Aavin not milking its worth
Reduction in price of green sachets leading to multi-crore revenue loss, lack of supply in livestock and fodder, delayed payment in procurement and non-subsidy to farmers are some of the issues plaguing the dairy gaint
CHENNAI: Aavin, the largest dairy co-operative of Tamil Nadu and a trusted brand among the households, is now facing a downfall in the market due to reduction in supply of its products, alleged sub-standard quality (with reduction in fat content) and lack of distribution.
It was May 7, 2021. Chief Minister MK Stalin signed an order reducing the price of milk supplied by Aavin by Rs 3 with effect from May 16. Insiders said that this was the first step of the dairy giant’s downfall.
“Due to reduction in price of milk by Rs 3 per litre, Aavin’s loss per year is Rs 280 crore. Aavin has been operating at a loss of Rs 700 crore since May 2021,” insiders noted.
Echoing this view was Natarajan Vaidyanathan, a major dealer of Aavin since 2005, who said, “To cope with the loss, the Tamil Nadu Cooperative Milk Producers Federation Limited (TNCMPFL), which owns Aavin, hiked the price of orange colour milk sachets containing 6% fat content to Rs 12/litre. But with the sale of orange sachets faltering, Aavin management reduced the 4.5% content in its green sachets to 3.5%. This is one of the main reasons for the deterioration of green sachets that are purchased by more than 40% of Aavin customers.”
Further, he added that from September 1, the sale of green milk sachets was stopped in Aavin’s own parlours but provided to wholesale dealers without any restriction. “As wholesale dealers sell to customers at higher prices than the MRP, Aavin incurs additional revenue losses,” Vaidyanathan pointed out.
Speaking to DT Next, an official of Aavin said that till April 2021, the milk procurement of TNCMPFL was 44 lakh litres/day. Now, non-subsidy to farmers, inadequate supply of livestock and fodder, delayed payment for buying milk and the entry of Karnataka Milk Federation’s Nandini has led to the slump in the procurement of milk to Aavin to 26-28 lakh litres/day.
“For Aavin, there are many problems at the procurement stage itself. Karnataka’s Nandini buys milk from TN farmers and producers by subsidising them up to Rs 6/litre. Since Nandini provides the price for the procured milk within 7-10 days, most farmers across the State have started supplying milk to Nandini. This is one of the many challenges Aavin faces,” sources pointed out.
Insiders opined that the Dairy ministry and top Aavin authorities had failed to provide a permanent solution to the existing chaos in the Aavin administration. However, officials within Aavin said that the loss incurred by the management due to reduction in milk price can only be saved if the State government provides subsidy.
Meanwhile, pointing out “scientific” reasons, State Minister for Milk and Dairy Development Mano Thangaraj, on Wednesday, said, “The quality of cow’s milk is not altered in any way. Reducing the fat content in green sachets is an effort to keeping customers healthy.”
He added that the processed cow’s milk was sold with an additional 1% fat content in green sachets, and that the “fat is scientifically unnecessary for today’s lifestyle. Moreover, many customers do not want to add solids including fat or protein to their diet. So for promoting a healthy Tamil Nadu, we’re highlighting the violet delight sachets instead”.
Fluctuations in the price of Aavin milk have burned a hole in the proverbial middle-class pockets. Considering the health benefits attached to consuming 2 glasses of milk and/or its related products every day, dairy is an essential item in an average Indian household.
“Milk provides a large amount of protein and is rich in calcium especially for people who are suffering from bone diseases,” opines Dr Preethi Raj, a city-based dietician. Milk has all essential nutrients, which is why children must drink a minimum of 2 glasses milk/day (300 ml), and consume dairy in the form of paneer and other milk products.”
For upper middle-class and above, a hike in prices does not pinch pockets as much as it does with the middle-class and lower. “An average middle-class family spends Rs 2,000/month on milk. Anything over and above would make a big dent in their budget as they would have to buy milk for their infants and senior citizens too,” points out Prof Dilu Susan Kurian with a private varsity.
(With inputs from Tinisha Rachel Samuel)