Turn the red wheel on top of the last ledge.
Defeating him has nothing to do with milk. There is no milk to be found anywhere on Super Power island.
When you face ratman and his rats and flies, climb to the red wheel at the upper right, which will dump sludge on Ratman. Jump quickly between the rats. Then avoid his flies to jump over to him and cuff him.
You have to make a series of three jumps between the rats to reach the red wheel at the upper right (to dump the sludge on Ratman). Then evade the flies and jump from the middle raised pipe over to cuff Ratman.
Ratman is hiding in the sewer under City Park, with his pet rats and stinging flies.
Ratman is on Super Power Island. There is a large rat in the sewer entrance to the factory on 24 Carrot Island (climb up into the bypass pipe to elude him).
You have to get the flies away from Ratman to defeat him. Climb up past the three rats on the right side to reach the final red wheel. Click it to dump sludge on Ratman. Now the flies attack you, but you can dodge them long enough to jump to the large center pipe, and over to where Ratman is.
You can defeat the 5 villains in any order. Copycat and Speeding Spike are Downtown, so the next villains are Sir Rebral in City Park and Ratman in the sewer under the restrooms.
You can beat the 5 non-flying villains in any order. If you are working left to right, the next is Ratman in the sewer under the restrooms.
You have to time your jumps between the moving rats, quickly going from pipe to pipe. You have to make a series of three jumps between the rats to reach the red wheel at the upper right (to dump the sludge on Ratman). Then evade the flies and jump from the big raised pipe over to cuff Ratman.
It is not extremely difficult after some practice. The hardest parts, even when you know what to do, are the battles against Ratman's rats and against Crusher. (see related question)
The control wheel in the Sewer Room is similar to the three outside that raise and lower the water levels. Except that this one (at the far upper right, past the rats) dumps sludge on Ratman and scares away the biting flies. You still have to get past them and jump over to where Ratman is, to capture him. (see related question)
The pay phone will ring when you have defeated the first 5 super villains (Copycat, Speeding Spike, Sir Rebral, Ratman, and Crusher). Answer the phone and you get the power to fly! Then you can defeat Betty Jetty.