To adopt market-based approach to pricing

Aavin has hiked the retail price of dairy products from today.

Consumers will shell out more for Aavin brand of ghee, butter and other dairy products. But, the cooperative dairy products continue to be more competitively priced than Amul, the largest cooperative brand, and much lower than private sector brand equivalents.

Buyers at Aavin’s retail outlets were in for an unpleasant New Year surprise as ghee and butter were costlier by about 20 per cent.

Prices of the popular Aavin sweets, including ‘Khoa’ and Mysore Pauk had also been hiked by about Rs 30 a kg and Badham flavour mix is costlier by about Rs 10.

According to sources in the know, this bodes well for the cooperative dairy sector in Tamil Nadu as it aligns itself better with market conditions and its competition.

Improving supply

Ghee or butter may have been Rs 60-80 a kg cheaper compared with private brands till yesterday but there was no guarantee that stocks would be available.

Now, with more pragmatic pricing, the cooperative can improve supplies even as it continues to be more competitively priced. The products are Rs 10-20 a kg cheaper than that of Amul, the other cooperative brand and Rs 60-80 cheaper than private brands.

This is also a mark of the new approach the State Government has adopted for the rejuvenation of the cooperative dairy sector.

The Tamil Nadu Cooperative Milk Producers Federation has been permitted to adopt a market-based approach to pricing of milk products even if not the main product, liquid milk.

Milk prices untouched

In the last week of December, the State Government hiked the procurement price of milk by Rs 3 a litre giving dairy producers a significant increase in revenue and matched the prices paid by the private sector dairies. But it has left the retail price of milk untouched. The procurement price hike takes effect from today. Farmers get Rs 23 a litre for cow’s milk and for buffalo’s milk Rs 31. Aavin procures about 24 lakh litres of milk daily from the dairy farmers.

The previous procurement price hike was in 2011 when the Government also hiked the selling price of milk which strengthened the operations of the cooperative sector.

(This article was published on January 1, 2014)
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