The Kerala Co-operative Milk Marketing Federation (KCMMF), known by the brand Milma, has voiced concern over the tendency of some state milk marketing federations to aggressively enter markets outside their respective states, holding that this involved a total breach of co-operative spirit based on which the country’s dairy sector has been organised.
“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 domains. This grossly violates the federal principles and co-operative spirit based on which the country’s dairy co-operative movement has been built and nurtured by pioneers such as Tribhuvandas Patel and Dr Verghese Kurien,” Milma Chairman K. S. Mani, said here today.
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“The move by Amul (Gujarat Milk Co-operative Federation) to promote its staple products in Karnataka has met with strong resistance from stakeholders in that state. But the Karnataka Milk Marketing Federation recently opened outlets in parts of Kerala to sell its Nandini brand of milk and other products. How can this be justified? This is an unethical practice, which defeats the very purpose of India’s dairy movement and harms the interests of farmers,” Mani said.
This trend will only lead to unhealthy competition among the states, which needs to be reined in, with the Union and state governments coming together to evolve a consensus, Mani said.
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Based on the prevailing agreement and courteous business relations among milk cooperatives, cross-border marketing of liquid milk should 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 said.
The tendency to enter 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 respective areas, taking advantage of variations in price and production cost in different states.
Though the input cost in the dairy sector in Kerala is much higher compared to other states, Milma passes on 83 per cent of its turnover to dairy farmers through co-operative societies in its network. Also, the bulk of Milma’s surplus is given to farmers as additional incentive on the 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 their respective states, Mani added.