Agri Business

Private dairies sulk as Aavin dips its hand in their milk-can

R. Balaji Chennai | Updated on August 10, 2011

Aavin milk processing unit at Sholinganallur

The private dairy industry in the State is sulking with the cooperative dairy, Aavin's move to procure milk from the private sector to meet its demand. According to private dairy industry representatives who do not want to be named, the authorities are asking the private dairy companies to part with about 20 per cent of the milk they procure from farmers to the Tamil Nadu Cooperative Milk Producers Federation. The move is to augment supply to Aavin, the cooperative milk brand, in line with plans to grow the business.

When contacted by Business Line, the concerned authorities declined to comment. Private dairies lose money on the deal as they procure milk from farmers, transport it to the chilling centre before supplying to the cooperative.

The payment to farmers is based on the milk fat content, which works out to Rs 18-18.20 a litre. But when they supply to the cooperative they lose over Rs 2 a litre including the transport and chilling costs, they say. The dairies plan to take up the issue with the State Government and seek relief. Dairy companies point out that the industry's regulator is also its competitor. Traditionally, the role of dairy regulator that is the Commissioner of the Milk Production and Dairy Development Department is also played by the Head of Aavin, so it is up to the Government to help them out. The move by the cooperative could prove detrimental in the long run as the private sector has contributed significantly to the growth of dairy in the State.

Of the 110 lakh litres a day (llpd) of milk produced daily in the State, Aavin accounts for about 20 llpd and the private sector account for 40-45 llpd. The balance is directly consumed.

Published on August 10, 2011

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