Milma’s Malabar union dissolved over substandard milk in Kasaragod, Malappuram dairy theft; chairman to move court

Kasaragod: In March 2025, Milma customers across Kasaragod district returned milk packets to shops after noticing a strong, foul smell, with some likening it to kerosene. The Kasaragod Dairy at Mavungal subsequently sent tankers carrying tonnes of the rejected milk to the Central University of Kerala in Periya, where it was used as manure for plants on the campus.

Nearly 18 months later, the episode has become one of the grounds cited by the UDF government for dissolving the LDF-controlled Malabar Regional Co-operative Milk Producers' Union (MRCMPU).

The Dairy Development director dissolved the regional union on Friday, September 18, citing the Kasaragod milk episode, alleged theft of dairy products at the Malappuram Dairy, failure to properly audit and present accounts of a subsidiary institution and other financial and administrative lapses. Deputy Director of Dairy Development in Wayanad Varkey George has taken charge as the administrator of the union.

Milma, or Kerala Co-operative Milk Marketing Federation, has three unions under it. The UDF government dissolved the LDF-led Thiruvananthapuram Union in July. The Ernakulam union is led by a UDF panel. With this, the UDF is likely to win the upcoming election to the board of directors of Milma.

Milma chairman K S Mani on Saturday alleged that the government's decision to dissolve the Malabar union was politically motivated and said the union would challenge it in court. Animal Husbandry Minister Bindu Krishna denied any political motive behind the action.

Of the several reasons cited in the order, the Dairy Development Director has placed the Kasaragod milk episode top among the grounds for dissolving the Malabar union.

On March 19, 2025, the Kasaragod Dairy procured 33,062 litres of milk from the Sampathrao Deshmukh Co-operative Milk Union after making an advance payment. According to the findings cited in the order, the milk was suspected to contain chemicals and had a kerosene-like smell.

But Kasaragod Dairy mixed the milk bought from Sampathrao Deshmukh with 55,000 litres of milk procured from the Karnataka Milk Federation.

The government order said the milk from Maharashtra was mixed with the existing stock and processed without quality tests, because of which the regional union lost 88,000 litres of milk and suffered a loss of ₹27.45 lakh.

Instead of recovering the money from those responsible or initiating disciplinary action, the managing committee wrote off the amount in the union's accounts, the order said.

The order said milk procured from another dairy is physically inspected when it reaches the plant and payment is made only after its quality is established.

‘Dairy products worth ₹84.45 lakh' stolen
The government order also cited an alleged theft of dairy products, including ghee, worth ₹84.45 lakh from the Marketing Products Store at the Malappuram Dairy's Marketing Depot at Moorkanad during 2025-2026.

The stock was allegedly removed by editing and cancelling invoices and gate passes, under the leadership of Fazul Vaidyan, a contractor engaged by the Malappuram Dairy, the order said.

The order said the managing committee let the contractor off without lawful action merely because he repaid the money before March 31, 2026.

Fazul Vaidyan continued to hold several contracts with the regional union. These include the operation of the Kottakkal Chenakkal chilling centre since 2012, a marketing depot since 2018, the Malappuram Dairy marketing depot since 2019 and the products store-cash collection contract from March 1, 2026.

The government order alleges that the continuation of these contracts indicated an "illicit nexus" between the contractor and the managing committee.

₹1.5 crore for inauguration, ₹25 lakh for grant function

The UDF government has also questioned expenditure incurred in connection with the new Malappuram Dairy.

According to the order, around ₹25 lakh was spent on a function organised to sign the memorandum of understanding for a ₹50 lakh State Government grant for the dairy.

It said another ₹1.5 crore was spent on the three-day inauguration programme held on December 22, 23 and 24, 2024.

The order said the continued extravagance and alleged misuse and misappropriation of funds, despite the union's financial condition, endangered the institution and affected money meant for the benefit of dairy farmers.

MRDF accounts not audited

The dissolution order also relies heavily on alleged irregularities involving the Malabar Rural Development Foundation (MRDF), a subsidiary institution of the regional union.

The Dairy Development Department said MRDF's accounts have never been subjected to statutory audit and that its audited accounts were not presented before the general body as required under the Kerala Co-operative Societies Act.

The Managing Director failed to discharge the statutory obligation of preparing the annual accounts and documents required for audit within one month of the close of the financial year, and placing them before the managing committee and reporting the matter to the Director of Co-operative Audit or an authorised officer.

Board dissolved

The Dairy Development director said the existing managing committee could not be allowed to continue because further lapses, violations of law and financial irregularities could endanger the survival of the institution and the interests of dairy farmers.

The union was dissolved without serving a show-cause notice or consulting with the State Co-operative Union and the financing institution. The director alleged that the delay involved in these procedures could give those concerned time to tamper with, destroy or alter records.