The economic viability of the milk unions of Punjab associated with Milkfed (Punjab State Cooperative Milk Producers Federation Ltd) has been a matter of concern, amid growing competition in the dairy sector.
After conducting a study on the financial restructuring requirement of Milkfed, Rabo India Finance (RIF), a subsidiary of Rabobank International, and Nabcons, a subsidiary of Nabard indicate that there is a clear need to adopt a professional approach in managing its milk unions for their financial turnaround.
Milkfed comprises of nine milk plants and 11 milk unions. There are 6,000 societies involving 3.50 lakh farmers who supply milk to the cooperative body. Out of these only two milk unions are generating substantial profits (Ludhiana and Ropar). The milk unions of Amritsar, Gurdaspur, Bathinda, Sangrur, Jalandhar and Hoshiarpur are under cumulative loss, raising questions regarding their sustainability. The increasing competition has made things difficult for the loss-making unions.
The study, ‘strategic vision and restructuring plans for Milkfed’, has put forth restructuring options for Milkfed, and for the milk unions associated with it. The report will be submitted to chief minister Parkash Singh Badal for perusal. Meanwhile, the consultants conducted a technical survey of the sick milk unions. They also analysed the sick milk unions in comparison with the profitable ones, besides studying Amul. On visiting the dairy plants, the consultants found that procurement employees were focusing more on micro-managing the account books of the village society, than increasing the milk procurement. This was a major factor leading to low turnover of the unions. Adulteration of milk is rampant in the societies associated with the milk unions of Sangrur, Gurdaspur and Bathinda. The survey found that the required quantity of solid non-fat (SNF) in milk is not measured at the society level. In the sick milk unions, no dividends are paid to the producers. As a result, more and more producers supply milk to private vendors. Another factor impeding their growth is that the unions have been focusing more on increasing the number of societies, rather than aiming for greater milk procurement.
