Problem 1: A milk cooperative federation in Karnataka — started on the ideal, selfsustaining ‘Amul’ model of the Gujarat Cooperative Milk Marketing Federation (GCMMF) 40 years ago — has turned into a giant, highly politicised, bureaucratic organisation that is dependent on government handouts for survival. Problem 2: Neither consumers nor farmers are happy with the prices set by the Karnataka Cooperative Milk Producers Federation (KMF). With the latest hike instituted from January 5, there is a difference of about Rs 10 per litre between the purchase price given to the farmer and the price paid by the consumer. This goes to KMF as infrastructure and input costs. The difference at the GCMMF is Rs 6. Problem 3: KMF is unable to market or cope with the huge amount of milk it receives daily; KMF diverts it to milk powder and milk products, which result in losses of Rs 5 to Rs 7 per litre of milk diverted. Problem 4: The government has no option but to keep the loss-making KMF and the dairy sector afloat with subsidies running into nearly Rs 4,000 crore, as lakhs of farmers are dependent on it for survival, especially because the state is currently reeling under the worst drought in 40 years and has seen 800 farmer suicides since April 2014.
Problem 5: There is no Plan B other than KMF for farmers or consumers, as the private sector does not receive the subsidies that KMF does. (Milk being transported from the village to the district unit of KMF) KMF’s milk brand, Nandini, is known for quality and is the third biggest player in India’s milk market, after Amul and Mother Dairy. It supplies milk not only in the neighbouring states, but as far as Jammu & Kashmir and the Northeast, besides remote markets like the Andaman and Nicobar Islands. KMF has been supplying ghee to the Tirupati temple for sweets and powdered milk to the Indian armed forces. It will soon enter the Mumbai market. A Sinking Ship The organisation has about 70 products in the market, all earning a good name. But unless drastic and long-term marketing strategies are put in place, the milk behemoth is set to collapse under its own weight, even as the state government keeps handing out dole after dole in a desperate attempt to ward off immediate blows. “The cooperative movement in the milk sector in the state has sunk due to politics. (Milk being packaged at a KMF plant) Elections are fought and power is grabbed at very high costs. Naturally, money needs to be made to support this,” farmer leader Kodihalli Chandrashekar told ET Magazine. “There is inefficiency at all levels. KMF is taking money from the consumers in the name of farmers and is not giving them their due. The money is just going to support the political class and KMF directors.”