Karnataka Cooperative Milk Producers’ Federation Limited (KMF) plans to increase the selling price of milk by ₹3 per litre.
KMF Chairman Balachandra Jarkiholi sent a letter to Chief Minister Basavaraj Bommai on April 25, two weeks after Cooperative Minister S T Somashekar refused to approve the proposed hike. Mr Jarkiholi had also met the CM earlier this week with the request, say KMF officials.
In a statement released to the media, the chairman said that KMF was constrained to raise the price as its input costs had increased in the last two years. Nandini branded milk is the cheapest in the market. All other brands are costlier by at least ₹8. Most milk brands, including Amul, have increased their sale price.
Mr Jarkiholi claimed that the extra ₹3 would be used to pay its suppliers. Of this, ₹2 would go to farmers and ₹1 to agents, the federation and milk cooperative societies.
Officials, however, say there are other factors. The most pressing is the demand of milk selling agents.
“Among all the players in the milk business, KMF gives the least commission. Even among the premium brands, our payment is lesser than others. While private dairies are offering up to ₹5 per litre, we are able to pay only ₹1.07. This could drive away our agents to private players. The only way to keep our flock together is to increase the commission amount,’’ said a senior official.
“Among the reasons for payment of lower commission is that operating cost of KMF is higher than others. The staff to volume ratio is higher than others. We have 15,000 employees for the 81 lakh litres of milk collected per day, which means each employee handles an average of only 540 litres. But some private companies have one employee handling up to 1,2000 litres. Their cost of operation is obviously less than ours,” said the officer.
Another reason is that since its inception, KMF has not been able to convert all its procurement into sales.
“We collect around 81 lakh litres per day, but sell only around 60 lakh litres. During lockdown, this fell to around 40 lakh litres. All that has weighed us down,” said an officer in charge of marketing.
Officials say the chairman was forced to go to the CM as the cooperation minister rejected the proposal for a hike in price of milk. Senior KMF officials had held three meetings with their counterparts in the cooperation ministry. A formal proposal was sent to the Minister who turned it down, said a senior official. “Our chairman tried to convince the Minister, but in vain.”
Balachandra Jarkiholi maintains that farmers’ welfare is the only reason necessitating the hike. “Why else should we increase the selling price? Farmers are suffering from crop loss and other problems. If we are able to pay an additional ₹200 to a farmer who gives us 100 litres per day, he will be helped to that extent,” he said.
He concedes that the cooperative is facing financial troubles. “Our finances are stressed. While our cost of processing, transport, raw materials and power has increased by up to 30% in two years, our selling price has remained unchanged. There is a difference of only an average of ₹4 between our procurement price and selling price. The last time we were allowed to hike the price (by ₹2) was in 2020. The lockdown hit us badly as we suffered due to reduced sales and storage losses. We are slowly getting back to normal. The increase in milk price will not push up the cost of living. The people know that prices of all commodities are increasing. I am sure they will accept the hike in price,” he said.
However, there are some who refuse to accept his argument.
“Milk is an essential commodity. Increasing its price will affect the common man who is already reeling under the pressure of price rise,” Sidagouda Modagi, farmers’ leader, said. “KMF should reduce its cost of processing by fine-tuning its management, stop wasteful expenditure and plug leakages. Every time the KMF hikes prices, it claims that farmers will benefit. But, that is not true. Its inefficiency is forcing them to increase the prices. By dragging farmers into this issue, the common man thinks farmers are responsible for the increase in price of milk,’’ he said.
KMF collects milk from nearly 23,000 various types of cooperatives in 2.5 lakh villages and towns. The turnover of the second biggest product cooperative in India, after the Gujarat milk cooperative federation, is estimated to be ₹19,800 crore for 2022. Its 28 lakh members earn around ₹22 crore, an average of ₹78 per person, each day. However, its procurement remains low clocking an average of 32 litres per village.
“Increasing procurement has not been our focus so far, but we hope to work on it,’’ said Mr Jarkiholi. “We are working on projects to promote new cow and bull varieties, and another eight projects under private-public-partnership (PPP) model. Once these are on track, we will take up other issues,” he said.
