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Private players vie for Punjab milk

Last updated on: May 13, 2008 12:11 IST

Paramjit Singh from Chunni Khurd in District Fatehgarh Sahib procures about 300 litres of milk every day from 30 farmers of his village. He shows off an electronic equipment to measure milk, given to him by Reliance, which has opened 400 milk collection centres in as many villages of Punjab as part of its milk procurement and retail marketing  programme.

For Punjab dairy farmers like Paramjit, there is a range of choices opening up so far as buyers are concerned.

Nestle and local players were already there in the terrain, Reliance has begun its operations and Wal-Mart is exploring the territory to procure milk as it plans to get into milk retailing in association with Bharti Mittal.

Some of them are procuring from the cooperatives under Punjab Milkfed, which naturally is not feeling threatened by these private players.

Paramjit says Reliance deducted the advance given to him from his first payment. He gets Rs 25 for a litre of milk and the minimum is about Rs 16-18, he says, depending on the fat content. But the best part of the deal is his monthly earning of Rs 8,000, which is a 3.45 per cent commission he gets for procuring milk from 30 farmers in his village.

Paramjit used to supply milk to Punjab Milkfed, the giant cooperative under the Punjab government, which has 11 cooperatives affiliated to it.

The payments are similar but more regular. While Punjab Milkfed always kept an installment pending, with Reliance it is once every 10 days, says Paramjit, who gets payment credited to his account in State Bank of Patiala after every ten days. The money is then distributed to farmers.

The value of milk is determined on the basis of fat (ideally between 7 to 10 units) and SNF (solid not fat). The price varies between Rs 16 and 24 a litre whether it is Reliance or the milk cooperatives under Punjab Milkfed.

Sukhwinder Singh of Duhali village in Mohali district does not get steep commissions as he gets milk from fewer farmers and they supply cow's milk. So, the commission is about half of what Paramjit gets, owing to low fat content.

But regular payments and mechanised measurements are an attraction for all, especially small and marginal farmers with average land holding of 2 acres, says Sukhwinder, adding that during the lean season, when there is no harvest, the regular payment from dairy farming is like a straw in the ocean.

Reliance has its own milk processing plant at Saha which converts milk into milk powder and hence the procurement is never discontinued.

Reliance refused to comment on its project in Punjab's Fatehgarh Sahib and Mohali districts or neighbouring Haryana, where it has opened collection centres in Sirsa and Fatehabad districts. But Reliance Retail's milk pouches are all over Chandigarh and Mohali, priced at the same levels as Verka, the Punjab Milkfed brand, whose cooperative societies have 360,000 members.

Punjab Milkfed, meanwhile, is not feeling threatened by these new players. Says MD VK Singh: "The competition is not a threat to us. Mother Dairy is in fact buying 40,000 litres from Verka and Verka milk is being sold at the Reliance retail outlets as well."

There is plenty of milk for all, says Singh, adding that the state has 11.7 million litres of marketable surplus per day and more players can be accommodated.

Wal-Mart joins the club: Wal-Mart, which has been partnering Bharti Retail is the newest entrant in the dairy procurement and retail business in Punjab, says another report from New Delhi.

Wal-Mart has been buying milk directly from cooperatives rather than from farmers. The operations are probably as old as Bharti's three retail outlets in Punjab where the milk is sold for Wal-Mart, which has no outlets of its own.

The Bharti-Wal-mart spokesperson told Business Standard: "Currently, we are working with corporates, cooperatives and local and regional players to procure milk and milk products. As of now, we do not plan to procure milk directly from farmers or set up milk processing plants."

The company is reportedly targeting supply and procurement of 1.5 million litres milk daily in Punjab, while eyeing similar targets in Uttar Pradesh and Bihar.

Wal-Mart recently announced its ready-to-drink hormone-free milk in the US. However, it did not say if the procurement in India was linked to exports.

Komal Amit Gera in Chunni Khurd (Punjab)