Dairying that saved farmers during agrarian crisis has lost its sheen 

It is inching towards becoming a loss-making venture due to reduction in milk procurement price when production costs have skyrocketed

Dairying, which provided financial succour to farming families in Karnataka when it was gripped by severe agrarian crisis, appears to have lost its sheen in the last two years. The sector has become almost non-remunerative due to the double impact of escalation in cost of inputs on the one hand and reduction in procurement prices of milk on the other.

Thousands of youth from different walks of life, who returned to their native villages after losing jobs during COVID-19, had taken to dairying to rebuild their lives. What attracted them to it was the organised marketing structure provided through co-operative network by Karnataka Milk Federation (KMF) that has milk procurement units in almost all the major villages.

The transparent accounting system and mechanism of fortnightly payment through bank transfer made it a very reliable option. The remunerative procurement price of ₹29 a litre in addition to an incentive of ₹5 a litre added to its attraction. But things have changed drastically as the cost of cattle feed, and cultivation cost of fodder have increased while the procurement prices of milk have been slashed.

Trying to improve the situation, the authorities have increased the procurement price by ₹2.5 a litre after slashing them by ₹5 a litre about a year ago. While it is not clear whether the earlier procurement prices will be eventually restored, dairy farmers feel that just restoring the earlier price level alone will not help given the skyrocketing input costs.

A farmer rearing cow, especially high-yielding hybrid cows, will have to provide not just fodder, but also feed supplements that include balanced nutritional diet. But the cost of these supplements have increased by about 10% to 30% in the last two years. The cultivation cost of fodder too has increased sharply due to the increase in input costs as well as land tilling charges on account of escalation in fuel costs.

Nagaraju, a farmer from Ramanagaram district who is into dairying for the last 25 years, says dairying was never under such a price distress earlier. “The cost of a tractor load of hay has almost touched ₹15,000 from ₹6,000 about two years ago. In contrast, milk procurement prices have gone down compared with the situation two years ago,” he points out.   

The secretary of a co-operative milk dairy from Ramanagaram district, who chose anonymity, says several youth have either stopped or reduced the size of their dairy owing to escalation in procurement costs.