UN and the Organisation for Economic Cooperation and Development (OECD) have envisioned India to be the world’s largest producer of milk by 2026. This global-level contribution is made possible by the acknowledgement of local capacities for the development of local economy and the full support of government to replicate the inclusive model.
ANAND, a small town in the state of Gujarat, western India, saw the flourishing number of dairy farmers in the area. The farmers, however, faced unfair treatment from local trade cartel. The fact that milk is perishable and distant location from Anand to Bombay, city where the milk is distributed, forced farmers to sell milk for whatever offered by the cartel.
This condition triggered a strike of dairy farmers refusing to be cowed down by the cartel. It ended up with a decision to establish their own cooperative, the Kaira District Co-operative Milk Producers Union Ltd.; which is now known as AMUL (Anand Milk Union Limited). The cooperative collected milk from local farmers (including those who can only produce 1-2 litres of milk per day) and delivered it to Bombay City. The cooperative applies model that establishes direct linkage between milk producers and consumers by eliminating middlemen. It applies a three-tiered structure, which involves local people (and representatives they elected) at village level (for milk collection), district level (procurement and processing), and state federation (marketing).
The system, which was initially applied in two villages, was then decided, by the Prime Minister of India at that time, Lal Bahadur Shastri, to become the basis of a National Dairy Development policy. According to him, the success of AMUL is attributed to four key ideas: the farmers own the dairy, their elected representatives manage the village societies and the district union, they run the dairy and manage the business professionally, and most importantly, the cooperatives are sensitive to the needs of farmers and responsive to their demands. AMUL cooperative registered on 14 December 1946, consisting two societies that collected 250 litres of milk. The business model was then replicated throughout the country and currently, AMUL members supply more than 9.2 million liters of milk per day.
Support of National Level Keeps Benefits at Local Level
Government has put their biggest support to AMUL by establishing National Dairy Development Board (NDDB) in 1965. Set up with a basic goal to replicate the AMUL model throughout the country, NDDB implemented the Operation Flood programme (1970-1996). Carrying “national” term in the name, though, NDDB uniquely focused on small rural milk producers; making dairying an attractive option for many villagers. The low capital intensity, short operating cycle, and steady returns make dairying a preferred activity among marginal and small farmers, who make up about 57 per cent of rural households in India. The programme established milk producers cooperatives in villages and made modern technology available to them. The national government, therefore, keeps benefits at local level; but provides support up to state level.
The continuous support from the government has resulted in uplifting “Anand Pattern” (an integrated cooperative structure that procures, processes, and markets) and thus promoting India as the largest milk producing nation in the world.
4 Key Factors for Successful AMUL
- Farmers own the dairy.
- Their elected representatives manage the village societies and the district union.
- They run the dairy and manage the business professionally.
- The cooperatives are sensitive to the needs of farmers and responsive to their demands.
Facts about AMUL
- Founded in 1946 to stop exploitation of farmers by middlemen.
- Managed by the Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which is jointly owned by more than 3.6 million milk producers of Gujarat.
- Spurred the White Revolution in India, making India at the top of milk producing nations.
- Awarded the “Best of All” Rajiv Gandhi National Quality Award. (1999)
Facts about Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF)
- India’s largest exporter of dairy products and food product marketing organisation with annual turnover (2016-17) US$ 4.1 billion.
- Daily milk procurement: approx. 18 million litres per day from 18,549 village milk cooperative societies, 18 member unions covering 33 districts, and 3.6 million milk producer members.
- Present on Global Dairy Trade (GDT) platform, in which only the top six dairy players of the world sell their products.
Key Features of the project:
- Establishment of a direct linkage between milk producers and consumers by eliminating middlemen.
- Milk producers (farmers) control procurement, processing, and marketing.
- Professional management.