Pre-Monsoon Rains in Bengaluru May Lead to Milk Oversupply, Impacting KMF Operations
Source: The DairyNews
The dairy industry in Karnataka is poised for a significant uptick in milk production, described by experts as a 'white flood,' due to heavy pre-monsoon showers experienced in May.
With a 24% increase in rainfall recorded in the state, and the Indian Meteorological Department (IMD) forecasting a further 106% increase from June to September, the Karnataka Milk Federation (KMF) is gearing up for potential challenges that an oversupply might bring. This includes potential impacts on milk prices and procurement strategies.
This surge in rain has bolstered fodder production, a welcome development following months of drought which severely impacted dairy farmers. However, the potential for milk overproduction raises concerns about decreased demand and the economic ramifications for producers. Historically, average daily milk production was about 85 lakh liters, as seen in the 2018-19 period, but current estimates suggest this could substantially increase.
The state government's incentives, typically Rs 5 per liter, coupled with KMF's procurement rates, which vary between Rs 33 to Rs 35 per liter based on fat content, might also be affected. Delays in disbursing these incentives have already put financial pressures on farmers. Rajkumar HP, chairman of BAMUL (Bangalore Milk Union Ltd), voiced concerns about the government's slow response to increasing the milk incentive by at least Rs 2, combined with outstanding payments to producers.
MK Jagadish, managing director of KMF, reported that daily procurement rates have risen from 75 lakh liters to 88 lakh liters and may soon exceed one crore liters. "We anticipate record production levels and are adjusting our procurement strategies accordingly," Jagadish explained.
With competition from private entities intensifying, KMF is exploring various strategies to stabilize the market. Plans are in place to ramp up milk powder production, which offers a shelf life of six months, thereby buffering against immediate market fluctuations. KMF is also in talks with the government to increase its procurement for the Ksheera Bhagya scheme, which currently purchases 300 tonnes of milk powder. Additionally, Jagadish mentioned expanding supply to Mumbai by 1.5 lakh liters and pursuing opportunities in foreign markets with new dairy products.
This surge in rain has bolstered fodder production, a welcome development following months of drought which severely impacted dairy farmers. However, the potential for milk overproduction raises concerns about decreased demand and the economic ramifications for producers. Historically, average daily milk production was about 85 lakh liters, as seen in the 2018-19 period, but current estimates suggest this could substantially increase.
The state government's incentives, typically Rs 5 per liter, coupled with KMF's procurement rates, which vary between Rs 33 to Rs 35 per liter based on fat content, might also be affected. Delays in disbursing these incentives have already put financial pressures on farmers. Rajkumar HP, chairman of BAMUL (Bangalore Milk Union Ltd), voiced concerns about the government's slow response to increasing the milk incentive by at least Rs 2, combined with outstanding payments to producers.
MK Jagadish, managing director of KMF, reported that daily procurement rates have risen from 75 lakh liters to 88 lakh liters and may soon exceed one crore liters. "We anticipate record production levels and are adjusting our procurement strategies accordingly," Jagadish explained.
With competition from private entities intensifying, KMF is exploring various strategies to stabilize the market. Plans are in place to ramp up milk powder production, which offers a shelf life of six months, thereby buffering against immediate market fluctuations. KMF is also in talks with the government to increase its procurement for the Ksheera Bhagya scheme, which currently purchases 300 tonnes of milk powder. Additionally, Jagadish mentioned expanding supply to Mumbai by 1.5 lakh liters and pursuing opportunities in foreign markets with new dairy products.
