Kerala Co-operative Milk Marketing Federation (KCMMF), known by the brand Milma, has voiced serious concern over the tendency of some state milk marketing federations to aggressively enter markets outside their respective states, holding that this involved total breach of co-operative spirit based on which the country’s dairy sector has been organised for the benefit of millions of dairy farmers.
K S Mani, chairman, Milma, said, “Of late, there has been a growing tendency on the part of some of the state milk marketing federations to market their staple products outside their respective domain. This grossly violates the federal principles and co-operative spirit based on which the country’s dairy co-operative movement has been built and nurtured by pioneers like Tribhuvandas Patel and Dr Verghese Kurien.”
“The move of Amul (Gujarat Milk Co-operative Federation), to promote its staple products in Karnataka has been met with strong resistance from the stake-holders in that state. But Karnataka Milk Marketing Federation recently opened its outlets in parts of Kerala to sell its Nandini brand of milk and other products. How could this be justified? Whoever does this, it is a highly unethical practice which defeats the very purpose of India’s dairy movement and harm the interests of the farmers,” said Mani.
“This trend will only lead to unhealthy competition among states, which needs to be reined in with the Union and state governments coming together to evolve a consensus,” said Mani.
“As per the prevailing agreement and courteous business relations existing among milk co-operatives, cross-border marketing of liquid milk shall be avoided as it amounts to blatant encroachment of the sale area of the respective state. Such practices from any side will jeopardise the spirit of co-operative principles that have been nurtured for long by mutual consent and goodwill,” he said.
The tendency to enter the markets outside one’s domain by opening sales outlets or roping in franchisees should be avoided. Initially, they sell only value-added products, then start selling liquid milk also and subsequently begin shop-to-shop distribution of milk. Eventually, they will seek to capture markets outside their respective area, taking advantage of the state-to-state variations in price and production cost.
Though the input cost in dairy sector in Kerala is much higher compared to other States, the company passes on 83% of its turnover to dairy farmers through the co-operative societies in its network. Also, the bulk of the company’s surplus is given to the farmers as additional incentive on milk price and subsidy on cattle feed as the well-being of the dairy farmers is its prime concern.
“Considering these stark realities, it is in the best interest of dairy co-operative federations of various States that they refrain from plans to open sales outlets or make franchisee arrangements to sell liquid milk and other staple products outside the respective State,” Mani concluded.