Milking it dry

The government milk major Aavin and private milk companies silent hike in the prices of milk products like curd, butter and ice cream, citing poor milk procurement due to the present drought conditions in Tamil Nadu, has come as shock to consumers as well as retail vendors and agents. Milk vendors demand that government regulate milk prices of both government-owned and private players as well to prevent such occurrence. 

Aavin’s senior officials said, “Our prices are based on the prices fixed by Gujarat’s Amul (Anand Milk Union Limited). We were forced to revise prices when we found that we were suffering a loss of Rs 100 per kilo when we converted milk powder to milk products.”

Aavin procures 30 lakh litres of milk every day during the flush season of which 11.50 lakh litres is sold in Chennai and another 10 lakh litres in the rest of the state. “As the present drought coincides with the lean season, daily milk procurement has dropped to 24 lakh litres,” officials added. 

“The remaining 8 lakh litres (during flush season) is converted to milk products and it was in order to break even that Aavin ventured to raise prices,” officials said. “Even after hiking prices, our products are still cheaper than those offered by private players,” they maintain. 

Vendors unaware of hike 

But there is no gainsaying the fact that surreptitious hike of prices has landed retail outlets in trouble. “The hike is only between Rs.2 - Rs.5 for ice cream,” 

Aavin officials counter. Aavin hiked price of butter by Rs.80 per kilo and ghee by Rs.50. “Without realising that prices had been raised, we sold milk products including ice creams at the old rates for two days, resulting in loss,” lamented a Aavin vendor, speaking on condition of anonymity. Aavin officials said they aim to ensure that dairy farmers continue to do business with them whatever the season, as they offer a milk procurement price of Rs.28 per litre, which is the highest in Tamil Nadu. This prevents them from moving to private players who currently offer prices ranging between Rs.18 and Rs.22 a litre for milk. Not only that, “Aavin’s higher procurement price attracts supplies from private players who keep their options open and they always supply to the concern which pays them higher prices” officials averred. 

TN Milk Agents and Employees Welfare Association state president SA Ponnusamy said, “Private companies hiking milk product prices without advance notification leads to reduced offtake by customers. This in turn affects milk farmers also, as reduced demand results in milk companies opting for lowered procurement.” 

An Andhra Pradesh based private milk producer announced increased prices for milk and curds from February 1. The hike was withdrawn the same day when the association opposed it. But four days later, without advance information, the company reduced its 200 grams curd pack to 175 grams without any change in price which worked out to an increase of Rs. 6 per litre. 

Ponnusamy said, “A Tamil Nadu based private milk producer hiked the price of curd by Rs.4 (Rs.52 to Rs.56) per litre. Hence, we feel that the state government which fixes the prices of paddy, cane, milk and water should also do the same with private players, if people are to benefit.” 

When contacted, the Chennai-based milk producer firm’s top official said, “We informed our agents about the proposed price hike and they are aware of it. We do not need to announce hikes to welfare associations as they are not directly connected with us.” 

Ponnusamy, who handed over petitions in this connection to the Chief Minister’s special cell, the Dairy Development Minister and Dairy Development Secretary demanding action on a war footing, said, “Lack of official action will only embolden private players to hike prices surreptitiously to their benefit while the public will continue to suffer.”

Aavin, the state-owned milk producers federation strives to be an all- weather friend to farmers despite recent hike.

Aavin fixes prices following the pricing model of Gujarat’s Anand Milk Union Limited (Amul).

Keen to retain farmers at all times, Aavin officials say they offer the best price in the market.

Price of ice cream has been raised bY Rs 2- Rs 5 by Aavin recently.

Price of Aavin butter has been increased by Rs 80, while the price of ghee has gone up by Rs 50.

A private milk producer in Andhra Pradesh reduced the quantity of curd by 25 grams after price hike was flayed.