From now on, Chennai's cuppa may cost more

Private milk companies also likely to hike prices following government’s decision to increase procurement and selling prices of milk by Aavin

Published: 19th August 2019 05:54 AM  |   Last Updated: 19th August 2019 05:54 AM   |  A+A-

Chennai's cuppa

Tea shops are likely to increase rates after the hike in milk price ( Photo| EPS, D Sampath Kumar)

Express News Service

CHENNAI: Sipping a cuppa at your favourite hangout/hotel will now become a pricey affair with private milk companies also likely to hike prices. The companies which procured milk at cheaper rates from dairy farmers now have to increase procurement price after Aavin has decided to increase milk price from Monday.

The State government increased the procurement price of cow’s milk from Rs 28 to Rs 32 per litre and buffalo milk from Rs 35 to Rs 41.

Sources said private milk companies pay Rs 24 to 26 per litre for cow’s milk as against Aavin’s price of Rs 28 while buffalo’s milk is being procured for Rs 31 to 33 per litre. However, Aavin pays Rs 35 a litre.
“After the revision of procurement and selling price of Aavin milk, the procurement price difference between Aavin and private companies increased to Rs 9 to Rs 10 per litre. In order to retain the milk suppliers, private companies now have to increase prices. This will result in an increase in prices of tea and coffee in shops and hotels,” said sources in a private milk company.

The announcement on the increase in milk prices by private companies is expected in another few days.
Besides, prices of ghee, butter, curd, milk powder and other ancillary items are also likely going up since 30 per cent of milk procured by private companies in the State is being converted as milk products.

According to Tamil Nadu Milk Producers’ Welfare Association (TNMPWS), the per day milk production of the State is two crore litre, of which 25 lakh litre is consumed by farmers themselves. Of the 1.75 crore litre, about 33 lakh litre is procured by Aavin, while the remaining is procured by private companies. 

About 80 lakh litre of milk is sold in the commercial market, of which 45 lakh litre is supplied to hotels and commercial establishments, while 35 to 40 lakh litre is sold through retailers. The remaining 60 to 63 lakh litre is diverted for producing milk products such as ghee, butter, sweets and other items under various brands, said M G Rajendran, general secretary of TNMPWS.

The demand for private milk increased manifold in the last two decades, since Aavin was unable to expand its business. About 95 per cent of full cream milk demand in the commercial market was catered by private companies, sources said.

Tamil Nadu Milk Dealers Welfare Association State president S A Ponnusamy said in spite of the steep increase in prices, Aavin milk was cheaper by Rs 2 than private milk. “Private milk rate was hiked by Rs 2 to Rs 4 in the last two years and there is a plan to increase further.

Aavin should provide incentives to agents to expand its market. Unless it increases the commission for dealers, private milk market will continue to grow which will have a cascading effect,” he said.

A senior official from Aavin said, “We mainly aim at catering to the public and cardholders, not the commercial market. The demand for increasing the commission for dealers and other options to expand the Aavin business is being looked into.”

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