Supply chain disruption: Reared in punjab, milked in gujarat, for sale in delhi

India’s No. 1 cow-breeding state suffers twin body blow, first from gau-rakshaks and now from notebandi

When farmers have no hard cash with which to buy things – in this case, cattle – the impact isn’t just on themselves. It’s also on other farmers – those in the business of breeding and supplying the same animals, ready to be milked by the former lot. Nowhere is the above special cash crunch-imposed crisis more apparent than in Punjab, India’s No. 1 cow breeding state that supplies an estimated 3 lakh animals – mostly Holstein Friesian crossbreds – worth Rs 2,400-2,500 crore annually to other states. A third of it goes to Gujarat alone, with Uttar Pradesh, Rajasthan, Maharashtra and Andhra Pradesh accounting for the rest.

This entire business – of cows that are reared in Punjab, milked in Gujarat and whose produce comes back for sale, including in Delhi and other northern markets – has been hit by the Narendra Modi government’s November 8 decision to demonetise all existing Rs 500 and Rs 1,000 denomination currency notes.

Punjab has some 6,500 dairy farmers owning anywhere from 10 to 500 animals each, and also into rearing of cows ‘ready to sell’ for others to milk. These breeder-farmers are today faced with a sudden demand collapse – sales have plunged to half their levels two months ago – and lower prices for their animals. According to them, freshly-calved two-year-old Holstein cows that are ready for milking, and can give 7,500-8,000 litres over a ten-month lactation cycle, are now selling at Rs 80,000-90,000, compared to Rs 1-1.2 lakh before demonetisation happened. Prices of 18-month-old pregnant heifers have, likewise, fallen from Rs 80,000-90,000 to Rs 60,000-65,000.

“I cannot be selling at these rates, which will just about cover my rearing costs”, notes Jaswinder Singh, who has a 60-animals farm at Gujarpur Khurd village in Banga tehsil of Nawanshahr district and sells 10-12 cows every year. Singh had 10 cows that he was supposed to sell in December, but couldn’t “because no trader came to me and even the ones whom I have contacted say there’s no cash with farmers in other states, who are our ultimate buyers”. He is now left with no option, but to sell the milk from the ‘ready to sell’ cows, which can at least take care of their rearing expenses.

Harbans Singh, too, is stranded with an equal number of cows bred for sale purposes. “I will wait for two more months for prices to improve. Traders have also advised me to hold on till cash returns to the market”, says this 40-animals dairy unit farmer from Kathgarh village in Nawanshahr Balachaur tehsil.

“It’s strange that milk prices are rising, but the rates for our animals are falling. I don’t see milk prices going down because there is a real supply problem that is already evident. At some point, cow prices will also have to catch up and we are living on that hope”, points out Balvir Singh, general secretary of the Ludhiana-based Progressive Dairy Farmers’ Association, who operates a 50-cows dairy farm at Udhowal village in Nawanshahr.

Amarjit Singh, a cattle trader from Chimna village in Ludhiana Jagraon tehsil, pegs the total rearing cost for a two-year-old cow ready for milking at Rs 80,000-85,000. “Farmers normally earn a profit of between Rs 10,000 and Rs 30,000 per cow. That, however, is ruled out at the current prices”, he admits. While there are buyers willing to pay higher rates against cheque payments, breeders are unwilling to accept these. “What if these bounce is what they tell me and I have no answer to that”, he adds.

“For us, this is a twin-blow. The first one came from the gau-rakshaks (self-styled cow protectors). And just when the threat from them was seemingly ebbing, thanks to the dressing down from the Prime Minister himself, we have been delivered a fatal one from notebandi (demonetisation)”, complains Mehar Singh. This trader from Rampur Kaleran village in Bassi Pathana tehsil of Fatehgarh Sahib district, hardly a month back, saw his vehicles transporting 30 heifers to Uttarakhand being impounded by gau-rakshaks. He managed to retrieve them with police intervention – but only after shelling out Rs 15,000.

What remains to be seen is the impact all this could have on India’s milk production. To the extent this takes place, forcing large-scale import of milk powder and butter oil in the days to come, it could well be an unintended outcome of gau-rakshak vigilantism and notebandi.

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