Labour crunch, poor procurement price behind Aavin milk supply dip in TN

Consumers of Aavin, the flagship brand of India’s 4th largest milk cooperative society, the Tamil Nadu Cooperative Milk Producers Federation, have been hit hard by poor supply. This is largely because Aavin’s procurement has dropped from 45 lakh litres per day to 27 lakh litres in the past week, SA Ponnuswami, founder-president, Tamil Nadu Milk Dealers’ Association told The Federal.

“This situation has made it difficult for Aavin to meet its customers’ needs. The supply was poor all over the state for more than a week. The impact is now being felt in Chennai for the last two days,” he said.

Many regular buyers of Aavin are now forced to buy milk from private brands. As per official data, Tamil Nadu has a milk production of 206 lakh litres per day. Every litre lost by Aavin is a gain for private players.

A credible brand

Even though Aavin caters only to nearly 20 per cent of milk consumption in the state, the value addition is much more. A milk cooperative society brand run on the lines of Amul by the state government, Aavin enjoys a lot of credibility compared to other private brands, said S Murugan, a milk dealer from Chennai, who sells both Aavin and private brands.

“Aavin is the most preferred brand by many. I am at the receiving end if I don’t do the home delivery on time. Aavin milk, which usually arrives at 3.30 am, reached us at 10.30 am yesterday. How will I distribute it?” he asked. And added that he has told his customers that it might take at least four days for normalcy to return.

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Poor procurement price

Associations working with milk producers say farmers have started to reduce the supply to Aavin citing poor procurement price (less by more than ₹10 per litre as compared to private players). Aavin now buys cow’s milk at ₹35 per litre and buffalo’s milk at ₹44 per litre. Milk sellers are demanding a hike in the procurement price citing the example of the price paid by private dairies.

For example, private companies purchase cow milk at ₹42 and buffalo milk at ₹46 per litre. Private milk vendors today sell at a minimum price of ₹50 for a litre of milk. Meanwhile, Aavin has a base price of ₹40.

A rise in fodder prices, which is said to have doubled, is one of the reasons milk producers are giving for their demand to increase the procurement price. According to Ponnuswami, Aavin is able to hold on till now predominantly because it is a reputed cooperative society, with more than 19 lakh members.

“If not, the impact would have been worse. As of now, milk producers of the Tamil Nadu Cooperative Milk Producers Federation are selling 80 per cent of their milk to private players, which offer a better price and sell the remaining 20 per cent to Aavin. The Tamil Nadu government has not also subsidised Aavin for selling at a lower cost (when compared to private companies). This has put the cooperative society under tremendous financial difficulty,” he said.

The associations representing milk farmers alleged that mismanagement is at the core of the crisis. There are allegations that the cooperative society is paying milk producers only once in 50-60 days, while private dairy companies reportedly pay them every week.

Aavin dairies face labour crunch

To compound matters, Ambattur and Sholinganallur dairies were affected by a labour crunch too for the past few days. There were not enough workers to load milk into distribution vehicles, as the migrant labourers who are usually deployed for the task had gone to their hometown for Holi.

“The contractors and sub-contractors failed to arrange replacements,” said Murugan. “In the absence of loading men, drivers and cleaners were forced to load milk supplies, which resulted in a huge time delay,” he said.

The Federal sent queries on these issues to the animal husbandry ministry, which handles the Tamil Nadu Cooperative societies. There has been no response from the ministry.

Crisis lands at Chennai’s door

The crisis was initially restricted to districts other than Chennai. With the labour crisis, the problem has hit the capital city too, leaving people who have been loyal to the Aavin brand in the lurch.

“In my 18 years of experience distributing Aavin milk, I haven’t faced such a crisis like this one,” said Murugan. “Aavin has a lot of credibility. For instance, Aavin milk which is kept at room temperature would turn sour in four hours, which is natural. But some of the private milk packets will survive much longer, which may worry people. That’s why people first prefer Aavin. It makes my job difficult to explain to them that it’s not my fault I am not able to deliver Aavin milk,” he pointed out.

Sources in Aavin, however told The Federal that Aavin will bounce back from this crisis soon. The government is said to be working to resolve the crisis as it has hit the capital city, and with wide media coverage. But, milk farmers of Aavin are worried that their concerns won’t be addressed anytime soon.

The DMK government decreased the retail milk price by ₹3 a litre and hiked up the procurement price by ₹3 a litre after it took over.

Private dairies had effected five price hikes in the last one year to manage the increase in procurement price.  The cooperative society is reportedly worried over an increase in procurement price which is expected to cause a significant financial burden.

Political worries

The government is said to be wary of increasing the price of Aavin milk, as this is the only cost-effective milk available to the public. Raising the price of Aavin milk can have political repercussions too. Earlier, when the DMK government increased the price by ₹3 in November 2022, BJP state president K Annamalai accused the government of “inefficiency.”

“Providing enough subsidy to Aavin is the only way out, which we expect the DMK government will do sooner than later,” said a source from Aavin. But, as of today, the standoff continues until the government comes up with a solution.