- 70 -

CHAPTER-IV

EXCHANGE FUNCTIONS RELATING TO MILK AND

MILK PRODUCTS IN CDCMPU AND KDCMPU

4.1 Functions of Exchange:

The MPCS plays an important role in distributing milk to various places of

the district. Its main function is to transfer the excess milk from the localities of

abundance to the places of demand, it thereby maintains a balance between the

demand and supply of milk throughout the district. The exchange of milk is done

both in the organized and unorganized sectors. The sale of milk through

organized sector means sales through co-operative societies. The sale through

unorganized sector means sale of milk by the unregistered vendors or private

vendors or direct sale by the milk producers themselves to the consumers.

In the organized sector the producers have to register themselves with the

nearby MPCS. The society collects the milk from the producers through the milk

vendor or the producers themselves have to directly deliver at the Co-operative

Societies. The MPCS then sends the milk so collected to the Milk Producers

Union. The Milk Producers Union after processing the milk, sells or distributes it

to the middle men and consumers. The Union also gets milk from the other

Unions of TamilNadu, occasionally.

- 71 -

The Union supplies the milk throughout the district under the brand name

“Aavin Milk” in polythene bags of different size like 500 ml, 250ml and 200 ml.

Whenever surplus milk is collected, it will be stored for a few days in specially

built refrigerators. In addition to dealing with milk, the unions also produce and

sell milk by- products.

4.2 PURCHASE AT KDCMPU

The KDCMPU has a purchase Department, headed by the Managing

Director and controlled by a quality control Manager. Milk has been purchased

from the suppliers and the other Co-operative members. It also purchases AMUL

skimmed milk powder from Anand town of Gujarat. Poly film has been purchased

from Tristar industries, Nasik of Maharashtra and Sugar has been purchased from

the local supermarkets.

4.2.1 Mode of payment of purchase:

All the suppliers of milk have been paid fortnightly. For the skimmed milk

powder, advance payment has been made, and for the films they are paid one-

week after the supply. Sugar has been purchased on a liberal credit basis

4.2.2 Milk Purchase routes and the number of Societies supplying

milk

The KDCMPU has been purchasing milk from the different milk societies

which are situated in the district. Because the societies are at different places, for

- 72 -

efficient collection of milk they are divided into five routes. The number of

societies and the places are given below in table 4.1.

Table:4.1

Milk producing routes and the number of societies in KDCMPU

S.No. Routes No. of Societies

1 Azhagappapuram 10

2 Derisanamcopu 14

3 Manavalakurichi 15

4 KanyaKumari 11

5 Kaliyakkavilai 12

Total 62

Source: Route wise milk collection abstract report from KDCMPU.

It is clear from the Table No. 4.1 that only five procurement routes are

available in KDCMPU. Sixty two Co-operative societies have been supplying

milk to the Union. In Manavalakurichi route fifteen societies has been supplying

milk and this happens to be the highest, whereas Azhagappapuram route with ten

has the lowest number of societies supplying milk to the Union1.

4.2.3 Calculation of quality based price

The price of the milk has been fixed by the quality of SNF (Solid Non Fat)

and Fat present in the milk. Normally, the price of milk is calculated by using the

formula

- 73 -

Price = (FAT + SNF) = Rs 80.77/ Kg

Calculation of purchasing rate per litre

Cow milk

Fat = 4.5%

SNF = 8.5%

So the total solids = 4.5 + 8.5 = 13%

Rate per litre = Standard rate x total solids

80.77 x 13% = Rs 10.50 per litre

The Milk is measured in kilograms and 100 kg of milk is equivalent to 102

litres of milk.

4.2.4 Varieties of Purchase reports

In the purchase Department, the following five reports are maintained.

1. Daily milk purchase statement

In this report one can see the details of milk collected both in the morning

and in the evening from various societies of the five routes and also the detailed

information about: the quality of the milk per liter, total quantity and the total

amount to be paid to each society.

2. Daily Milk Purchase Abstract

In this report one can see the details of quantity of milk collected

both in the morning and in the evening from various societies of the five different

routes, individually as well as collectively.

- 74 -

3. Route Wise Milk Purchase Abstract

This report is prepared once in 15 days. It contains a detailed information

on a chronological basis on: the quality of milk collected in the morning and

evening times, the Fat and SNF contents, rates of the milk and the total amount

due.

4. Payment of Milk Purchase Report

In this report one can see the total quality of milk in terms of: Fat, and SNF

and total value. This report is prepared once in 15 days. The distinguishing

feature of this report is that from this report, the detailed informations relating to

the individual societies in a particular route can also be got very easily.

5. Monthly Purchase Report

From this report one can see the total quantity of milk collected from each

society and also, the average of the milk purchased.

4.2.5 Procurement of Milk in KDCMPU

The KDCMPU receives milk from the local societies and from the other

district Dairies namely Tirunelveli, Karaikudi, Madurai and Virudunagar. The

union daily procure raw milk from the members of the member societies

producing milk. However, not all of them send the milk to the procuring union.

- 75 -

The details regarding the milk procurement at the union from 1990-‘91 to

2005-‘06 has been given in the Table No. 4.2.

Table No:4.2

The statement of procurement of KDCMPU from 1990-’91 to 2005-‘06

Year Quantity (litre) Total value

(Rs)

Rate per litre

1990-1991 4214721.300 16754497.14 4.00

1991-1992 3818172.250 14698061.67 3.85

1992-1993 3933183.150 15318564.20 3.90

1993-1994 3663075.500 17486729.29 4.77

1994-1995 4628799 22614393.43 4.89

1995-1996 5390347.500 30180999.66 5.59

1996-1997 4643094.500 28560451.82 6.15

1997-1998 3811250 24724331.12 6.49

1998-1999 5691087.800 45376999.18 7.97

1999-2000 6849938.900 45943811.73 6.70

2000-2001 7150834.250 48568204.94 6.79

2001-2002 6692889.850 45813950.70 6.84

2002-2003 6024119.300 45206854.02 7.50

2003-2004 4904687 49283401.48 10.04

2004-2005 5832822 58143293.76 10.00

2005-2006 3057615 32104951 10.49

Source: Compiled from the yearly audit report of the KDCMPU

- 76 -

It is clear from the above given Table that the milk procurement of the

Union was high during the year 2000-01, with a quantity of 7150834.25 litres with

a total value of Rs 48568204.94. However, In the year 2005-06 the union was

able to procure only 3057615 litres at a total value of Rs.32104957. This is the

least procurement throughout the years under study2. Further to state that

whenever the union purchases milk from Tirunelveli DCMPU, the cost increases

due to the expenditure on transportation and packing and forwarding costs.

4.2.6 Purchase or Production of By-products in KDCMPU

The KDCMPU purchases by-products from other dairies in addition to

what they have been producing. The by-products are: milk peda, Ghee, Butter,

Badam Mix, Flavoured milk and Butter Milk. The production and purchase of by-

products of ‘KDCMPU’ in the year 2005-‘06 on a month wise basis is given

below the Table No 4.3

- 77 -

- 78 -

4.3 PURCHASES OF CDCMPU

The procurement Department of the CDCMPU had been headed by its

Managing Director, and controlled by Quality Control Manager. Milk is

purchased from the milk producers and MPCS. The main dairy in Coimbatore,

has 200000 litres handling capacity and four chilling centers. The

Shanmugapuram chilling center has 50000 litres handling capacity. Sultanpet

chilling centre, has 50000 lit handling capacity, Tirupur and Annur chilling center

has 10000 lit handling capacity each. There are totally 47 procurement routes

within the district3.

The details regarding the milk collected by the milk producers union

Coimbatore from 1990-‘91 to 2005-‘06 is stated in Table No 4.4.

Table No.4.4

The statement of Average Milk procurement of CDCMPU from 1990-91 to

2005-06.

Year Litre

1990-1991 32533910

1991-1992 31139245

1992-1993 31385255

1993-1994 38978715

1994-1995 39518185

- 79 -

1995-1996 36179530

1996-1997 30641385

1997-1998 30549405

1998-1999 41550505

1999-2000 43186800

2000-2001 45882325

2001-2002 46163740

2002-2003 45978320

2003-2004 56652015

2004-2005 70063940

2005-2006 75778015

Source: Compiled from the hand Books of CDCMPU.

It is clear from Table No.4.4 that the procurement of milk by the CDCMPU

increases year by year particularly from 2002-03 onwards.

About 7,57,78,015 litres of milk was procured during the year 2005-06. It is

the highest procurement of the study period of 16 years. In the year 1997-98 only

30549405 litres was procured. This is the least procurement in the study period.

At present the procurement is very high.

- 80 -

Per day area wise procurement of milk in CDCMPU is given below.

Table No.4.5

CDCMPU per day area wise procurement

Place Morning (lit) Evening (lit) Total litres

New Dairy Complex 28933 27686 56619

Shanmugapuram CC 22651 20062 42753

Sulthanpet CC 27765 24807 52592

Tirupur CC 10512 9926 20438

Annur CC 18253 14540 32893

Source: Compiled from the details CDCMPU handbooks.

It is clear from Table No. 4.5 that four chilling centers and one main dairy

have been utilizing milk from the Co-operative societies. The procurement from

these chilling centers is done both in the morning and evening. The new dairy

complex procures more quantity in the morning and evening. That dairy average

in the morning is 28933 litres and 27686 litres in the evening. So it stands in the

first place in procurement of milk, second place goes to the Sulthanpet chilling

center which deals with 27765 litres in morning and 24804 litres in the evening.

Thiruppur Chilling Center stands last, it procurement in the morning is 10512

litres and 9926 litres in the evening4.

- 81 -

4.3.1 Quality of milk procurement in CDCMPU

The CDCMPU collects milk from various places and societies. The

procurement of milk and its pricing is on the basis of quantity. Fat and S.N.F. can

be measured and that quantity based payment was made from the year 1991 to

2006. The average quantity of milk procurement is recorded in the auditor’s final

report. It is clearly stated below in the Table No.4.6

Table No.4.6

Quality of milk produced from 1991 to 2006 in CDCMPU

Year Fat % SNF %

1991 4.2 8.1

1992 4.23 8.17

1993 4.25 8.16

1994 4.21 8.19

1995 4.19 8.2

1996 4.2 8.18

1997 4.23 8.07

1998 4.263 8.089

1999 4.28 8.114

2000 4.287 8.132

2001 4.325 8.127

2002 4.298 8.122

2003 4.236 8.187

2004 4.143 8.141

2005 4.179 8.115

2006 4.10 8.20

Source: Compiled from the quality maintain records of CDCMPU

- 82 -

It is noted from the Table No.4.6 that the Fat content is high in 2001 with

4.325% fat. The solid Non Fat (SNF) content is high in the period of 1995 and

2006 where the percentage is 8.2 in the milk procured5.

4.3.2 By products production in CDCMPU

The CDCMPU produces by-products such as Butter, Ghee, Flavored Milk,

Mysorepa and Milk peda. The production of by products with quantity in the year

2005-2006 is given below in the Table No.4.7

- 83 -

- 84 -

4.4 Sales of KDCMPU

Selling is another important function which involves transfer of the title of

goods to the buyers from the seller. Selling is important from the point of view of

the seller, the consumer and the general public.

The KDCMPU collects milk from various societies. The so collected milk

is subjected to Fat test and SNF test. After the test of Fat and the SNF value, the

rate is calculated and compared with the standard quantity. The milk with 3.0 fat

and 8.5 SNF is considered as the minimum standard quantity. The collected milk

is processed in the dairy industry and then packed in 250 ml, 500ml, for sale. The

packed milk is distributed through various places within the district.

4.4.1 Types of sales

There are five types of sales which are as follows:

1. Cash sales

Cash sales can be done at any time. I can be rectified irrespective of

the inventory of milk. KDCMPU is selling milk packets in all the four

towns in Kanyakumari District namely, Nagercoil, Padmanathapuram, Colachel

and Marthandam. The rate of the milk packet per litre is Rs.12.50 for cash sales.

The selling rate of the standardized milk is Rs.14.00 per litre and for the full cream

milk it is Rs.16 per litres for cash sales. fortnight, month wise, year wise reports

are recorded6.

- 85 -

2. Credit Sales

KDCMPU employee sells the milk in and around Nagercoil. The route

wise credit sales is done to many institutions like schools, hostels, college, hotels,

canteens, hospitals etc., in credit. This is also called the approval sales. The rate

of milk is Rs.12.50 for credit sales.

3. Card Sales

The Union issues milk card, the valid period is from 16th

to 15th

of every

month. The customer has to purchase the milk card in advance. Since the

customer pays the amount in advance the rate per litre of toned milk is Rs.12 only,

in the prescribed bars.

4. Agent Sales

Agents are to pay the amount in advance for the delivery of packets. He

gets a commission of 20 paise per litre. The rate of the milk Rs.12.50 per litre for

agents.

5. Special order Sales

Special orders can be placed at any time. It can be rectified irrespective of

the inventory of milk. For the marriage and other functions the consumers can pay

in advance to the union. The milk is then supplied on the demanded day and at the

doors. The rate of the milk is Rs.13.50 per litre for special order sales.

- 86 -

The details regarding the milk sales by the union of KDCMPU from 1990 –

‘91 to 2005-’06 is stated in the Table No 4.8

Table No 4.8

Statement of sales of milk in KDCMPU from the year 1990-‘91 to 2005-‘06.

Year Sales (Lit) Rate (Rs.)

1990-1991 4219958.300 23190771.29

1991-1992 3818507.750 20596569.19

1992-1993 3931551.650 23472943.41

1993-1994 3848933.950 27636439.97

1994-1995 5006010.800 37192285.32

1995-1996 5698991.950 47895838.91

1996-1997 5259668.850 47727704.03

1997-1998 5344748.350 53627999.09

1998-1999 5689277.800 65169123.90

1999-2000 6846468.950 74827649.49

2000-2001 7152934.250 79206168.29

2001-2002 6696852.850 78343641.84

2002-2003 6023705.300 61597600.89

2003-2004 6404643.100 79382937.23

2004-2005 7006449.700 87582317.64

2005-2006 7726296 97485239.15

Source: Compiled from the final year audit report of KDCMPU.

- 87 -

It is noted that from Table No. 4.8 that the sales quantity and sales rate of

KDCMPU has been increasing, particularly from 1990-‘91 to 2005-‘06.

Sales of milk was about 4219958.300 litres in 1990-‘91 and it has increased

to 7726296 litres during the year 2005-‘06.

4.4.2 By-product sales in KDCMPU

The Union sells milk and its by-products under its trade name “Kanya

milk”. It prepars milk by-products like, milk peda, Ghee, ice cream, rose milk and

mango drinks from Salem dairy and supplies the same through their agents and

through milk bars maintained by the union. it was well appreciated by the general

public. The by-products quantity and sales price are given below in detail in Table

No: 4.9

- 88 -

- 89 -

4.5 SALES AT CDCMPU.

4.5.1 Sales Plan I

Except the Coimbatore and Ooty customers all those who purchase ½ lit

milk per day get one Coupon also. They get 7 Coupon continuously then on the

seventh day they can submit the seven Coupons in the booth and get 50 grams

Aavin ghee for free. It accelerates sales.

4.5.2 Sales Plan II

This plan is to Create awareness to the customers. Except Coimbatore city,

in all other places one coupon is given to the customers. Those who purchase ½

litre would submit the coupon of the previous day in the booth and get a small gift

and in addition to it they get one more coupon. The aim of the Union is to boost

the sale of the products.

1st day gift - tea powder packet worth Rs. 1

2nd

day - coffee powder packet worth Rs. 1

3rd

day - shampoo sachet worth Rs. 2

4th

day - shampoo sachet worth Rs. 2

5th

day - sugar packet worth Rs. 4

6th

day - fair & lovely sachet worth Rs. 5

7th

day - . soap worth Rs. 5

- 90 -

If the customer purchases 1 lit toned milk they get 200 ml free

If the customer purchases 500 ml toned milk they get 100ml free

If the customer purchases 200 ml Fat they get 50ml free

These schemes were introduced for promoting milk sales7.

Symbol

The National Dairy Development Board introduced a common sign or

Mnemonic symbol. It is based on good quality of milk.

4.5.3 Bulk sales

The Excess product is sold in bulk only through the TCMPF to the other

States. Under the information of the TCMPF, the union sends the product to the

other states. the union does not collect the money from the party directly, but the

TCMPF collects the money from the party and they get 5% commission for the

sales and then the TCMPF pays the amount due to the product to the union. This

type of sales is under the agreement of TCMPF and the Union. Commissioned

forwarding agents are appointed by the TCMPF in every State for product sales of

Aavin. They have the power to fix the rate of the product for the international

sales of Milk by products.

- 91 -

4.5.4 Direct Sales

In CDCMPU 75% of milk is sold directly as fluid milk. Only surplus ghee

is sent to the TCMPF which amounts to 50 tonnes per month. In the year1975

only 15000 litres milk was sold per day. But now the sale per day is nearly

150000 litres8.

4.5.5 Excess of Milk

The excess Milk in CDCMPU is sent to Erode Union to prepare milk

powder (Skimmed Milk)

The CDCMPU Collects milk from four chilling centers and their member

societies. These milk is then processed and sold through parlours and various

places. The sales of toned milk from the year 1990-91 to 2005-06 is given in the

table No. 4.10.

Table No.4.10

Average milk Sales details of CDCMPU from 1990-91 to 2005-06

Year Sales (Litre)

1990-1991 27066210

1991-1992 263252260

1992-1993 77790735

1993-1994 31271010

- 92 -

1994-1995 34639230

1995-1996 33379250

1996-1997 32379150

1997-1998 33765785

1998-1999 36971945

1999-2000 36620450

2000-2001 36318230

2001-2002 36086820

2002-2003 35927315

2003-2004 41508895

2004-2005 48363230

2005-2006 53497685

Source: Compiled from the Details of CDCMPU handbook.

It could be noted from the Table No.4.10 that the sales quantity of

CDCMPU is on the rise particularly from 1990-91 to 2005-06. Sales of milk is

about 27066210 Litres in the year 1990-91 and it has increased to 53497685 litres

in the year 2005-069.

- 93 -

Per day Sales of milk in CDCMPU is given in Table No: 4.11

Table No.4.11

Area wise sales of packet milk per day

Area .500 Lit (000) .250 Lit (000) .200 Lit (000) Can (000)

Coimbatore 97.81 38.06 - 0.86

Pollachi 1.38 0.13 0.24 -

Udumalpet 0.69 0.38 0.04 -

Valparai 0.45 .05 - -

Mettupalayalam 5.67 1.93 - -

Tirupur 12.28 4.55 3.38 -

Total 118.28 45.10 3.66 0.86

Source: Compiled from the details of distribution report in CDCMPU.

It is noted from the Table No. 4.11 that the area wise sales of packet milk

per day stands first with 500 litres and can sales is very low in Coimbatore

District10

.

- 94 -

END NOTES

1. Milk supply register of KDCMPU

2. Auditors report of KDCMPU in the year 2005 -2006

3. handbook of CDCMPU in the year 2005 – 06

4. Milk Procurement records in the year 2005 – 06

5. Quality maintaining records in CDCMPU

6. sales register of KDCMPU in the year 2005 – 06

7. Marketing Plan records of CDCMPU in the year 2004 – 05

8. Sales register of CDCMPU

9. Handbook of CDCMPU in the year 2005 – 06

10. Milk distribution register of CDCMPU