said the 70:30 RSF could not be entirely acceptable or practical in dairy farming given its complexities. But some aspects of the model can be borrowed like extending the fixed price for sugar to milk powder, he said.

Shetti also cautioned that such measures would invite flak as milk powder prices have international bearing due to treaty under GATT.

“The government will have to provide short- and long-term measures to help dairy farmers. As in the sugar sector, prices of skimmed milk powder should be made uniform across the country. This will partly minimise the losses faced by dairy farmers and stabilise milk supply and its price.” Fluctuation in milk powder price has a direct bearing on milk rates paid to farmers, he added.

Shetti also demanded scrapping of 5-12 per cent Goods and Service Tax (GST) on milk products like white butter and sweets. If expenses on production of milk products come down, then the profit could be shared with dairy farmers, he said.

There has growing unrest among the dairy farmers following a steep decline in milk prices from Rs 27 per litre to Rs 15 per litre.

The Covid-19 lockdown has compounded the problems as milk demand has declined by 35 to 40 per cent.

The fall in skimmed milk prices has seen milk cooperatives and private players exploiting the farmers as processes milk powder is not bringing desired dividends.

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