Milma pays the best price for the members of the cooperative and it finds it hard to compete with cheaper brands from other states.Kochi: The dominant dairy cooperative in Kerala is staring at a crisis after milk production overshot its target by a fifth. The Kerala Cooperative Milk Marketing Federation (Milma) procures 13.64 lakh litres of milk from dairy farmers a day on average yet it can sell only 13.15 lakh litres.
Milma pays the best price for the members of the cooperative and it finds it hard to compete with cheaper brands from other states. The cooperative has been transporting the excess milk to Tamil Nadu to convert it to milk powder. The process threatens to sink Milma.
Milma gives merchants Rs 1.74 per litre as commission, while the private suppliers from neighbouring states offer them up to Rs 9 per litre. Though households in Kerala prefer Milma, restaurants and tea shops settle for any brand. Merchants make a profit by pushing the other brands.
Milma cooperative members earn up to Rs 34.50 per litre depending on the quality of milk, factoring in the nearly Rs 4 increase since February 11, 2017. This is the best milk price across the country. Dairy farmers in Tamil Nadu get only Rs 24 to Rs 26. Private companies hardly give Rs 21 per litre.
Milk procurement in Kerala rose by 20.24 percent last year, compared to 4 to 5 percent in the previous years.
Milma procured 12.25 lakh litre milk per day on average this year up to April, compared to 12.25 lakh litres of daily average last year. In May, however, the procurement rose to 13.64 lakh litres. The cooperative has excess milk of 60,000 to 70,000 litres of milk left unsold every day.
Milma is forced to rely on milk powder making units in Tamil Nadu to convert the excess procurement since the only manufacturing unit in Kerala, in Alappuzha, is shut. The cooperative pays Rs 320 to convert a litre of milk to milk powder yet milk powder commands a price of only Rs 139 in the international market.
Lopsided supply
Even as the largest milk cooperative in Kerala has an excess of up to 70,000 litres every day, private companies from the other states are pumping 3 lakh to 3.5 lakh litres of milk into Kerala. Milma is unable to undercut competition because it pays farmers the best price in the country.
The Kerala government successfully approached the court to increase the milk price in 2010. Procurement prices have been increased five times since then, including the move by the present Left Democratic Front government in February last year.
The procurement price was increased by Rs 2.76 in June 2010, Rs 4.20 in September 2011, Rs 4.60 in October 2012, Rs 2.40 in July 2014 and Rs 3.35 in February 2017.
Milma is in a fix. The cooperative can’t even utilise the excess milk to make value-added products such as yogurt or chocolate since the rival products rely on cheaper milk from Tamil Nadu.
Though milk procurement has increased by 2 lakh litres since the rise in price in February 2017, Milma officials doubt if all of these came from within the state. Unscrupulous elements may be smuggling in low-quality milk from other states through Palakkad and Idukki borders, they suspect. Smugglers can make a quick profit of at least Rs 1.5 lakh if they manage to sneak in a tanker containing 15,000 litres.
