The Kerala Co-operative Milk Marketing Federation (KCMMF), known by its trade name Milma, has voiced serious concern over the tendency of some milk marketing federations to aggressively enter markets outside their respective states. This, according to Milma, is a total breach of the cooperative spirit based on which the country's dairy sector has been organised for the benefit of millions of dairy farmers.
Milma Chairman AKS Mani said that 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. Mani's remarks came after Amul announced in an ad last week that it would sell its products online in Bengaluru, stoking fears that the milk major would take over Karmataka's own milk brand Nandini. "This grossly violates the federal principles and cooperative spirit based on which the country's dairy cooperative movement has been built and nurtured by pioneers like Tribhuvandas Patel and Verghese Kurien. The move of Amul (Gujarat Milk Co-operative Federation) to promote its staple products in Karnataka has been met with stiff resistance from the homegrown stakeholders. But the Karnataka Milk Federation (KMF) itself recently opened its outlets in parts of Kerala to sell its Nandini brand of milk and other products. How is this justified? It is a highly unethical practice which defeats the very purpose of India's dairy movement and harms the interests of the farmers," Mani said, adding that such practices need to be curtailed.
As per the prevailing agreement and courteous business relations existing among the milk co-operatives, cross-border marketing of milk shall 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 cooperative principles that have been nurtured for a long time by mutual consent and goodwill, Mani said. It was further pointed out that the tendency to enter the markets outside one's domain by opening sales outlets or roping in franchisees should be avoided.
"Initially, they sell only value-added products, then they start selling liquid milk also and subsequently begin shop-to-shop distribution of milk. Eventually, they will seek to capture markets outside their respective area, taking advantage of the state-to-state variations in price and production cost," Mani said. Though the input cost in the dairy sector in Kerala is much higher compared to other states, Milma passes on 83% of its turnover to dairy farmers through the cooperative societies under its network. Also, the bulk of Milma's surplus is given to the farmers as an additional incentive on milk price and subsidy on cattle feed as the well-being of the dairy farmers is its prime concern, Mani added.
"Considering these, it is in the best interest of dairy cooperative 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 said.