One Chennai dairy shows the way: Farmers paid via bank transfers

While countless businesses across India have faced problems after demonetisation, leading to spate of payment defaults, Hatsun Agro's 3.1 lakh farmers have received payments against milk supplies without any issues through bank transfers.

Written by Harish Damodaran | New Delhi | Updated: November 17, 2016 12:52 pm
demonetisation, chennai dairy, account transfer, salaries stopped, dairy salary paid, Hatsun Agro Product Ltd, milk supplier, cashless economy, dairy company, indian express news, india news The company sells its milk, curd, ice-cream and other products through its 2,500-odd ‘Hatsun Daily’ retail-cum-distribution points. (Representational image)

NOVEMBER 12 was pay day for the 3.10 lakh farmers who supplied milk to Hatsun Agro Product Ltd in the first 10 days of this month. Each of them received their due-day sums, which the Chennai-based dairy company credited directly into their bank accounts.

While countless businesses across India faced problems after Prime Minister Narendra Modi announced demonetisation of Rs 500 and Rs 1,000 notes on November 8, leading to a spate of payment defaults, R G Chandramogan, chairman of Hatsun Agro which has a turnover of Rs 3,444.59 crore, says he and his farmers “slept peacefully”.

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His company procures about 28 lakh litres per day (LLPD) of milk, which, at an average of Rs 26 per litre, translates into daily payments of about Rs 7.3 crore.

“We have 9,800 centres from which milk is collected, with each farmer supplying an average of 9 litres per day. We make payments for the milk procured during the first 10 days of the month on the 12th, for the next 10 days on the 22nd, and for the last 10/11 days on the 1st of the following month. All this money is transferred directly to farmers’ bank accounts, against daily invoices of the quantity of milk supplied and the price corresponding to its fat and solids-not-fat (SNF) content,” says Chandramogan.

According to him, the demonetisation announcement had minimal impact on Hatsun. “For us, it was business as usual. We made payments to our farmers aggregating nearly Rs 75 crore on November 12, as per our regular schedule,” he says.

There was no effect on sales either. The company sells its milk, curd, ice-cream and other products through its 2,500-odd ‘Hatsun Daily’ retail-cum-distribution points. The sales collections are also credited to Hatsun’s bank account on a daily basis. “Whether it is farmers, distributors, transporters or employees, we don’t make or take payments in cash. Everything is via bank transfers,” says Chandramogan.

Within this entire chain, the move to make payments to farmers’ bank accounts was the real challenge in the beginning. Even the district-level dairy unions affiliated to the Gujarat Cooperative Milk Marketing Federation (Amul) currently limit bank transfers to the accounts of primary village societies, which, in turn, pay their farmers in cash.

“We wanted to go a step ahead and reach farmers directly. We began the exercise in October 2013 and by 2014-end, 90 per cent of our farmers were covered. Initially, they were reluctant, being used to getting cash. But we were firm with them, because it was a logistical nightmare to arrange for cash and transport this to each of our 9,800 procurement centres. And it was even more difficult to make exact payments to each farmer against varying volumes and fat/SNF content of milk supplied,” says Chandramogan.

But when farmers saw money actually coming to their bank accounts, the situation changed. A farmer supplying nine litres daily at Rs 26 per litre would get Rs 2,340 credited to his account every 10 days. “All of a sudden, he became creditworthy in the eyes of the bank, which now saw him as a customer to be wooed. Our farmers aren’t regretting the move to direct bank transfers, especially today with the demonetisation decision and cash disappearing from the system,” he says.

While Amul is now forcing its dairy unions — which disburse around Rs 450 crore per week to 18,500 village societies — to put in place systems enabling direct transfers to farmers’ accounts, Hatsun Agro can take credit for doing this before any other dairy or food processing concern.

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First Published on: November 17, 2016 3:45 am
  1. R
    rameshnk
    Nov 17, 2016 at 5:09 am
    This is a fiitting reply to the great sick champions of poor people - scamgressis, leftists, tms etc al. They do not have any solutiuons. In fact they relish when common has some problems coz, that gives some saline to show their presence. If they really care for the poor people, let them offer solurtion( if at all). They do not have any solution. If they had The country would not have in the present state. These oppostion politcos are at best ly vultures who feed on poor people troubles and relish on that.
    Reply
    1. G
      Giridharan Velamore
      Nov 17, 2016 at 1:15 am
      This is a wonderful story. Thanks IE for sharing this news. Government too should spread such news to the rest of the country. If dairy farmers in TN could follow direct transfers in their accounts, others too can. Where there is a will, there is a way.
      Reply
      1. K
        K.Jayakrishnan
        Nov 17, 2016 at 9:17 am
        The Media should be highlighting such stories and educating the public. Instead some TV channels and print media are more interested in decrying this good move by the govt.Hope better sense prevails.
        Reply
        1. M
          manian
          Nov 17, 2016 at 5:43 am
          Where ther is a will there is a way.What this company has done is a lesson for the w nation .Modern tech. can help us solve the present problem if we are prepared for it.Our netas can think of doing something like this instead of wasting time in parliament on noisy debates.
          Reply
          1. M
            manian
            Nov 17, 2016 at 5:51 am
            what this company has done is a lesson to the w nation.our netas can think of doing something on these lines instead wasting time in parliament on noisy debates.
            Reply
            1. N
              Nityananda
              Nov 17, 2016 at 3:45 am
              This system is great, as long as the banks have a separate queue for their own customers. That'll enable the farmers to draw money for their needs reasonably quickly.
              Reply
              1. K
                Krishnan
                Nov 17, 2016 at 5:03 am
                I pay our carpenter, mason and electrician by bank transfer only. I could carry out a major repair work without these people coming to me for cash payment. This demonitisation is a lesson for many who are familiar with mobile phone operation but not interested in net banking.
                Reply
                1. S
                  Sawan
                  Nov 17, 2016 at 9:27 am
                  You seem to have understood the opposition really well. For example the BJP, when in Opposition, perfected the method of how this has to be done. Else, would the same Party which Opposed demonetisation in 2014 before the General elections be now talking of it's virtue?
                  Reply
                  1. S
                    Sanjeev Mahajan
                    Nov 17, 2016 at 7:10 am
                    Better than Amul
                    Reply
                    1. V
                      Vasan
                      Nov 17, 2016 at 3:58 am
                      Exactly majority of people suffering because of the fact that they do not do bank transaction. Way to go with less cash transactions. Small shops, buses and auto should take money through electronic media.
                      Reply
                      1. S
                        Srinivasan Thyagarajan
                        Nov 17, 2016 at 4:59 am
                        This can be done for a few lakhs as well and TV channels can devote time to educate citizens of a cashless approach as a responsible eny
                        Reply
                        1. V
                          vish
                          Nov 17, 2016 at 2:16 am
                          Moreof such articles should be published and show to opposition,how bringing common man into the banking system, instead of blaming Govt.they should help common man in to the banking system .lt;br/gt;lt;br/gt;Just playing politics instead of helping people and Govt.will be rewarded accordingly.
                          Reply
                          1. V
                            Vijayalakshmi Suresh
                            Nov 17, 2016 at 2:09 am
                            This what said by central government do all transactions through bank .
                            Reply
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