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Focus on remunerative market for milk
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Sunday, 01 August, 2010, 08 : 00 AM [IST]
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Karnataka Milk Federation Ltd which is the first-ever World Bank funded integrated project in milk cooperative sector has 13 Milk Unions spread across the state. Its network of 11,962 Dairy Cooperative Societies (DCS) has accounted for an average procurement of 40.61 lakh litres per day. In 2009-10, the Federation clocked a turnover of Rs. 3,791 crore. The key objective is to ensure a regular, assured and remunerative market for milk produced by the farming community, stated AS Premanath, managing director, Karnataka Milk Federation in an interaction with Nandita Vijay. Excerpts:
How has KMF performed and what is the plan of action for this fiscal?
KMF is the second largest dairy federation in the country after Gujarat Cooperative Milk Marketing Federation (GCMMF) which markets Amul products and is ranked first in south. This year, we have achieved a record in milk production clocking a whopping 41.8 lakh litres in July. During April and May, the Federation experienced an unprecedented shortage primarily with drop in milk procurement dropped at 30.5 lakh litres which impacted sales of ghee and butter too. This was due to the scorching summer which resulted in inadequate drinking water and fodder for cattle. There was also the issue of handling milk cooperatives in the border states as milk was sold here at higher prices. This led KMF to increase the procurement price by Rs 3 from Rs 16 to Rs 19, thus helping to restore supplies. Currently, 10 lakh litres of liquid milk is surplus in a day out of which 1.5 lakh litres are sold outside the state. The remaining is converted into value-added products like butter and ghee. The average sale of liquid milk in Bangalore district is 27 lakh litres and sales in the city is at 14 lakh litres. The procurement target set for 2015 is 70 lakh litres.
As part of the growth strategy, have there been any new projects and allocation of funds for the same?
Yes, there are several initiatives by KMF to grow the business and increase the market opportunities. Going by the surplus milk availability, we need to look at value-added products and penetrate into the market that is indicating strong demand. Therefore, we have chalked out investments and these include: Increase production capacity of UHT (Ultra High Temperature) milk of ‘Good Life’ and ‘Slim Life’ which are currently produced in Kolar. At an investment of Rs 22-25 crore, KMF will expand the capacity at Kolar from one lakh metric tonnes (MT) to 2.5 MT and one lakh MT at Channarayapatna in Hassan district taking the total capacity to 3.5 lakh litres.
There is a new dairy being set up at Chikkaballapur under the Kolar-Chikkaballapur Milk Union where the state government has sanctioned assistance to the tune of Rs. 10 crore. A new packaging unit is coming at Kumbalgod at an investment of Rs 12 crore from the Mandya Milk Union. On the cattle feed front, we will have three new units. One facility at Bangalore with a production capacity of 500 metric tonnes at an investment of Rs 62 crore, Hassan unit with capacity of 300 metric tonnes at Rs 36 crore and plant near Shimoga of 300 metric tonnes capacity at Rs 45 crore investment.
KMF has around 45 products, could you tell us which are the fastest growing and new launches?
We have a wide range of milk and value added products under the Nandini brand which bagged the most valuable brand award in 2009. The range of 45 milk and milk products in 166 different stock keeping units offers customers a wide basket of choice. These include Toned HTM, HCM, DTM standardized milk, FCM, Shuban Milk, curds, butter milk and lassi. Frozen products like ice-creams and frozen desserts. Ethnic Indian sweets like Mysore Pak, burfi, peda, besan lado and jamoon mix. Fat based products like ghee, butter, paneer and khova. Powder-based products like dairy whitener and SMP. Good Life milk in variants like Slim, Smart, Super and Sampoorna apart from beverages in tetra packs like flavoured milk and butter milk. Despite the competition, we have been able to sustain the market leadership by fulfilling consumer demands. Fastest growing products include ghee, HT milk, Mysore Pak and Peda. The new launches are yoghurt which is ready for the market in September. Processed cheese in retail packs are on the anvil and cheddar cheese is undergoing product trials. We are looking at the manufacture of chocolates and are in discussion with Campco for a production alliance.
The Federation has brought down the price of ghee could you provide us details on this?
KMF supplies ghee for the preparation of laddus in Tirupati. Early this month, we brought down the cost of ghee by Rs 30 to Rs 270 from Rs 300 per litre which is attributed to increase in milk production and fat content in milk.
How has the company fared in the international market?
KMF has commenced its production of skim milk powder to Nepal, Middle East, Singapore, Thailand and Philippines from November 2000. In the last one decade, the Federation has exported around 10,023 metric tonnes. One of the key reasons to augment capacity was to cater to the enquiries, which are coming in from the emerging markets.
What have been the developments on the ice cream front?
The current capacity at the Mother Dairy plant at Yelahanka is 10,000 litres where it undertakes production of its ‘Nandini brand and also contract manufactures for Amul ice creams and Mast Dahi. Now we are in the process of preparing a project report to set-up a 3,000 litre ice cream unit at a cost of around Rs. 8 crore at Bellary to cater to the needs of the north Karnataka market.
How would you describe the scene for dairy in the country?
The sector has significant growth prospects. Although India is one of the world’s leading milk producers, yet the northern parts of the country are facing acute shortage of milk supply. States of North East, West Bengal, Delhi and Kerala are dependent on milk powder. In fact, the Delhi government is keen to procure milk from KMF via a rail tanker and the supply is awaiting clearance from the Indian Railways. There are also opportunities for development of low fat and sugarless milk products, paneer and cheese variants. In fact, KMF is carrying out research for products targeting the growing diabetic population.
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