Proposed revamp may help Aavin to clear Rs 371 crore arrears to suppliers

On accumulated dues, sources said, “as the normal practice milk farmers will be paid every week and it slowly converted to paying them once a month and that continued for some time.” While big dairy farms could weather the monthly payment, small farmers, who depended totally on Aavin, were the most affected by this procedure. Also the mismatch between procurement and selling prices and the huge cost involved in primary and secondary transportation of milk would also be “seriously looked into,” sources added.

While procuring milk from individual societies by Aavin involved primary transportation, moving it from there to Chennai was secondary transportation. While Aavin procured around 34 lakh litres of milk daily, it was able to sell only 24 lakh litres with the rest being converted into value added products or milk powder. The high cost for such conversion and poor returns resulted in holding the milk powder stocks for more than six months, sources revealed. There were also times when milk powder had to be added to bring milk supplied to customers to the required quality levels, it was said.

“Efforts are under way to curtail wasteful expenditure as during the previous AIADMK regime, the federation and district milk unions are considered cash cows for local politicians to profit,” they said.