Who will buy the milk?


Went to a few villages which no longer had co-operative milk collection centres. They had it in the past but because of disputes they shut down. The local milk agents/sweet shops gave more money per litre than the co-operative collection centre. They accepted even water added milk/adulterated milk. The price was paid within 2-3 days! People expected the same “benefits” from the co-operative society. Milk started flowing to the milk agents.

However, the milk agents have limited capacity. They can collect only up to a certain volume. The ability to collect milk fluctuates wildly with season. Slowly the number of HHs having cows/buffaloes have gone down.

Average Milk production was 2 litres in a day. The volume of milk was low enough to prevent problem of milk sales. It was mostly sold to them without a hassle.

There is no doubt in the minds of farmers that dairy farming is profitable BUT only if there is guaranteed buyer of ALL milk.Buying high value cattle would actually increase the pains if there is no guarantee of all milk being sold milk.

Our understanding: If at all the co-operative DOES reopen its collection centres in these villages,after a few months, the first lot of milk from each farmer might still go to the milk agents (because they get a higher price there), it will be the remaining milk that would reach the co-operative milk collection centre. However, there is a limit to the volume that the agent can collect.

Let us assume that cattle financing is done in a village where an organised milk collection centre (offering guaranteed milk purchase with quality based payment) is reopened/opened. As the volume of milk production goes up in a village, the price the milk agents pay for the milk will go down because it will be easier to get milk (good old demand- supply). The farmers will start to earn less per litre of milk sold. However, since there is a milk collection centre in the village, the milk agent will offer a price slightly higher than the milk collection centre rate ALWAYS. So, for most farmers, the first attempt would be to sell milk to the milk agent and then the remaining to the collection centre.So while the price received per litre will go down,the volume of milk sold is now higher (because of high yielding cattle purchased with cattle loans), the total earnings will be much higher than earlier.

IF the milk collection centre does NOT exist in the village where cattle financing is done, the price of milk will dip drastically and milk agents will rule. They farmers will have no alternate option to sell milk and will suffer and will slowly lead to farmers taking lesser care of cattle and finally leading to a situation where they keep low yielding cattle just because it is a tradition or because it meets domestic requirements of milk.

Sounds very logical and obvious.Solution for Co-ops: Finance cattle to collect milk. Problem is co-operatives did try to finance cattle.But most of the milk started flowing into the milk agents channel because they were paying higher.So, neither did the repayment of loans happen and neither did they get the milk. Finally the co-operative collection centres shut down. Obviously, the moment the collection centres shut down, the milk agents had the freedom to decide prices and volumes to be collected as per their requirements. The active veterinary support provided through co-operatives stopped. The Govt veterinary support was only partly functional. The farmers found it difficult to maintain good quality cattle and hence the present state where average milk production is 1-2 litres!

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