Lockdown Effect: To offset the economic impact of Covid-19 on Dairy Sector, Ministry of Fisheries, Animal Husbandry and Dairying has introduced a new scheme “Interest subvention on Working Capital Loans for the Dairy sector” for Supporting Dairy Cooperatives and Farmer Producer Organizations engaged in dairy activities (SDC&FPO) for implementation during 2020-21. In this scheme, the dairy sector will be given 2 per cent additional incentive annually. The Ministry of Fisheries, Animal Husbandry & Dairying informed about the decision in a written press statement.

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Issuing the press statement in this regard the Ministry of Fisheries, Animal Husbandry & Dairying said, "Due to higher milk procurement and lower sales during the COVID-19 lockdown, the milk/dairy cooperatives have resorted to large scale conversion into high shelf-life products like milk powder, white butter, ghee, and UHT milk etc. Such conversion into high shelf-life products resulted in blockage of funds and caused difficulty in payment to the farmers. Due to decrease in demand for high valued products like ice-cream, flavoured milk, ghee, cheese etc., only a small quantity of milk is converted into value-added products like Paneer and Dahi impacting the sales turnover and realization. This will result in limiting the ability of cooperatives to procure milk at the current level or they would be forced for downward revision of procurement price, which will affect the farmers." The ministry's statement went on to add that the scheme has made provisions for providing interest subvention of 2% per annum, with an additional incentive of 2% per annum interest subvention to be given in case of prompt and timely repayment/interest servicing.

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In order to meet the working capital needs of the Cooperatives and Farmer-owned milk producer companies,  Interest subvention will be given on working capital loan taken from scheduled Commercial Banks/R.R.Bs/Cooperative Banks/Financial Institutions between 1st April 2020 and 31st March 2021 by Cooperatives/FPOs for the conversion of milk into conserved commodities and other milk products.

This will help to ease out the working capital crisis for handling surplus milk and enable timely payment to the farmers. The scheme will be implemented by this Department through the National Dairy Development Board (NDDB), Anand.