Surplus milk, drop in demand: How Nandini kept farmers smiling through lockdown

July 3, 2020

Akshatha M | ET  Bureau

BENGALURU — On March 24, the day Prime Minister Narendra Modi announced a 21-day nation-wide lockdown to contain the Covid-19 pandemic, unease gripped top managers at Bengaluru headquarters of the Karnataka Cooperative Milk Producers’ Federation Ltd (KMF), owner of India’s second largest dairy brand Nandini.

If swathes of rural Karnataka have a semblance of economic stability, it is brought upon by milk that they supply to the cooperative behemoth. The Rs 14,000 crore the formidable brand generates in revenues touches families of nine lakh dairy farmers, lifting them from abject poverty and hunger.

At the onset of the lockdown, KMF and 14 associate milk unions stared into the immediate challenge of not just collecting milk from farmers in 254,000 villages, but supplying to over 10 million customers within Karnataka, and across the border. “It was an unprecedented situation that none of us were prepared to handle. But we had to respond quickly, to keep the supply chain going and keep both dairy farmers and customers happy,” KMF managing director B C Sateesh told ET.

What went behind the scenes on the night following the announcement and the weeks that followed was one of meticulous planning, data gathering and impeccable execution. “Problems were plenty. We faced issues in terms of transportation, shortage of labour, maintaining hygiene and sourcing of packaging materials. It required coordinated work from all our field staff and officials,” Sateesh said.

Among the first things the KMF management and officials did soon after the lockdown was enforced was to turn offices into their temporary homes. With sections of drivers and workers at chilling and processing units reluctant to work for fear of contracting the virus amid other transportation issues, officials decided to make themselves available in offices and chilling plants 24×7. “We had to lift the spirit of our employees,” said Mrutyunjaya Kulkarni, KMF director (marketing).

About 15,000 employees work for the federation and its affiliated units. Nearly 4,000 vehicles are deployed to collect and distribute milk.

Soon, the KMF also announced doubling of salary to employees attending work during the lockdown. “We supplied them food, arranged for transport, introduced hygiene practices in dairy and chilling units. A combination of interventions helped boost the morale of our workers,” Kulkarni said.

While labour and transportation issues were set right, the major challenge before the management was a sudden fall in demand for milk. KMF sources on an average 68 lakh litres of milk from farmers everyday, of which 47 lakh litres of milk and curd is sold in Karnataka and eight lakh litres are transported to Tamil Nadu, Maharashtra, Goa, Andhra Pradesh and Telangana.

“Within 48 hours of the announcement of the lockdown, the demand for milk in Karnataka fell to 36 lakh litres. Our milk supply to neighbouring states came down to 1.5 lakh litres. Suddenly, we had surplus milk of about 16 lakh litres,” said D N Hegde, KMF director (animal husbandry).

On normal days, Karnataka converts 13 lakh litres of milk into powder or into milk-based products of a long shelf life. The drop in demand pushed the cooperative body to find ways to deal with an additional 16 lakh litres of milk. “Our conversion capacity was limited to maximum 16 lakh litres and not all milk powder plants were functional,” Hegde said.

That is when the Karnataka government came to KMF’s rescue that, by extension, helped farmers. Lockdown had left many migrant workers and low income families in deep trouble. No job meant no food to their family members quite often.

In the first week of April, Chief Minister B S Yediyurappa announced to purchase seven lakh litres of milk from KMF everyday and distribute it free of cost in slum areas and labour colonies. “By the end of April, the state had purchased 2.11 lakh litres of milk at a cost of Rs 80 crore. It came as a big relief to plan for the coming weeks,” Sateesh said.

Although the state bought out surplus milk, KMF was still left with nine lakh litres of milk, caused largely by the shutdown of the hotel industry, offices and temples. During the breathing time in the first two weeks of April, the KMF management decided to increase its milk conversion capacity by repairing some of its dysfunctional plants. One such plant was at Ramanagaram near Bengaluru. “The plant was waiting to be commissioned,” D N Hegde said.

The challenge, however, was Karnataka did not have the engineers to commission this fully-automated state-of-the-art plant. They had to come from big brother Gujarat. That is when Daniel J, a driver at KMF, pitched in. Amid the stringent lockdown, Daniel offered to drive to Gujarat.

“I reached Vadodara, 1,400 km from Bengaluru in 18 hours. Roads were empty, restaurants and dhabas were closed. I lived on bread and biscuits,” Daniel said. He covered a distance of 3,800 km and was back at Bengaluru office on the fourth day. Soon, Ramangaram plant started taking seven lakh litres of milk load.

Around the same time, the dairy giant faced yet another problem: shortage of packaging stuff. KMF partially manufactures milk pouches in its own factory unit, but is also dependent on Goa, Daman and Diu and Kerala for the supply of plastic and carton boxes. “Although we had a stock to last for a month, we could run short of supply by the end of April,” the KMF managing director said.

But states that were supplying materials were facing a massive shortage of workers. “We approached the Union Home Ministry. Their war room coordinated with various district authorities on a daily basis and ensured smooth supply of materials,” Sateesh said.

As the federation and unions worked relentlessly to collect and supply milk, dairy societies and farmers too swiftly adapted to the Covid-19-induced system of a new hygiene culture. For instance, in Kolar-Chikkaballapur dairy union area, where a large number of families are dependent on dairying, milk societies have mandated strict social distancing and face cover.

“Dairy farmers have shown immense maturity and are following all precautionary measures. Societies do not accept milk from Covid containment zones,” said H V Thippa Reddy, MD, Kolar-Chikkaballapur milk union.

K R Srinivasa, a farmer from Kolar who sells 40 litres of milk everyday said he faced no glitches in supplying milk to the society. “Society took milk even on the first day of lockdown. The money has been credited to my account,” he said.

As Karnataka struggles to come back to normalcy, with restaurants barely getting customers and offices mostly closed, the demand for milk is yet to fully pick up. “We have regained the demand by about 8% in June and we are hoping that it will gradually improve,” Kulkarni said.

But some good practices adapted during the lockdown like milk vendors and drivers switching to cashless transactions when the milk is unloaded, stringent hygiene practices such as using gloves and sanitisers are likely to stay. “Lockdown has taught us how to supply milk during a crisis of this magnitude and turn challenges into opportunity,” the KMF MD said.

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