The rising cost of raw materials has dimmed the prospects of Kerala Feeds, forcing the State-owned cattle feed manufacturer to look at long-term procurement contracts with farmer organisations .

At present, the company is purchasing raw materials from the e-portal of the Karnataka Government. “We are planning to make arrangements with National Cooperative Dairy Federation of India for entering into a long-term contracts with farmer organisations in Punjab, Uttar Pradesh, Chhattisgarh, Andhra Pradesh and Tamil Nadu, besides seeking the support of the Indian Institute of Plantation Management for acquiring the stuff directly from North India at competitive prices,” B Sreekumar, Managing Director, Kerala Feeds, said.

Raw material

Kerala Feeds uses raw materials such as maize, de-oiled rice bran, de-oiled cake, cotton seed extraction, soyabean meal and molasses to meet the production requirements. However, a 10-35 per cent increase in the cost of raw materials since 2015 has resulted in the company slipping into the red. It registered an operating loss of ₹72 crore. The average loss was ₹60/bag. Raw materials account for 90 per cent of the production cost, he said.

Maize, which is the main input for feed products, largely comes from Bihar, Punjab and Andhra Pradesh. He cited the Union Government’s cattle protection schemes for the drop in arrival of inputs to Kerala.

“We are against any rate hike in the wake of surging raw material cost. Still, our prices are lower than private players’. Being a government organisation, we have a commitment towards milk farmers to provide them cattle feed at affordable rates. KFL (Kerala Feeds) is functioning without any subsidy from the government,” Sreekumar told a group of visiting journalists .

KS Indusekharan Nair, KSLchairman, said the committee formed by the State Government has given permission to raise the feed price by ₹25/bag for some select products, considering the increase in raw material cost. “We have also taken up the matter with the Centre to avail of subsidies under various agricultural schemes to tide over the crisis. We are also exploring possibilities of getting raw materials through MMTC,” he said.

The ₹375-crore company with three units in Kallettumkara, Karunagappilly and Kozhikode has a total production capacity of 1,250 tonnes, which would go up to 1,750 tonnes once the upcoming 500 tonne plant at Thodupuzha becomes operational. The company is looking at ₹500 crore turnover by 2020-21 and a share of 50 per cent in the State’s cattle feed market, which is estimated to be 4,000 tonnes per day, involving five lakh milk farmers and 12 lakh cattle.