Dairy co-operatives happy about demonetisation boost to banking transactions
Dairy milk cooperatives across several big states are happy about the demonetisation-led boost to banking transactions and many like Amul, Karnataka Milk Federation and Mother Dairy expect to overcome resistance from farmers while transferring money to their bank accounts.
Dairy companies usually pay farmers from whom they source the milk once a week through cash payments. “We already disburse Rs 970 crore annually- under the motivational fee to farmers since the past one year and will start making the weekly payments too via bank accounts,” says the cooperative managing director Rakesh Singh of Karnataka Milk federation, which daily procures 70 lakh litres milk from 9 lakh farmers across 14,000 societies. The federation now plans to now start disbursing payments to farmers which it does once in two or three week through bank accounts. It pays out about Rs 18-20 crore daily to milk-supplying farmers.
Hatsun Agro, a leading private dairy player form Chennai which procures 28 lakh litres milk daily and disburses Rs 73 crore every ten days to farmers has been making 99.65 % of it payments through banks accounts for the past one and a half years. ”We have made no cash transfers, except for few old people who are unable to go to bank. Initially there was resistance from farmers but we wanted to get them away from the clutches of money lenders,’ says RG Chandramogan, MD of Hatsun Agro.
With the limit of withdrawal of maximum Rs 10000 per week per account, milk societies will be forced to transfer money in milk producers’ accounts opened during Jan Dhan Yojana, which were not active, feels RS Sodhi, managing director at Gujarat Cooperative Milk Marketing Federation (GCMMF) that owns the country’s top dairy brand Amul.
“Our 18000 societies were disbursing about Rs 450 crore per week i.e. Rs 2-3 lakh per society in cash to milk producers. Earlier we tried to make payments through banks but due to vested interest of society secretaries, they didn’t allow it to succeed. There are few problems but I feel in a few days, things will settle,” says Sodhi whose federation handles 175 lakh litres milk daily.
Mother Dairy which currently procures 35 lakh litres milk daily and pays Rs 80-90 crore a week to farmers, says that it makes direct cash transfers to its five farmers producer company who are facilitating farmers to open accounts.
“A lot of success can be seen in Rajasthan and some parts of Gujarat, where farmers are getting direct cash transfer. This is the way forward and in our new greenfield projects in Nagpur, Marathwada and Vidarbha, we are implementing it,” says S Nagarajan, managing director of Mother Dairy.
The daily milk collection in Maharashtra, approximately worth Rs 44 crore, is also slowly shifting to bank payment, says Prakash Khutwal, secretary, Maharashtra State Milk Producers Association. “The head of the village level milk collection centre used to withdraw cash from bank and make cash payment to farmers twice or thrice a month. Now they are transferring money directly to farmers accounts as limit on individual withdrawals from the bank has come to place,” he says.