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Harish Damodaran

GCMMF, NDDB ties sour after brief honeymoon

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New Delhi Feb. 21 After a brief reconciliatory phase following the exit of Dr Verghese Kurien, the Gujarat Cooperative Milk Marketing Federation (GCMMF) and the National Dairy Development Board (NDDB) are again at loggerheads.

Renewed tensions

The renewed tensions between the two organisations, sources say, goes back to early this year, when NDDB sought 5,000 tonnes of skimmed milk powder (SMP) from GCMMF, which was later enhanced to 7,000 tonnes. GCMMF, on its part, agreed to supply the entire quantity at Rs 136 a kg, the rate at which it was then selling the commodity.

GCMMF's offer was initially valid till January 16, which, again on NDDB's request, was extended to January 30. Then came the masterstroke, with the Centre, on February 1, announcing a ban on export of milk powder.

Impact of ban

The result: SMP prices crashed (they are now ruling at Rs 105-106 a kg) and GCMMF was politely told that its offer was not acceptable.

GCMMF's contention is that the export ban was done at NDDB's behest and the latter all along knew it was coming. "They were not interested to buy in the first place. The offer letter was simply used to persuade the Centre to impose the ban on exports and weaken market sentiment, so as to procure stock at a lower rate," the sources noted.

Since the ban, the NDDB-owned Mother Dairy is said to have bought 2,000-odd tonnes of SMP at Rs 107-110 a kg, besides getting some 18 lakh litres per day (LLPD) of milk processed into powder and ghee by private dairies for a conversion charge of around Rs 1.70 a litre. The average cost through this route works out to roughly Rs 120 a kg for SMP and Rs 125 a kg for ghee, the sources added.

Mother Diary

But it is not GCMMF alone that is fuming at the moment. Equally incensed are the various State cooperative dairy federations that supply milk to Mother Dairy. On January 24, Mother Dairy raised liquid milk prices by Re 1 a litre, citing high SMP rates and the need to pay more for enabling federations to augment procurement from farmers.

"What they have done is the opposite. On February 6, after powder prices crashed due to the export ban, Mother Dairy has actually lowered its procurement rate by 50 paise. What was the need then to hike prices to the consumer?" wondered Mr Ramchandra Choudhary, ex-Chairman, Rajasthan Cooperative Dairy Federation (RCDF).

According to him, Mother Dairy is now procuring milk of 6.5 per cent fat and nine per cent solids-not-fat (SNF) content at Rs 17.50 a kg (delivered at its dock), from the earlier Rs 18 a kg. As against this, it is selling full-cream milk of lower six per cent fat and nine per cent SNF at Rs 22 a litre (from the earlier Rs 21) or Rs 21.4 a kg.

"Even if you add cost of processing, packing and retailer's margin totalling about Rs 1.50, they are making a margin of Rs 3 a litre. This is profiteering at both producers' and consumers' expense", Mr Choudhary added.

More Stories on : Dairy & Dairy Products | Corporate Disputes | Co-operatives

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