Aavin hikes milk price - how does it compare with neighbours !!!

The Tamil Nadu government on Saturday announced a hike in Aavin (Tamil Nadu Co-operative Milk Producers Federation) milk price by Rs.10/- per litre. The hike, which comes after a gap of three years, will come into effect from November 1.  Chief Minister Mr O. Panneerselvam said the price of milk will go up by Rs 10 per litre to Rs 34. – that has prompted immediate protests with some calling for roll back of the prices.

flavoured milk of Vijaya 

The retail price of toned milk will go up by 40 per cent, from the current rate of Rs. 24 to Rs. 34 – the hike comes at a time when an increase in power tariff is looming large.  The CM said that  procurement prices of cow and buffalo milk would also go up by Rs.5 and Rs.4 a litre. This meant Aavin would buy cow milk at Rs.28 a litre and buffalo milk at Rs. 35.  It is most likely that you do not know the price of the milk that you buy daily.  From Sept 2011, the price of toned milk [the blue cover that you buy]  1 litre is Rs.24/- for monthly card holders and the MRP is Rs.27/-; for half-litre it is Rs.12/- & Rs.15.50 respectively;  in respect of Standardised milk [green cover] which  is 4.5 milk i.e., containing fat @ 4.5% - the price is Rs.14.50/- per 500 ml.

Those who are 40+ would remember the olden days and scramble for milk in the morning.  In the mid 1970s was the paradigm shift in the city of Chennai to pasteurized milk.  Prior to that the localities depended entirely on the neighbourhood cowherds for milk.  They use to buy cow’s milk as also buffalo milk for different needs.  The milkman would come in front of the house, have a customary check of the utensil before they touch the udder and then milch the cattle in your presence – still people used to complain of the milk being very much watery. Then slowly people shifted to pasteurized milk supplied by the Govt. which was a very big hit those days.  The process (not of manufacture) but of getting it home was arduous though. 

Getting back to the price increase after 3 years, the TN CM is quoted as stating that there has been demand of the dairy farmers for hiking the procurement prices because of the increase in input cost. Pointing out that the private dairies had also increased the procurement prices, he recalled that when the government, in January this year, hiked the procurement prices by Rs. 3 a litre, there was no hike in the retail prices. The previous increase was made in November 2011.

The milk price has been hiked after nearly three years and has been necessitated by the increasing cost of production as the cost of milch cows; animal feed and fodder have gone up, the release said.  From November 1, 2014, the dairy cooperative will pay dairy farmers ₹ 5 more per litre for cow milk taking the procurement price to ₹ 28 a litre; and ₹ 4 more for buffalo milk which will give dairy farmers ₹ 35 a litre. The hike in sales price of milk will help improve the viability of the dairy cooperative. The State Government has given the Federation financial assistance of over ₹ 192 crore and helped stabilise its operations. The milk price hike will benefit over 22.5 lakh dairy farmers, the release said.

A newspaper report puts it that the hike will help Aavin turn a small profit of about ₹ 0.22 (22 paise) a litre. Previously the dairy cooperative was making a loss of about ₹ 4.77 on every litre of milk sold. Aavin sells about 21.5 lakh litres of milk daily in Tamil Nadu with 11.5 lakh litres sold in Chennai and the balance across the State. Due to sustained losses Aavin had lost its dominant position in the dairy market to private brands such as Arokya, Heritage and Tirumala, the sources said.

No industry can suffer continued losses and the hike in prices was waiting to happen.  With private milk producers offering much more than what Aavin was paying, milk farmers started queuing up before them to sell their produce.  Private producers increased procurement price several times and farmers were reluctant to sell milk to Aavin as they got more money by selling to private producers, it is stated.  The increase either in terms of % or Rs.is substantially high – but yet, it was a move necessitated by circumstances.  You may wish to draw comparison with neighbouring State milk products of : ‘Milma, Nandhini, Vijaya, Sudha…’

In Kerala, in July 2014,  Milma hiked the price of milk by Rs.5 per litre; the revised rate for one litre toned milk in blue cover is stated to be  Rs.33 per litre from the earlier Rs 28/-  In Sept. 2013, in Karnataka, Nandhini went up by Rs.2/- becoming Rs.30 per litre from Rs.28/-; that too was criticised as it was the third increase in six months.  In the same month, Andhra Pradesh Dairy Development Cooperative Federation Limited (APDDCFL),  increased the price of Vijaya milk  by Rs. 2 per litre from Rs. 32 to 34.  In May 2014 in Bihar, the Bihar State Milk Cooperative Federation Limited (Comfed) was  criticised as 'milching' milk consumers in the native state by selling pasteurized Sudha milk for Rs 33 to Rs 43 per litre, but supplying to a private dairy at Joya in Moradabad for just Rs 25 per little, including transportation cost. The beneficiary of the Comfed's largesse, incidentally, was selected without floating tender.

For Aavin the card holders, the following will be new rates [subject of course to possible rollback !!]

Milk Variety	Packet Colour	Price Now	Revised
Toned Milk	Blue	360	510
Standardised	Green	435	585
Full Cream	Orange	495	645
Double toned	Magenta	345	495

With regards – S. Sampathkumar

27^th Oct 2014.