KMF Plans to Raise Milk Prices to Help Karnataka Farmers

Karnataka Cooperative Milk Producers' Federation Limited (KMF) intends to raise the price of milk by 3 rupees per litre. On April 25, two weeks after Cooperative Minister S T Somashekar refused to approve the proposed hike, KMF Chairman Balachandra Jarkiholi wrote to Chief Minister Basavaraj Bommai. According to KMF officials, Jarkiholi met with the CM earlier this week to make the request.

In a statement released to the media, the chairman stated that KMF was forced to raise the price because its input costs had risen in the previous two years. Nandini milk is the cheapest on the market. Every other brand is at least $8 more expensive. Most milk brands, including Amul, have raised their prices.

Jarkiholi stated that the additional 3 would be used to pay its suppliers. Two of these would go to farmers, while one would go to agents, the federation, and milk cooperative societies. Officials, on the other hand, claim that there are other factors. The demand for milk selling agents is the most pressing.

"Of all the milk industry players, KMF charges the lowest commission." Even among premium brands, our payment is lower than that of others. While private dairies charge up to $5 per litre, we can pay only $1.07. This could cause our agents to defect to private players. Increasing the commission amount is the only way to keep our flock together," said a senior official.

"One of the reasons for the lower commission payment is that KMF's operating costs are higher than others." The staff-to-volume ratio is higher than in other companies. For the 81 lakh litres of milk collected per day, we have 15,000 employees, which means that each employee handles an average of only 540 litres. However, some private companies have one employee who can handle up to 1,2000 litres. "Their operating costs are obviously lower than ours," the officer explained.

Another reason is that KMF has not been able to convert all of its procurement into sales since its inception.

"We collect approximately 81 lakh litres per day but only sell approximately 60 lakh litres." During the lockdown, this was reduced to around 40 lakh litres. "Everything has weighed us down," said an officer in charge of marketing.

According to officials, the chairman was forced to go to the CM after the cooperation minister rejected the proposal for a milk price increase. Senior KMF officials met with their counterparts in the Cooperation Ministry three times. According to a senior official, a formal proposal was sent to the Minister, who declined it. "Our chairman attempted, but failed, to persuade the Minister."

Balachandra Jarkiholi maintains that the hike is solely for the benefit of farmers. "Otherwise, why would we raise the selling price?" Farmers are dealing with crop loss and other issues. "If we can pay an extra $200 to a farmer who gives us 100 litres per day, he will be helped to that extent," he explained.

"Milk is a necessary commodity." "Increasing its price will have an impact on the common man, who is already under pressure from price increases," farmers' leader Sidagouda Modagi said. "KMF should reduce its processing costs by fine-tuning its management, stop wasteful spending, and plug leaks." The KMF claims that every time it raises prices, farmers will benefit. That, however, is not the case. Because of its inefficiency, they are forced to raise their prices. "By dragging farmers into this issue, the common man believes farmers are to blame for the increase in milk prices," he said.

KMF collects milk from nearly 23,000 cooperatives of various types in 2.5 lakh villages and towns. The turnover of India's second-largest product cooperative, after the Gujarat milk cooperative federation, is expected to be Rs. 19,800 crore in 2022. Its 28 lakh members earn approximately Rs. 22 crores per day, or Rs. 78 per person. Its procurement, however, remains low, with an average of 32 litres per village.

"Increasing procurement has not been our focus thus far, but we hope to work on it," Jarkiholi said. "We are working on projects to promote new cow and bull varieties, as well as eight other projects using the private-public-partnership (PPP) model." "Once these are resolved, we will move on to other issues," he said.