Costly fodder set to raise prices of milk, eggs

The Centre has already decided to allocate extra funds for purchase of fodder to states. It will move a Cabinet note on the issue soon

The fear of a deficit monsoon is driving up fodder prices in many parts of the country. In the past 10 days alone, prices have risen about 25 per cent. If the monsoon indeed plays spoilsport, as is widely apprehended, there is strong likelihood of a rise in the prices of milk and eggs, adding to inflation woes.

According to sources, the price of common fodder (made of wheat stem) in parts of Rajasthan has increased from Rs 500 a quintal to Rs 750 a quintal in the past 10 days. In the corresponding period last year, it was available at Rs 400 a quintal. "If the situation remains the same, we will have no option but to increase the price of milk by at least Rs 2 a litre," says Ramchander Choudhary, chairman, Ajmer Milk Producers' Cooperative Union. He adds the price of cattle feed has increased from Rs 15 a kg last year to Rs 17 a kg now, an increase of about 10 per cent.

Experts say the situation is no different in other parts of the country. "The fear of a deficit monsoon has driven up the prices of fodder 40-50 per cent compared to last year. If we have a drought at hand, prices will rise further," says Ajay Jakhar, chairman of Bharat Krishak Samaj. He adds in states such as Rajasthan, the situation is worse, as farmers are forced to sell cattle at discounted prices because of unaffordable fodder, only to buy these later at 50-70 per cent premium. "While we have different drought-relief schemes, there are none for the people who own cattle and bear the brunt of a deficit monsoon."

According to the Reserve Bank of India, fodder prices saw an average annual increase of 19.5 per cent between 2008-09 and 2012-13. During the same period, prices of cattle feed rose at an average annual rate of 10.2 per cent. Experts say in drought years, there is an alarming increase in the price of fodder, as there is a huge deficit of green fodder (grass, etc) to supplement dry fodder (made of wheat, jowar and soyabean). "While states such as Punjab and Haryana manage well because of less dependency on monsoon rains, states that are more rain-dependent, such as Rajasthan, suffer a great deal," says Jakhar.

Costly fodder is likely to result in an increase in the prices of milk, milk products, eggs and meat. These product categories have contributed the most to the elevated levels of food inflation in the country. A paper in the Economic and Political Weekly dated October 19, 2013, said, "On an average, from December 2009 to August 2013, the group comprising eggs, meat and fish has recorded the highest inflation rate of 17.16 per cent, followed by milk (11.78 per cent), fruit and vegetables (10.84 per cent), food grain (9.11 per cent), condiments and spices (7.08 per cent), and tea and coffee (6.14 per cent)."

Clearly, this means any respite from food inflation is months away.

The deficit monsoon is likely to hit western parts of the country more than others. It is expected this will impact kharif crops such as cotton, jowar, maize and sugarcane. Maharashtra alone accounts for a third of the total cultivable area under cotton; it is a leading producer of sugarcane, too. And, jowar and maize are increasingly being used as cattle fodder.

In 2012, when India faced a far-less alarming situation, in terms of a deficient monsoon, the deficit in dry fodder was 40 per cent, green fodder 36 per cent and fodder concentrate supplies 57 per cent. If rains continue to be below normal, this year could well see a similar situation. The Centre has already decided to allocate extra funds for purchase of fodder to states. Soon, it will move a Cabinet note on the issue.