The Tamil Nadu Cooperative Milk Producers Federation, whose popular brand is Aavin, has terminated the contract of 11 Clearing and Forwarding (C &F) agents, who are part of the milk delivery chain in Chennai city, making a savings of ₹15.39 crore per annum.
The agents were being paid an additional 75 paise per litre of milk on the condition that they would increase sales to 6 lakh litres per day, which has not happened, hence the decision has been taken, officials said. These agents would, however, continue to function as wholesale distributors, who will supply milk to distributors or retailers.
It was in 2019 that Aavin appointed C&F agents in the hope that they would help increase sales in the city. They were chosen from among its existing wholesale dealers, who were performing well and selling above 10,000 litres a day. Private dairies have C&F agents in their distribution line.
The termination, which comes into effect from July 3, Saturday, comes at a very opportune time for Aavin, which is trying to make up a projected loss of ₹240 crore per annum due to the reduction in milk prices by ₹3 per litre. The milk major procures around 35 lakh litres of a day from farmers through cooperative societies and sells around 25 lakh litres of milk a day with a little over 12 lakh litres being the volume of sales in Chennai city alone.
The C&F agents were supposed to deliver milk to wholesalers from Aavin’s dairies on a cash and carry method. Though initially the sale of milk had marginally increased by around 40,000 litres a day, it did not go up after that. It remained the same 5.2 lakh litres per day even after the recent reduction of prices of milk.
The agents were also resorting to making payments to Aavin through cheques, which they were permitted to do so only for a period of three months, and were holding a credit of ₹6.75 crore over, which was above their combined deposit amount of ₹5.52 crore. Objections to their appointment and functioning had come from various quarters, including a section of wholesale dealers, some of whom had gone to court.
