Strong co-operative, pvt sector absorb production

With nearly 70 lakh litres of milk being handled daily by the cooperative and the organised players in the private sector, Tamil Nadu has emerged the second largest dairy player after Gujarat.

Though a far second, with cooperative in Gujarat alone handling 1.2 crore litres of milk, two of the largest players in Tamil Nadu, the Tamil Nadu Cooperative Milk Producers Federation and the private sector Hatsun Agro Product Ltd together procure nearly 50 lakh litres of milk directly from dairy farmers.

According to industry sources, on going flush season is seeing a rapid increase in milk production and the co-operative and private sector has managed to keep procurement going even as in neighbouring States the dairy industry is declaring a ‘procurement holiday’.

Following a review last week, the Dairy Development Department had announced that co-operatives in Tamil Nadu were procuring about 27 lakh litres of milk daily. The milk is sold as liquid, packeted milk and processed into various dairy products. In the private sector, Hatsun Agro procures about 21-24 lakh litres of milk daily and according to the Tamil Nadu Dairy Association, which represents over 100 small dairy companies that sell branded milk in packets, some of them procure up to 25,000-50,000 litres daily. While for the large players this is an opportunity to expand their procurement base to grow the business, the smaller players are also growing though there is some short-term pressure on maintaining procurement.

Diversification

R. G. Chandramogan, Chairman and Managing Director, Hatsun Agro, says, diversifying the product base by expanding market geographies are the only option for sustained growth. Dairy output is growing with farmers seeing an opportunity for weekly, assured income from milk supplies while agriculture is a seasonal operation. But the increase in milk procurement needs to be utilised.

While farmers’ income is protected, the surplus has ensured there is no ‘inflation’ in milk while prices of dairy products have dropped. While Hatsun Agro’s margins are squeezed it is an opportunity to expand procurement in the long-term, he said.

The company’s presence in a diverse base including, milk powder exports, countrywide marketing of branded products including ghee, dairy whitener and milk powder is enabling milk absorption. Nearly 13 lakh litres of milk is processed into branded milk, ice-creams and related products while the balance is converted to dairy ingredients. The company’s veterinarians carry out over six lakh artificial inseminations annually, which will maintain availability of about one lakh additional female calves to keep the production pipeline going.

R. Rajasekaran, Secretary, Tamil Nadu Dairy Association, said the wide industry base is helping in keeping the procurement going. Even if some small players stay away, the produce is absorbed by the larger players. Deficient monsoon, agri-labour shortage is driving farmers to dairying as there is assured and regular income. Typically, production increases by 4-5 per cent annually but this year the growth is set to double.

Deficient monsoon also means that from January when the dry fodder availability goes down, output could drop. Also fodder concentrate prices are increasing with prices going to Rs 19 a kg from Rs 12 kg previously.

(This article was published on December 6, 2012)
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