Milk unions to seek Rs 5 per litre hike in prices after CM asks them not to cut farmers’ incentives

BENGALURU: The milk unions, which had proposed to reduce the incentive paid to dairy farmers, had refrained from doing so after Chief Minister Siddaramaiah asked them not to reduce the payments to farmers.

The milk unions now look set to deliver a shock to consumers as it has proposed to increase the price of milk by Rs 5 per litre. Having faced losses for the last two months, the mil unions were planning to reduce the incentive paid to farmers. With opposition mounting, the milk unions restored the incentives, but are now preparing to place a proposal before the government to hike milk prices.

“We have not reduced the incentive given by the government. The Bangalore Milk Union Ltd (Bamul) was giving Rs 31.15 per litre to dairy farmers. When the supply of milk dropped in the summer to 13.5 lakh litres per day, Bamul decided to give an additional Rs 2.85 per litre to farmers to tide over the shortage of fodder, etc., as the milk union was in a profit of around Rs 10 crore at that time. It was decided at our executive committee meeting that the incentive will be only for April and May and, from June 1, the price will revert to Rs 31.15 per litre”, said Narasimha Murthy, president of Bamul.

Narasimha Murthy, president of Bamul, said the milk union suffers a loss of Rs 16 lakh per day.

“During that time, the supply of milk increased to 15 lakh litres per day. When Bamul started heading towards loss of Rs 12-13 crore per month, we decided to reduce the incentive by Rs 1.5. But after the CM said that the incentive should not be cut, we have continued it”, he said.

“For Bamul, procurement of one litre of milk is consting Rs 34.75 and retailers get Rs 2 as commission. The milk union is left with only Rs 1.25 per litre with which we have to manage all costs and overheads. We are selling 13 lakh litres of milk and suffering losses of Rs 16 lakh per day. We plan to meet the CM and the Deputy CM and make them aware of the situation. If the price is not raised, the milk unions will find it difficult to sustain”, Narasimha Murthy noted.

“For the last five years, we had been asking the previous government to allow a price hike of Rs 5 per litre, but it okayed only a hike of Rs 2 per litre. We will go with whatever the government decides”, he added.

While the milk unions seem firm that a price hike is inevitable, the Congress government will be treading carefully with the Lok Sabha elections coming up next year while it looks to strike a fine balance between the interests of consumer, the milk unions and dairy farmers.