Two-Axis Milk Pricing System is a method used by dairy cooperatives to determine the price of milk based on two main quality parameters:
- Fat content
- Solids-Not-Fat (SNF) content
This pricing system rewards milk producers not just for quantity, but also for quality, especially the nutritional value of the milk.
What is Two-Axis Milk Pricing?
In this system, the price paid to the milk producer depends on:
- Fat percentage (%) in the milk
- SNF percentage (%) in the milk
Each additional point of fat and SNF adds a specific amount (₹) to the base price. The cooperative society maintains a pricing chart, also called a rate chart, where Fat is one axis and SNF is the second axis — hence the name Two-Axis Pricing.
Example:
Suppose the rate is:
- ₹10 per 1% fat
- ₹7 per 1% SNF
If a farmer supplies 1 litre of milk with:
- 4.0% fat
- 8.5% SNF
Then the price per litre will be:
= (4.0 × ₹10) + (8.5 × ₹7)
= ₹40 + ₹59.5 = ₹99.5 per litre
Thus, farmers who supply milk with higher fat and SNF content get paid more.
Comparison with Other Pricing Systems
| System | Basis of Payment | Drawback |
|---|---|---|
| Volume-based Pricing | Only on the number of litres of milk supplied | Ignores milk quality; encourages dilution |
| Fat-based Pricing | Payment based on fat content only | Ignores SNF; encourages practices that increase fat artificially |
| Two-Axis Pricing | Based on both fat and SNF | Most accurate reflection of milk quality |
Why is Two-Axis Pricing Better?
1. Rewards Milk Quality
- Encourages farmers to supply nutritionally rich milk.
- SNF includes proteins, lactose, minerals — essential for human health.
2. Prevents Adulteration
- If a farmer adds water to milk, both fat and SNF values drop — resulting in lower payment.
- Thus, it discourages dilution or tampering.
3. Promotes Balanced Feeding
- Farmers are motivated to feed animals balanced diets, improving both fat and SNF levels.
- Leads to better cattle health and productivity.
4. Supports Fair Pricing
- Farmers are paid fairly and scientifically, based on the real value of the milk they supply.
- Creates transparency and trust in cooperative systems.
5. Helps Dairy Industry
- Dairy processors get high-quality milk which is better for producing paneer, curd, butter, milk powder, etc.
- Reduces processing costs and improves product quality.
6. Encourages Scientific Farming
- Farmers take interest in using mineral mixtures, good fodder, and hygienic practices, as they know it increases their income.
Real-Life Application in India
- Most AMUL-affiliated dairy cooperatives in Gujarat and several other states use two-axis pricing.
- Even in NDDB-promoted milk unions, this system is standard.
- This system has helped boost farmer income in regions where it is properly implemented.
Conclusion
Two-Axis Milk Pricing is a scientific and fair method of determining milk price. It not only improves the economic condition of dairy farmers but also ensures the delivery of high-quality milk to consumers. Compared to other systems that consider only volume or fat, two-axis pricing promotes balanced and healthy dairy practices, benefiting the entire milk value chain — from rural producers to urban consumers.