Subsidies to milk producers are political tools in India, in effect destroying the farmers

#subsidies to #milk producers seems to be a convenient political tool being used by the States to keep #farmers happy. While it seems a sweet gesture, in reality it is a slow poison that distorts the market.

After Karnataka started giving milk subsidies to the farmers, demand for similar subsidies have started coming in from other states, particularly from its neighbouring states and few of them have implemented it as well. There are other States, who bail out the local cooperatives through one-off subsidies or support.

This crushes the milk industry at different levels: it makes the farmers inefficient, makes the processors even more inefficient as all their inefficiencies are more than cushioned by the subsidies routed through them and therefore is an indirect profit and most importantly, makes the end consumer market distorted by flooding cheap & subsidised commodities.

We have seen the ill-effects of agriculture subsidies making India much surplus in foodgrains like wheat & rice while perennially short in pulses & oilseeds, leading to huge import bills.

The situation gets all the more serious in case of milk as India is the largest producer as well as consumer of milk in the World with more than 23% of the global milk produced and growing at a rampaging pace (2.5 times global growth)!

Contrast this with the fact that milk productivity per animal in the country is one of the lowest and therefore, there are lot of inefficiencies sitting at farmers' level.

Now, when subsidies are applied to well-developed markets like milk, which has been created to this level with pain-staking efforts of great visionaries like Lal Bahadur Shahtri, Tribhovandas Patel, Dr. Kurien & others; we are knowingly destroying all the efforts that have gone into this industry over last 7 decades.

Milk market in the country has been quite open (not controlled by State in terms of pricing either at farmers' or consumers' level) and has become much more competitive post liberalisation with entry of private capital. In fact, Dr. Kurien worked assiduously over these many years to keep it that way and the end result is for any one to appreciate!

It is for this reason that, Indian dairy farmers are today realising anywhere from 70-80% of the consumer rupee, one of the highest returns!

Would genuinely feel that such market distortions would make the industry weaker and nothing else.

Hope good sense prevails and we don't repeat the mistakes of past done in case of pulses & oilseeds.