CHENNAI: The Aavin on Saturday terminated clearing and forwarding (C&F) agents from its milk distribution network.
The decision will have no impact on the availability of milk for consumers, and it would cut Rs 15.39 crore yearly expenditure incurred by Aavin since 2019.
The C&F agents previously acted as a link between wholesale distributors and Aavin facilitated bulk transportation centres in Chennai and suburban areas.
The milk from wholesale distributors were sold to consumers through dealers and retail shops.
Between 2014 and 2019, milk was supplied through 51 wholesale distributors and four lakh litres of milk were sold daily in Chennai region.
With an objective to expand the milk sale, 11 wholesale dealers were appointed as C&F agents in 2019.
The agents were given daily sale target of six lakh litres and paid 75 paise commission per litre. The arrangement cost Aavin additional Rs 15.39 crore a year.
“A year after the appointment of C&F agents, per day milk sale reached 5.2 lakh litres, and it increased to 5.7 lakh litres last month after a price cut of Rs 3 per litre. As the C&F agents had not contributed significantly to boosting the sales, their services have been terminated,” said Aavin Managing Director KS Kandasamy in a statement.
The State-owned Aavin procures 46 lakh litres a day, which is the third highest quantum of milk procured by any public sector undertaking in the country after Amul (Gujrat) and Nandhini (Karnataka) brands.
So far, Aavin had been providing Rs 2.75 paise commission (profit) for selling per litre and it was distributed among C&F agents, wholesale distributors, dealers and retailers.
After the scrapping of the agents, Aavin has to now give Rs 2 per litre towards commission of which distributors will receive Rs 1.
TN Milk Dealers Welfare Association President SA Ponnusamy said, “Given the transportation and other expenses involved in supplying milk, dealers and retailers must be given Rs 2 per litre. Hence, selling of milk at Rs 3 a litre higher than MRP is inevitable.”