Kerala’s 93-year old labour co-operative society ULCCS is venturing into dairy business by setting up a plant at Kozhikode at an investment of ₹30 crore.

The plant which will start operations during January next year will have a daily procurement capacity of one lakh litres of milk. But the project will concentrate more on value-addition than supply fluid milk, said TP Sethumadhavan, Director, UL Education, UL Cyber Park.

“We will provide a minimum support price to dairy farmers and incentives based on value-addition. A support price of milk will benefit scores of poor dairy farmers,” he told BusinessLine. Sethumadhavan, who is also the former Director of Entrepreneurship, Kerala Veterinary and Animal Sciences University (KVASU), pointed out that there has been a substantial improvement in milk production and the demand-supply mismatch of milk is now around 24 per cent.

However, the State government is trying to enhance self-sustainability in dairy industry and to facilitate it, he said, ULCC is planning to implement a massive dairy entrepreneurship programme.

To motivate younger generation to venture into dairy entrepreneurship, he strongly favours promoting start-ups in dairy sector. To achieve this, there is a need for special purpose vehicles (SPVs) with the support from banks and co-operatives with the lead role taken by Nabard.

The Indian dairy sector, according to him, needs to fix milk price on feed price index since feed cost forms 70 per cent of expenditure in dairying. The existing PFA Act that stipulates minimum 3.5 per cent fat and 7.5 per cent non-solid fat for pasteurised liquid milk needs to be modified in line with FSAA Act.

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