The decision by Dakshina Kannada Cooperative Milk Producers’ Union Ltd (DKMUL) to introduce an additional ₹1 per litre milk incentive reflects a calibrated cooperative response to mounting cost pressures in India’s southern dairy belt. Effective from 21 February to 31 May 2026, the measure is aimed at stabilising milk procurement during the lean summer months, when fodder scarcity and heat stress typically reduce yields.
DKMUL’s administrative board has projected an incremental payout of approximately ₹4.1 lakh per day, translating into nearly ₹4 crore over the incentive period. The move underscores how regional milk unions are increasingly using targeted price interventions to retain farmer loyalty while safeguarding supply continuity.
Addressing fodder stress and seasonal volatility
Union officials have cited acute shortages of both green and dry fodder across Dakshina Kannada and adjoining districts, compounded by elevated silage costs. These challenges have intensified input inflation for smallholder dairy farmers, many of whom operate on thin margins. By temporarily enhancing farmgate realisations, DKMUL aims to offset part of this pressure and prevent distress-led reductions in cattle numbers.
Reinforcing quality-linked procurement
Importantly, the special incentive is layered on top of the existing quality bonus of ₹1.5 per litre for milk meeting 4.4% fat and 8.5% SNF benchmarks. This lifts the effective quality milk price to ₹41.7 per litre, reinforcing the union’s long-standing emphasis on compositional quality rather than volume alone. Such pricing structures continue to shape farmer behaviour towards better feeding and herd management practices.
Managing supply-demand imbalances
Current procurement stands at roughly 4.1 lakh litres per day, down marginally from December levels due to seasonal factors. With internal demand hovering near 5 lakh litres per day, DKMUL has relied on inter-union sourcing from Hassan, Shivamogga, and Mandya to bridge the gap. The incentive is expected to arrest further decline and, potentially, lift local procurement closer to demand levels.
Cooperative economics under scrutiny
DKMUL’s move illustrates how cooperative dairies are balancing farmer welfare with financial sustainability. While higher payouts strain union balance sheets in the short term, they also help preserve long-term milk flows and member confidence. As climate variability intensifies and input costs remain volatile, such adaptive pricing mechanisms may become a recurring feature across India’s cooperative dairy landscape.
