Milk union finances in a mess

CHENNAI, JUNE 16. The State Government will have no alternative to hiking the selling price of Aavin milk, as the finances of the Tamil Nadu Cooperative Milk Producers' Federation and district unions are dismal.

Increasing cost of production, mounting arrears to producers and stiff competition from private dairies have all contributed to the financial mess. The cumulative loss of Rs. 100 crores apart, the district unions have to clear dues, running to about Rs. 60 crores, to about 20 lakh farmers for supplying milk to 8,300-odd societies.

Apart from demanding the payment, the dairy farmers are seeking an increase in the procurement price. The current price of Rs. 9 a litre for cow's milk and Rs. 10.94 for buffalo milk was fixed three years ago. Despite their repeated demand, the previous Government had not increased either the procurement or selling price.

An increase was effected last in April 1998, when the price of toned milk was raised from Rs. 9.50 to 10.50. Even after the hike, the unions suffered a loss of 50 paise a litre. However, the State Government then agreed to compensate this loss. For the next three years, it released a substantial amount, now and then, either as grant or as ways and means advance to the unions to clear the arrears to the farmers. Even in April this year, arrangements were made to sanction Rs. 31.79 crores to various district unions for clearing the dues.

Though the elected bodies of district unions were given powers last year to fix the procurement and selling price, only a few utilised the opportunity. Only the Coimbatore, Tiruchi and Madurai district unions increased the price of standard milk from Rs. 12 to 12.80. However, in Chennai city, where nearly 50 per cent of the total production is being sold, the federation kept the price of toned milk at Rs. 10.50. In fact, it increased the price of standard and full cream milk in January last year. Though the total sale of these two varieties in the city was less than 50,000 litres a day, there was a protest from consumers and this ultimately led to the transfer of the then Managing Director.

Meanwhile, Mr. K. A. Sengottuvel, president, Tamil Nadu Milk Producers Welfare Association, urged the Government to consider revising the procurement price along with the selling price. The selling price was very low in Tamil Nadu compared to other States, he said.