KOCHI: With prices of raw materials going through the roof literally, the state-run Kerala Feeds Ltd (KFL) - largely responsible for regulating cattle feed prices in the state - is labouring to keep its head above the water. The management of KFL - which commands a 40 per cent share of the market - said the company has incurred operating losses to the tune of Rs 72 crore since 2015 on account of commodity price fluctuations and social obligation to support dairy farmers.
“The prices of raw materials like maize, oil-less chaff and rice cake, soybean and molasses used in feed production have gone up by as much as 35 per cent since December. However, KFL effected a hike of Rs 25 per packet since then, which means the company still loses Rs 65 on an average on our products,” said B Sreekumar, KFL MD. He said KFL has not received any subsidies from the state so far.
The company which reports 90 per cent of its operating cost for procuring raw materials was on the verge of a turnaround when it reported a profit of Rs 9 crore in the first half (H1) of the financial year (FY) 17-18 from a Rs 38 crore loss in FY16-17. “Raw materials’ price hike saw us reporting a loss of Rs 9 crore in H2 FY 17-18. A similar scenario prevailed in FY18-19 H1 with a Rs 75 lakh profit. But with the massive relief efforts after mid- August’s flood havoc and commodity price hike, we are likely to end up with Rs 10 crore loses during this FY,” said Sreekumar.
The company, which sources 95 per cent of its raw material requirement from outside Kerala using the Karnataka Government’s e-procurement portal, is planning to engage with the National Cooperative Dairy Federation of India and long-term procurement contracts with farmer collectives to keep prices in check.
KFL chairman Indushekaran Nair said it is the quality products from the comapny’s stable which has reined in prices of cattle feed which could have zoomed to over Rs 2,000 per packet.“Such high cost for feeds would be detrimental to the state’s aim of achieving self-sufficiency in milk production by 2019-end,” he said.
The average price of a 50 kg cattle feed now hover around Rs 1,100 in the market. With an installed daily production capacity of 1,250 metric tonnes (MT) and nearly Rs 400 crore turnover, KFL mainly produces three variety of feeds in 50 kg packets - Elite, Midukki and Rich - and certain mineral mixtures, exclusively for dairy farmers in the state. KFL, which employs 4,500 Malayalees, has three plants situated in Thrissur, Kozhikode and Karunagappally. With a 500 MT plant scheduled to go on stream in Thodupuzha in the next few months, KFL plans to have a turnover of Rs 500 crore by FY 20-21.