New Delhi: To resolve the ongoing agitation in Maharashtra by dairy farmers seeking better prices, the agriculture ministry on Thursday requested the commerce department to raise export incentives on milk and milk products.

The ministry also said it has been asking state governments to provide milk under welfare schemes for school-going children and in day care centres as a measure to raise domestic demand and ease excess supplies of milk. It also set up a 300 crore fund to provide working capital to dairy cooperatives.

“Considering the present scenario, the (agriculture) department has requested (director general of foreign trade, or DGFT) to increase export incentive for milk and milk products and casein from 10% to 20% for the benefit of farmers," said an official statement.

The export incentives will allow dairy companies to export surplus skimmed milk powder (SMP). According to industry estimates, dairies in different states are saddled with unsold SMP stocks totalling about 140,000kg.

According to the agriculture ministry, the incentives will be provided under Merchandise Export from India Scheme (MEIS) which include neighbouring countries like Nepal and Bhutan. It remains to be seen whether this will improve farmer prices in states like Maharashtra.

Since 16 July, farmers in Maharashtra took to the streets demanding a direct subsidy of 5 for every litre of milk supplied to dairy firms and cooperatives. Farmers in the state currently receive between 16 to 23 for a litre of cow milk, compared to retail prices of over 40 per litre.

“The state government earlier announced incentives to dairies for SMP exports but these did not improve price realization for the farmer," said Yogesh Pande, spokesperson of the Swabhimani Shetkari Sanghatana (SSS), the state’s largest farmer organization which is leading the agitation. The agitation affected supplies to cities like Mumbai and Pune as farmers stopped milk tankers, poured supplies on highways, and distributed milk among people for free.

To resolve the crisis, Pande said, the state government is likely to hold a meeting with Raju Shetti, member of Parliament and head of SSS late Thursday evening.

India is the largest producer of milk in the world with an estimated output of 165.4 million tonnes in 2016-17. Maharashtra ranks seventh among Indian states in milk output.

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