Dairy Department Orders Action Against Malabar Milma Over Financial Lapses

The Department of Dairy Development has directed further action against the Malabar Regional Cooperative Milk Producers Union (MRCMPU), commonly known as Malabar Milma, following an inspection that flagged financial and administrative irregularities across its operations.

An order issued by the Director of Dairy Development on September 18 called for detailed scrutiny and further proceedings under various provisions of the Kerala Cooperative Societies Act, 1969. The inspection is said to have found lapses including the delayed submission of the union's annual reports and audited accounts, along with irregularities in financial transactions and records at its establishments.

₹27.45 lakh loss at Kasaragod dairy

The order specifically points to an alleged ₹27.45 lakh loss at the Kasaragod Milma Dairy after substandard milk was procured. According to the findings, 33,062 litres of milk was purchased on March 19, 2025, from the Sampathrao Deshmukh Cooperative Milk Union after an advance payment was made. The milk was suspected to contain chemical substances and had a kerosene-like smell.

The stock was stored locally and mixed with 55,000 litres procured from the Karnataka Milk Federation, bringing the total prepared for distribution to 88,000 litres. The purchased milk was allegedly processed without completing the required quality tests or confirming its quality before being mixed with existing stock.

The incident reportedly caused a ₹27.45 lakh loss to the regional union. The order criticised the management for reducing the amount from the union's account without recovering the loss from those responsible or initiating action against them. It also questioned the decision to make an advance payment without carrying out the usual physical quality checks when the milk arrived at the dairy. Milk procured from other dairies is normally subject to quality testing before payment.

The Director's order described the failure to properly inspect the milk and the advance payment as lapses reflecting management negligence in the transaction at the Kasaragod Mavungal Dairy.

Questions over Malappuram dairy stock

The inspection also raised questions over stock worth ₹84.45 lakh at the Malappuram dairy. The department has directed that stock records and accounts be examined and the utilisation of the amount verified.

Clarification has also been sought regarding a ₹50 lakh grant sanctioned for the development of the Malappuram dairy. Only ₹25 lakh was reportedly spent, and the department has asked for details on the use of the remaining amount and whether the grant served the purpose for which it was sanctioned. Records relating to construction and development works at the dairy, including expenditure incurred, completed works and pending works, have also been sought.

Second ₹27.45 lakh under scrutiny

The utilisation of another ₹27.45 lakh recorded in the union's account has also come under scrutiny. Officials have been directed to verify its utilisation, the balance amount and supporting records, and to take appropriate action based on the findings.

The order stresses that the union's managing committee is responsible for ensuring that funds are properly utilised, documented and submitted for audit. The committee faces possible action.

Citing Section 64(4A) of the Kerala Cooperative Societies Act, the Director said the managing committee is responsible for properly preparing financial and statutory records and submitting them for audit. Failure to comply could, under the relevant provisions, lead to disqualification of committee members.

The department has directed officials to intensify scrutiny of financial transactions and records of various establishments under Malabar Milma, collect the required documents and initiate further proceedings based on the irregularities identified during the inspection.