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However, almost 99 per cent of the Rs 35 billion allocated as the central share in the fund has been exhausted till December, much of which has gone into buying pulses from farmers.
The Centre contributes half of the Price Stabilisation Fund, while states chip in with the rest.
The agriculture ministry in mid-December had issued an advisory to states and central ministries and departments to include milk in the mid-day meal, public distribution system and other welfare programmes, including distribution through Anganwadis.
The recent measures to create additional domestic demand for milk has come against the backdrop of a sharp fall in milk procurement prices mainly due to weak global markets and excess supplies during the flush season.
The flush season for milk runs from November to March, when supplies are usually on the higher side.
Though prices tend to move downwards during this period, this year’s decline has been particularly pronounced as procurement rates have dropped to their lowest levels.
A weak global market for milk since 2015 has also contributed to the fall.
Skimmed milk powder, which quoted at $5,000 per tonne in 2015 in global markets, is now below $2,000 per tonne.
Officials said fresh milk procurement rates in Maharashtra had dropped to Rs 18 per litre from Rs 26-27 per litre last year, while buffalo milk rates in Punjab and Haryana had fallen to Rs 26 per litre from Rs 38-40 per litre last year.
Though cooperatives have upped their procurement by 25-30 per cent this year, this not not adequate. The private sector has shown little interest in buying milk this year as exports are unviable.
Overall milk production in 2017-18 is estimated at 6-7 per cent more than last year’s production of 165 million tonnes.
The government estimates the country has a stock of 116,000 tonnes of skimmed milk powder due to higher conversion and this is expected to increase to 200,000 tonnes by March.