Milk price hike inevitable: Minister

COIMBATORE, JUNE 16. ``A hike in the price of Aavin milk looks inevitable'', Mr. C. Shanmughavelu, Minister for Dairy Development, said here today.

Talking to presspersons, he said the Tamil Nadu Milk Producers Co-operative Federation (TMPCF) and the district co- operative milk unions were facing losses to the tune of Rs. 100 crores, running up huge dues because of various factors including ``gross mismanagement during the past five years and surplus labour apart from a huge inventory''.

(At present, cardholders pay Rs. 10.50 per litre of toned milk, Rs. 13 for standard milk and Rs. 15.50 for full cream milk. It costs one rupee more in retail.)

The Minister said a worker drawing Rs. 5,500 per month was selling only 20 litres of milk per day. ``If such a sordid condition were to continue for years, how could the organisation be profitable?'' As against the norm that only five to seven per cent of the income should be spent on the wage bill, Aavin units were incurring as much as 15 per cent.

A number of district unions also had surplus staff, all permanent employees. They were still employing some NMR (temporary) staff as well. Even in the cattle feed unit, there was a surplus of 250 workers.

Apart from correcting various irregularities in the administration, even a voluntary retirement scheme might have to be considered. ``At present we have mooted a VRS proposal for the Nilgiris District Co-operative Milk Union''.

The Minister said the quality of milk procured from the farmers was not upto the mark. This necessitated mixing of milk powder and butter to standardise it. The exercise cost Rs. 1.65 per litre, adding to the production cost- another reason for the loss. ``Hence, it would be our endeavour to insist on procurement of quality milk from the farmers''.

Only local sale of milk fetched considerable profit to the unions. For example, the Erode district union, one of the biggest in the State, was handling as much as 2.4 lakh litres of milk. But it was able to sell only 40,000 litres locally, whereas 65,000 litres was sent to Chennai.

The rest had to be converted into milk powder, butter and ghee. The union therefore suffered a loss of more than Rs. 18 crores and had built up arrears to farmers for 98 days.

Similar instances of arrears due for periods ranging from 20 to 50 days had been reported from various unions, though they were permitted to be in arrears for only 15 days.

The Minister said that in Chennai alone, the TMPCF was losing one rupee on every litre of milk sold. As against the receipt of 10 lakh litres, it was selling seven lakh litres in the capital. He admitted that `cheaper' milk from Andhra Pradesh was eating away into the Aavin market in Chennai.

Mr. Shanmughavelu said there were some irregularities in the purchase of machinery and those responsible ``would have to face the music''.