Oct 26, 2020
The management of milk as a farm commodity via cooperatives may offer farmers and policymakers some understandings. Like many other sectors in India, the dairy sector faced the heat of Covid-19. But farmer-owned cooperatives shielded dairy farmers from the brunt of a drop in demand from bulk consumers by absorbing the shock at a time when small and big private players, including milk processors, left the field waiting for the market to recover.
According to the data of the first six months (April-September) of current and previous financial years show that dairy cooperatives did not stop procurement despite selling less during the six months in 2020 compared to the corresponding months last year. Ideally, the procurement of cooperatives and sale could have been higher. But, data from milk unions and dairy federations shows procurement remained higher even as sales dipped below the previous year due to the Covid crisis. Dairy cooperatives could not sell due to a massive drop in demand from bulk consumers — requiring conversion into long shelf life milk powder. This conversion, however, won’t give them immediate returns. Nevertheless, they managed to maintain a supply chain for daily retail domestic consumers.
If the supply of milk and milk products were not interrupted during this period of crisis, it was just because of the dairy cooperatives and other producer centric organizations who have been resilient enough to work tirelessly as Covid warriors during this emergency to minimize the disruptions in the dairy supply chain.
In fact the central govt. reacted to the need of the dairy sector and announced an interest subvention scheme on working capital loans to address the liquidity problem. Most of the private players, including processors, had considerably reduced milk procurement as demand plunged due to closure of hotels, restaurant and catering (HORECA) segment, lack of purchasing power with consumers, and aversion to the chilled milk beverages and ice creams during Covid-19. Though the economy is now getting progressively unlocked, the HORECA segment is expected to remain subdued as people will prefer in-home eating.
The milk cooperative model is an apt example when the sector, backed by newly enacted farm laws, looks to offer options for small and marginal farmers, accounting for 86% of India’s farming community, through promoting an additional 10,000 farmer producers’ organizations (FPOs) over next five years. The FPOs can be revolutionary for farmers, as the milk cooperatives in different states were. The milk cooperative changed the dairy sector scene over the years. The model may not only save crop farmers in crisis as we had seen for dairy farmers during Covid-19, but can also ensure economies of scale even in the normal situation for getting the better price of their produce,” said an official.