Price pressure forces dairy co-ops to diversify

Cooperatives are foraying into non-dairy businesses.

Milk cooperatives in Gujarat are diversifying into non-dairy businesses like packaged tea, namkeen, and ginger, onion and garlic powder.

The dairies in Gujarat are tapping these segment due to a concern in milk unions that if they do not give competitive prices to the farmers, milk producers would opt for other dairies.

Among the member unions of the Gujarat Co-operative Milk Marketing Federation, which markets the Amul brand, Ahmedabad-based Uttam Dairy is planning to get into packaged tea.

"The basic aim to launch non-dairy products is to survive in the stiff competition in milk pricing. We have to explore other income sources to provide our farmers the best price," said HA Nadiadwala, managing director, Ahmedabad Milk Producers' Union Ltd.

The union is set to launch Uttam Namkeen and would soon come out with Uttam Wafers. Other namkeen products such as Chanadal too are on the cards.

Panchmahal District Cooperative Milk Producers' Union Ltd plans to foray into garlic, onion and ginger powder manufacturing for which it would spend over Rs 6-7 crore. The dairy is targeting the export market in the segment.

Likewise, Vadodara-based Sumul Dairy has plans to launch sweets like chaina murki and mineral water.

"Most dairies planning to launch food products are located in big cities like Ahmedabad and Vadodara, where industrialisation is high and milk procurement is comparatively lower than other dairies such as Mehsana-based Dudhsagar and Palanpur-based Banas Dairy. As a result, they are being forced to look at other sources of income," said RS Patel, managing director, Panachamrut Dairy.

The dairy is in talks with the Gujarat Cooperative Milk Marketing Federation (GCMMF) to use its 'Amul' brand for its powders.

Rajkot-based Rajkot District Cooperative Union Ltd is also planning to launch various food products in the domestic market. "We are now in the planning stage and it is too early to comment," said AC Sinha, managing director, Rajkot Dairy.