TN Dairy firms approach State govt for support

R Balaji Chennai | Updated on April 05, 2020

Increase in cost of labour and raw material added to the overheads for the dairy farmers. File Photo   -  BusinessLine

In the backdrop of over 58 lakh litres of milk going unutilised daily, representing a huge loss to dairy farmers, the Tamil Nadu Dairies Association has urged the State government to ease restrictions in line with that allowed for essential commodities. Some market intervention is needed to infuse liquidity, it said.

The association which represents the private sector dairy, mostly small companies, will have to stop procuring milk from farmers due to the loss in retail sales. The potential loss of income to farmers is about ₹18.76 crore a day just during the lockdown, says the Association based on NDDB figures of milk production.

The association has urged the State government in a representation on Friday to free up movement of vehicles along the entire milk logistics chain to restore operations and government purchase of dairy products to infuse liquidity into the sector.

Vehicles move from dairy farms, to chilling centres and further to milk processing units and, after processing, back to the consumption markets. This calls for a range of vehicles of various capacities from sub-one tonne vehicles to aggregate the milk from farmers, to large tankers that move to factories. The same happens to move productions from the factory to markets.

Then there are also the essential raw materials for milk processing, production of dairy products and packaging. All these have also been hit.

According to the Association, the surplus has been generated due to drop in daily sales following the Covid-19 pandemic lockdown.

Of the 230 lakh litres of milk produced daily, about half is consumed in the producers’ household or near the production centres. Dairy companies collect the balance, with the cooperative sector accounting for 35 lakh litres and the private sector about 80 lakh litres.

During the lockdown, cooperative sector sales have dropped to about 25 lakh litres and that of private sector to 32 lakh litres which accounts for the 58-lakh-litre surplus.

According to R Rajasekaran, Secretary of the Association, at least half this surplus needs to be converted to long shelflife products such as butter, ghee, skimmed and whole milk powder due to drop in milk sales. Since the private dairies do not have adequate processing capacity, and due to the drop in revenue, the companies can no longer afford to procure milk from farmers.

The drop in sales is primarily due to the exit of commercial/institutional segment from the market due to lockdown; retail sales is also down due to the timings being curtailed. Processing has also been hit due to manpower shortage as staff is not able to report for work due to restrictions on movement of vehicles.

The Association has urged the State government to allow free movement of vehicles relating to the dairy sector. They also requested the government to purchase butter and milk powder from the private sector to infuse liquidity into the market and enable them to continue purchasing milk from the farmer and milk outlets be allowed to stay open longer to improve sales.

Published on April 05, 2020

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