Common malpractices by Milk Collection Agencies
Introduction
One of the basic things to be successful in any business is to sell your product for best price. The primary product in dairy business is milk. As I mentioned in other articles, it is always better to avoid middle-men and directly sell the milk to end-consumers like households, hotels, sweets shops, etc. But for many rural dairy farms, road connectivity is not good, so they have to depend on milk collection and processing centers (Milk Kendras). This article explains about the various malpractices practiced by the milk collection agencies which results in losses to dairy farmers and tips to avoid them.
1. Mixing Water.
Say 400 liters of milk is collected in a collection route, when it reaches the chilling center, approximately 2% of milk is transferred from each farmer milk can to a new milk can. And for that quantity, water is added to farmer milk can. So 2% of 400 liters is 8 liters in single collection route. A dummy customer number is created and assigned to the new milk can in that route. This process is repeated for all routes in the collection center. On an average, a collection center collects atleast 4000 liters. So 80 liters of milk is billed to the non-existing dairy farmer accounts on a single day. On payment day, this amount is shared among all the employees in the collection centre. In this scenario, if a dairy farm produces 100 liters, it will lose 2 liters of milk per day. The monthly loss is approximately 200 liters. At an average price of Rs 35/liter, the loss is Rs 7000/month.
2. Reducing Fat Percentage.
Milk prices are fixed based on the percentage of fat in the milk. For example 8% fat will fetch Rs 40/liter. But when the fat percentage is calculated in the collection center, the fat percentage is reduced by 0.1% to 0.5%. This is a very common practice by most of the collection centers. Let's assume, the fat% is reduced by 0.2%. In this scenario, if a farmer sends 100 liters of buffalo milk and if the price is Rs 40 for 8% fat, then for 0.2%, it is Rs 1. So daily loss to the farm is Rs 100 (100 liters X Rs 1) and monthly loss is Rs 3000.
3. Reducing Milk Density.
This is another malpractice which is commonly followed by most of the milk collection agencies. The price is calculated in liters, so the milk has to be measured in liters. But it is not practically feasible to manually measure all the collected milk in liters. So a liter weighing scale is used. The weight to volume conversion is based on density. A liter of milk weight is different from a liter of cooking oil because the density of both of them are different. For that matter, density of buffalo milk is different from cow's milk. Density of Buffalo milk is .9727 and cow milk is 0.965 - but the milk collection centers pre-configure the weighing scale in the range of 0.9500 to .9600 without any difference for either cow milk or buffalo milk. Let's assume the weighing scale density is configured at .9600 and the loss would be approximately 120 ml per liter. If a farmer sends 100 liters of buffalo milk per day, the loss would be 1.2 liters (100 liters x 120 ml) which works out to an approximate loss of Rs 50 per day and a loss Rs 1500 per month.
Conclusion
These malpractices are followed by most of the milk collection agencies (could be private, co-operative or government-owned). The best way to overcome these malpractices is to buy a milk analyzer and a weighing scale. Milk analyzer determines Fat%, SNF% (Solids but not fat) and milk density. A good quality milk analyzer costs around Rs 35,000 and a weighing scale around Rs 10,000. This is highly suggested to dairy farmers producing atleast 100 liters of milk per day and selling the milk to collection centers. 45,000 rupees investment will save you Rs 5,000 to Rs 10,000 per month.