Government to tweak rules to make 'Aarey products' available in retail shops

In a bid to expand its depleting market share, the state government is planning to tweak rules to ensure that Aarey products, including the iconic 'Energee' brand of flavored milk, are sold in shops apart from designated Aarey kiosks.

"At present, Aarey products are sold only in Aarey Sarita booths and are not allowed in private shops. We are planning to allow retailers and those with a cold storage chain to sell these products," said a senior official from the state animal husbandry, dairy development and fisheries department.

The official added that once the new rules, which were being contemplated, were in place, they would allow those who could offtake a minimum quantity of 50 liters of milk daily to become Aarey dealers. "We will ask for advance payment, which can also be done online with delivery to be taken the next day," the official said.

This means that Aarey brands like Energee, masala milk, curd, ghee and lassi can be made available at private outlets and supermarkets. The government milk scheme has over 1,000 Aarey Sarita stalls and distribution centres in Mumbai, apart from a few outlets in regions like Nagpur and Pune.

The official said that dairy development department had to change its business model to survive in a fast-evolving market. He warned that failing this, the Aarey brand and the government milk schemes, which already suffer from idle capacity, could risk going in the way of loss making public sector units like Maharashtra Agro and Fruit Processing Corporation (MAFCO).

The restriction on marketing and sale of its milk and products has prevented Aarey from expanding its market presence and emerging as a pan-Maharashtra brand.

The state government's milk schemes have a miniscule share in the greater market ecosystem, accounting for just around 80,000 to 90,000 liters of milk collection daily as against about 1 crore liters of daily milk production in Maharashtra. Much of this milk is sold in the Greater Mumbai market, which accounts for a daily demand of 55 to 60 lakh liters.

Around 60% of milk in Maharashtra is collected from the organised sector, with the private sector accounting for the largest chunk, followed by co-operatives. This figure does not take into account the milk that is brought into Maharashtra from neighboring states.

However, the government's role in the market goes much beyond its small market share—it retails its products at a lower MRP than private producers and cooperative players. For instance, Aarey sells a liter of cow's milk for Rs35 as against Rs40 by other brands.

It also plays the role of a market intermediary especially in times of a market glut, which forces producers to discard their milk or when there is a shortage.

The government's milk procurement prices also serve as a benchmark for co-operative and private milk federations. Hence, a rise in these rates will help agriculturists, especially in times of crisis like droughts, when they turn to dairy farming to sustain their incomes. The dairy development department purchases a large portion of this milk from drought-prone regions like Marathwada.

"We will have to increase our production," said the official, adding that failing this, they would face a "demand- supply mismatch."

The department has three farms at Aarey milk colony, Palghar and Dapchari.

The average per capita availability of milk in Maharashtra was just around 223 gm per day in 2014-15 as compared to the national average of 307 gm, with food habits in the state not conducive to consumption of milk in pure form due to reliance on other substitutes like non-vegetarian food to meet protein requirements.