Hard times for TN's Uthukuli butter and ghee makers; GST, shrinking profits blamed

Sources say there were 59 companies in the sector in 2005, but currently, only 20 are in operation.
Image of 'ghee'used for representational purposes only
Image of 'ghee'used for representational purposes only(File photo)

TIRUPPUR: More than half of the industries which produce butter and ghee in Uthukuli which is famous the world over, have closed down in the last two decades due to several factors including dwindling profit, rise in cattle maintenance expenses and implementation of the Goods and Service Tax (GST).  

Sources say there were 59 companies in the sector in 2005, but currently, only 20 are in operation. The industry has appealed to the Tamil Nadu government to announce special schemes, and the union government to keep them out of the purview of GST.

RR Duraisamy, owner of Dheivam Dairy Farm in Uthukuli, said, “Our family has been involved in butter and ghee production for three generations. After me, my successors have come to this business. But this is not the case with many families. Many people have shifted to other professions like the knitwear industry. I remember very well that in 2005 there were 59 companies in Uthukuli. Currently, there are only 20 companies.”

Duraisamy cited several factors for the dwindling number of units.
“The prime reason for this is that many people have given up cow and buffalo rearing because of labour shortage, high input cost, and water shortage due to inadequate rain. The implementation of the GST affected the industry in a big way because the tax was raised from zero to 12%. This forced us to increase the price of butter and ghee. For example, we increased the price of butter from Rs 450 to Rs 500 per kg and ghee from Rs 550 to Rs 600. Ghee and butter made from buffalo milk cost Rs 50 more. This reduced profitability. At this price, we cannot compete with the big companies. So many producers went to Tiruppur for work.”

R Kumar, a local manufacturer, said, “In the current environment, only 45 tons of butter and 30 tons of ghee are produced in Uthukuli every month. Earlier, 75% of butter and ghee produced here went to other states. At present only 25% of production goes to other states as our price is considered high in other states. But since Uthukuli’s butter and ghee are of high quality, the price cannot be compromised. Quality is what keeps this industry going. The Government of Tamil Nadu should announce special schemes to protect this industry.”

P Rasu, branch manager of Avarampalayam Sarvodaya Sangam, which is engaged in the production of butter and ghee since 1989, said, “The busy season for us is Pongal and Diwali when sales will be three times more than usual. But the industry is declining day by day. GST is a big issue for us. It should be completely removed or reduced. Cold storage facilities should be constructed to store milk and curd in Uthukuli. This will help us.”

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