Milk Vita certainly does not have manoeuvrability like the private companies.

Milk Vita certainly does not have manoeuvrability like the private companies.

But as the premier packaging organisation, it too had some advantages which it failed to capitalise because of endemic weakness in its management.

Milk Vita, the state-run cooperative of milk producers, has raised prices of milk but the private companies which follow suit immediately have not done so this time. Whether they are watching the situation before making a similar move or have other ideas is not clear yet.

If the logic advanced by the authorities of the cooperative has no flaw, the private packaging companies, of necessity, should be compelled to raise prices of their milk packed in plastic pouches made of low-density polyethylene (LDPE) film. But if they do not raise prices and can still make profit, Milk Vita is going to have a tough time to stay in business. According to the cooperative’s version, it has been incurring a loss of Tk 0.28 on a pouch of one litre since price hike at the growers’ level about two years ago.

One wonders if this was the case. If a packaging company buys a litre of milk at Tk 39.50-Tk 43, should it make a loss at all when the pasteurised packet is sold at Tk 62 a litre? Milk Vita has been compared by an official with India’s Amul as a successful cooperative venture. Is it really the case? The former has just survived with injection of funds from time to time by the government.

Or else, it would have not existed this long. Amul, on the other hand, is indeed a success story that has grown from a small personal initiative to a giant milk producer – one that has not only made India self-sufficient in dairy products but has also become a profitable venture itself. With top-heavy management, excessive overhead cost, corruption and various weaknesses at several points of collection and distribution chains, Milk Vita would better make a very poor comparison with cooperatives like Amul.

There is a possibility that private companies, now a good many of them, may not go for an increase in their dairy products. Instead, they may concentrate on capturing the market. If there is a healthy competition among them, they surely have every chance of ending on the profitable side. After all, private companies are not confronted with the myriad problems Milk Vita has inherited as a legacy.

Cost-cutting is a virtue with them and most likely their profit margin will not be affected by the small rise in prices at the growers’ level. Also, milk output is likely to vary depending on seasonal changes. At times milk becomes very cheap. The private companies have the advantage of making the most of such seasonal gluts and consequent low prices.

Milk Vita certainly does not have manoeuvrability like the private companies. But as the premier packaging organisation, it too had some advantages which it failed to capitalise because of endemic weakness in its management.

It has made news for many wrong reasons starting from lack of accountability of the money spent to recruitment of employees who had no use for the organisation. Internal bickering at times surfaced indicating that it could collapse any time. Somehow it was revived but still there is a long way to go for it to become a profitable venture.

 

 

Source: DAIRY NEWS OF INDIA