The Kerala Cooperative Milk Marketing Federation (KCMMF), known by the brand Milma, has voiced serious concern over the tendency of some State milk marketing federations to aggressively enter markets outside their respective States, holding that this involved a breach of the cooperative spirit based on which the country’s dairy sector has been organised for the benefit of millions of dairy farmers.
“Of late, there has been a growing tendency on the part of some of the State milk marketing federations to market their staple products outside their respective domain. This grossly violates the federal principles and cooperative spirit based on which the country’s dairy cooperative movement has been built and nurtured by pioneers like Tribhuvandas Patel and Verghese Kurien,” Milma Chairman K.S. Mani said here on Thursday.
Amul in Karnataka
“The move of Amul (Gujarat Milk Cooperative Federation) to promote its staple products in Karnataka has been met with strong resistance from stakeholders in that State. But the Karnataka Milk Marketing Federation recently opened its outlets in parts of Kerala to sell its Nandini brand of milk and other products. This is a highly unethical practice which defeats the very purpose of India’s dairy movement and will harm the interests of the farmers,” Mr. Mani said.
He feared that the trend would lead to unhealthy competition among States, unless the Union and State governments come together to evolve a consensus.
“As per the prevailing agreement and courteous business relations existing among milk cooperatives, cross-border marketing of liquid milk shall be avoided as it amounts to blatant encroachment of the sale area of the respective State. Such practices from any side will jeopardise the spirit of co-operative principles that have been nurtured for long by mutual consent and goodwill,” he explained.
Mr. Mani noted that the tendency to enter the markets outside one’s domain by opening sales outlets or roping in franchisees should be avoided. “Initially, they sell only value-added products, then start selling liquid milk also and subsequently begin shop-to-shop distribution of milk. Eventually, they will seek to capture markets outside their area, taking advantage of the State-to-State variations in price and production cost.”
Though the input cost in dairy sector in Kerala is much higher compared to other States, Milma passes on 83% of its turnover to dairy farmers through the co-operative societies in its network. Also, the bulk of Milma’s surplus is given to the farmers as additional incentive on milk price and subsidy on cattle feed as the well-being of the dairy farmers is its prime concern.
Considering these stark realities, it is in the best interest of dairy co-operative federations of various States that they refrain from plans to open sales outlets or make franchisee arrangements to sell liquid milk and other staple products outside the State, Mr. Mani added.