Ramakrishna, a 30-year-old dairy farmer with seven buffaloes in a village in Telangana’s Ranga Reddy district, is in a fix now. The animals yield about 30 litres a day. This would mean about a daily income of ₹700. Though Vijaya Dairy, the public sector cooperative dairy, gives him ₹23 a litre – ₹6 short of the cost of production – a subsidy of ₹4/litre from the State government comes handy for him.

“But we are not going to get this subsidy any longer. The State government has decided to do away with this subsidy for farmers who produce more than 25 litres a day. I have only one option before me – to reduce the number of buffaloes or to forgo the subsidy,” he said.

Farmers managing small and medium dairy units that produce more than 25 litres are worried. Citing the example of the neighbouring Karnataka, they want the government to increase the subsidy to ₹7 from ₹4 a litre, instead of removing the subsidy.

Opposing the government move, the Progressive Dairy Farmers’ Association has said the move could severely impact the livelihoods of farmers, who were already in severe distress because of the severe drought.

The government, which introduced the subsidy scheme a year ago for dairy farmers that supply milk to the Vijaya dairy, said it was not in a position to continue the scheme any longer. It spends ₹70 crore a year on the scheme that covers 81,000 farmers.

Dairy Farmers
                                 Dairy Farmers

This has come as a shocker to farmers as it could impact their livelihoods. “While we spend ₹29-31 to produce a litre of milk, we are getting only ₹23. If the government removes this incentive, it would severely impact our livelihoods,” Kandala Bal Reddy, General Secretary of Progressive Dairy Farmers’ Association, told BusinessLine.

He said it was not fair on part of the government to leave out farmers that produce more than 25 litres. “The neighbouring Karnataka is spending ₹1,000 crore a year on the scheme. We urge the government to enhance the subsidy to ₹7/litre instead of diluting the scheme,” he said.

He said the cooperative dairy charges ₹15 for handling on every litre it procured and sold. “Compare this with ₹10 in Karantaka. The local government can reduce the handling charges and pass on the benefit to milk producers and consumers,” he said.

A government official, however, argued that majority of the farmers would still continue to get the benefit. “As many as 78,550 farmers would get the subsidy of ₹60 crore. Only a fraction of big farmers are excluded,” he argued.