MILK MARKETING IN AP –ROADBLOCKS IN CRISIS SITUATION

MILK MARKETING IN AP –ROADBLOCKS IN CRISIS SITUATION

Introduction:

Andhra Pradesh with over 1.1 million tons milk production in a year figures in top 5 milk producing states in India.  Once very strong state for cooperative dairies, subsequently became testing ground for MAC act, producer companies’ act and the end result is near disappearance of Coop brand Vijaya and Federation milk procurement reaching record low of 25000 litres/day.

The very fact that the presence of private dairies is highest in AP shows that how the political system killed cooperatives, converted few cooperatives into family controlled producer companies with blessing of the rulers at that point of time. Heritage with coterie of family controlled producer companies completely spoiled and disturbed the three tier dairy cooperative system. The end result is unhealthy competition, monopoly of private dairies, coterie operations in milk pricing. In the process the milk rates paid are lowest when compare to neighbouring states and farmers are the losers.

Sreeja Dairy: 

In this polluted environment with latest addition of Ongole to sick units list in cooperative sector, the largest women participated milk Producer Company “Sreeja” emerged as a ray of hope for collective action. After the severe jolts from bad examples of producer companies such as Sangam, Vishaka, in Sreeja the design is ensured as more democratic with no scope for family control. 

With assured market support from NDDB/Mother dairy, Delhi, Sreeja growth is fantastic with present procurement of over 4 lakh litres/day. Sreeja not only benefiting large number of women with better milk pricing, bonus etc, but also acting as price control mechanism on private dairies.

CORONA effect:  

·         Overall milk sales dropped by over 30%. There is an increase of 10% in domestic sales and steep drop of 40% in bulk sales as the hotels, sweet shops etc., are closed.

·         In such conditions normally milk plants convert milk into powder and use it in lean season.

·         There are some dairy units who do not have powder plants. In fact Sreeja is not having powder plant of its own. Unless until they custom hire a plant for conversion, Sreeja will be forced to downsize their operations by 75% , as their liquid milk sales is in Delhi and at present rail transport is completely stopped.

·         Logistics, permissions, raw materials supply etc., will be disturbed, having negative impact on operations.

How the industry will behave:

·         They will try to reduce milk collection and avoid converting surplus into powder as it involve blacking of working capital and also effect profitability.

·         Try to avoid some long distance routes and blame it on transport etc.

·         Reduce milk purchase rate as the supply is more than demand. It is given to understand that Dodla & Sangam already reduced procurement prices and given to understand that Heritage will be reducing from 01.04.2020. 

·         They will not extend support for third party conversions so that killing one unit like eliminating competition for ever.

·         Increase retail sale rates taking advantage of curfew situation. I was told Heritage already increased selling price by Rs.4/litre.

Role of Government/Milk Commissioner (MC):  

·         Like we are taking care of milk availability to consumer, we must ensure marketability to milk producers. MC shall ensure that dairies operate in all procurement routes like in normal days.  Ensure that milk procurement trucks are issued curfew passes and smooth inter district, interstate transport happen without hiccups.

·         Ensure that spare capacities of milk powder production shall be made available on third party conversion basis to others.

·         Ensure that coal, oil, labour etc., movement to dairy units is not affected due to curfew.

·         Ensure that both procurement and selling prices are maintained at pre-curfew period.

·         MC shall be available to dairies and extend support on 24x7 basis with problem solving approach. Less time for meetings and more time for field actions.

Bonthu Guruva Reddy – 9866889246

grbonthu@gmail.com