Milk Co Operative

October 21, 2008

Rural Development

MILK CO-OPERATIVES AND RURAL DEVELOPMENT

Presented by: Dr.C.N.Ray Faculty of Planning and Public Policy, CEPT

Dairy Industry Profile, 1997

Human population:

953 million (70 million dairy farmers)

Milk production:

74.3 million tonnes (203.5 million lpd)

Average annual growth rate (1995-2000): 5.6% Per capita milk availability:

214 g/day or 78 kg/year

Milch animals: 57 million cows;

39 million buffaloes

Milk yield per breedable bovine in-milk: 1,250 kg Cattle feed production (organized sector): 1.5 million tonnes Turnover of veterinary pharmaceuticals: Rs. 550 crores Dairy plants throughput: 20 mlpd Throughput as percentage of total milk output: 10 Value of output of milk group (1994-95)*: Rs. 50,051 crores Value of output of dairy industry**: Rs. 105,000 crores

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Welcome to Amul While we may justifiably take pride in having built the largest food product business in the country, we do not pause to rest upon our laurels. In all that we do, and will do, we never forget that we face an increasingly competitive environment. In this environment, we have survived and grown on the basis of our greatest strength: co-operative culture, co-operative networking, market acumen and respect for both producer and the consumer.

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GCMMF: An Overview Members:

13 district cooperative milk producers' Union

No. of Producer Members: 2.7 million No. of Village Societies: 13,141 Total Milk handling capacity: 10.21 million litres per day Milk collection (Total - 2007-08):

2.69 billion litres

Milk collection (Daily Average 2007-08): litres Milk Drying Capacity:

7.4 million

626 Mts. per day

Cattlefeed manufacturing Capacity: 3090 Mts per day5

MILK PROCUREMENT Total milk procurement by Member Unions during the year 2007-08 averaged 75.90 lakh kilograms (7.6 million kg) per day, representing a quantum growth of 12.9 per cent over 67.25 lakh kilograms (6.7 million kg) per day achieved during 2006-07. The highest procurement as usual was recorded during January 2008 at 98.81 lakh kilogram (9.9 million kg) per day. This increase in milk procurement is very impressive, against the backdrop of 4.5 per cent growth registered during the previous year. During the peak procurement period, we have successfully demonstrated our ability to process almost 10 million liters of milk per day. SALES During the year, sales of Federation registered a quantum growth of 22.9 per cent to reach Rs. 5255.41 crores (Rs. 52.55 billion). This is an extremely impressive growth, when viewed from the perspective of 13.4 per cent growth that we had achieved in 2006-07 and 29 per cent growth achieved in 2005-06. The sales performance has been consistent in recent years and we are confident of maintaining these excellent results in the coming years, as well. In global terms turnover is $ 1.3 billion, at the existing currency exchange 6 rate.

List of Products Marketed: Breadspreads: Amul Butter Amul Lite Low Fat Breadspread Amul Cooking Butter Cheese Range: Amul Pasteurized Processed Cheddar Cheese Amul Processed Cheese Spread Amul Pizza (Mozarella) Cheese Amul Shredded Pizza Cheese Amul Emmental Cheese Amul Gouda Cheese Amul Malai Paneer (cottage cheese) Utterly Delicious Pizza

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Mithaee Range (Ethnic sweets): Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom) Amul Amrakhand Amul Mithaee Gulabjamuns Amul Mithaee Gulabjamun Mix Amul Mithaee Kulfi Mix Avsar Ladoos UHT Milk Range: Amul Shakti 3% fat Milk Amul Taaza 1.5% fat Milk Amul Gold 4.5% fat Milk Amul Lite Slim-n-Trim Milk 0% fat milk Amul Shakti Toned Milk Amul Fresh Cream Amul Snowcap Softy Mix 8

Pure Ghee: Amul Pure Ghee , Sagar Pure Ghee , Amul Cow Ghee Infant Milk Range: Amul Infant Milk Formula 1 (0-6 months) Amul Infant Milk Formula 2 ( 6 months above) Amulspray Infant Milk Food Milk Powders: Amul Full Cream Milk Powder , Amulya Dairy Whitener Sagar Skimmed Milk Powder , Sagar Tea and Coffee Whitener Sweetened Condensed Milk: Amul Mithaimate Sweetened Condensed Milk Fresh Milk: Amul Taaza Toned Milk 3% fat Amul Gold Full Cream Milk 6% fat Amul Shakti Standardised Milk 4.5% fat Amul Slim & Trim Double Toned Milk 1.5% fat Amul Saathi Skimmed Milk 0% fat Amul Cow Milk

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Curd Products: Yogi Sweetened Flavoured Dahi (Dessert) , Amul Masti Dahi (fresh curd) Amul Masti Spiced Butter Milk , Amul Lassee Amul Icecreams: Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi) Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond) Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra Mantra, Fresh Pineapple) Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae) Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch, Megabite, Cassatta) Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic) 10

Chocolate & Confectionery: Amul Milk Chocolate, Amul Fruit & Nut Chocolate Brown Beverage: Nutramul Malted Milk Food Milk Drink: Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate) , Amul Kool Cafe Health Beverage: Amul Shakti White Milk Food 11

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Root Cause…..

History

In the forties the dairy industry was dominated by one firm – Polsons, using the milk produced in Kaira District. Farmers

Contractors Industry

Consumer

Kaira District Cooperative Milk Producers' Union (AMUL) was born, in 1946 to ensure that its producer members received the highest possible share of the consumers' rupee. “The focus was on production by the masses, not mass production.” The National Dairy Development Board was created in 1965 in response to rural producers which were sensitive to their needs and responsive to their demands.

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National Dairy Development Board (NDDB) The National Dairy Development Board was created to promote, finance and support producer owned and controlled organizations. Fundamental to NDDB's efforts are cooperative principles and the Anand Pattern of Cooperation. Philosophy Cooperation is the preferred form of enterprise, giving people control over the resources they create through democratic self-governance. Self-reliance and accountability is attained when people have financial stake. Progressive evolution of the society is possible only when development is directed by those whom it seeks to benefit. All beneficiaries, particularly women and the less privileged must be involved in cooperative management and decision making. Technological innovation and the constant search for better ways to achieve our objectives is the best way to retain our leading position in a dynamic market While our methods change to reflect changing conditions, our purpose and values must remain constant. 15

National Dairy Development Board (NDDB) Cont… Genesis The National Dairy Development Board (NDDB) was founded to replace exploitation with empowerment, tradition with modernity, stagnation with growth, transforming dairying into an instrument for the development of India's rural people. It was created in 1965, to fulfill the desire of the then Prime Minister of India – the late Lal Bahadur Shastri - to extend the success of the Kaira Cooperative Milk Producers‘ Union (Amul) to other parts of India.   That success combined the wisdom and energy of farmers with professional management to successfully capture liquid milk and milk product markets while supporting farmer investment with inputs and services. Dr (Ms) Amrita Patel serves as the Chairman of NDDB;  Dr Verghese Kurien was the founder Chairman.

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National Dairy Development Board (NDDB) Cont… Dairy Cooperatives & Brand Names across Nation Punjab Milk Federation, Punjab – VERKA Haryana Dairy Development Cooperative Federation Ltd. – VITA Himachal Pradesh State Cooperative Milk Producers’ Federation Ltd. – HIM Gujarat Cooperative Milk Marketing Federation Ltd. – AMUL   Karnataka Cooperative Milk Producers’ Federation Ltd. – NANDINI Andhra Pradesh Dairy Development Co-operative Federation Ltd. – VIJAYA Kerala State Cooperative Milk Marketing Federation Ltd. – MILMA Maharashtra Rajya Sahakari Dudh Mahasangh Maryadit – GOKUL, KRISHNA, etc Madhya Pradesh State Cooperative Dairy Federation Ltd. – SNEHA, SANCHI Orissa State Cooperative Milk Producers’ Federation Ltd. – OMFED Pradeshik Cooperative Dairy Federation Ltd. (UP) – PARAG   Rajasthan Cooperative Dairy Federation Ltd. – SARAS Tamil Nadu Cooperative Milk Producers’ Federation Ltd. – AAVIN West Bengal Cooperative Milk Production Federation Ltd. – MOTHERDAIRY, etc Bihar State Cooperative Milk Producers’ Federation Ltd. – SUDHA

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Operation Flood Operation Flood was a rural development programme started by India's National Dairy Development Board (NDDB) in 1970. One of the largest of its kind, the programme objective was to create a nationwide milk grid. It resulted in making India one of the largest producers of milk and milk products, and hence is also called the White Revolution of India. It also helped reduce malpractices by milk traders and merchants. This revolution followed the Indian green revolution and helped in alleviating poverty and famine levels from their dangerous proportions in India during the era. Gujarat-based Amul (Anand Milk Union Limited) was the engine behind the success of Operation Flood and in turn became a mega company based on the cooperative approach. Verghese Kurien (chairman of NDDB at that time), then 33, gave the professional management skills and necessary thrust to the cooperative, and is considered the architect of India's 'White Revolution' (Operation Flood). His work has been recognised by the award of a Padma Bhushan, the Ramon Magsaysay Award for Community Leadership, the CarnegieWateler World Peace Prize, and the World Food Prize. 18

Operation Flood has helped dairy farmers, direct their own development, placing control of the resources they create in their own hands. A 'National Milk Grid', links milk producers throughout India with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets a major share of the price consumers pay. The bedrock of Operation Flood has been village milk producers' cooperatives, which procure milk and provide inputs and services, making modern management and technology available to members. Operation Flood's objectives included :

Increase milk production ("a flood of milk") Augment rural incomes Fair prices for consumers

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Operation Flood was implemented in three phases. Phase I Phase I (1970–1980) was financed by the sale of skimmed milk powder and butter oil gifted by the European Union (then the European Economic Community) through the World Food Programme. NDDB planned the programme and negotiated the details of EEC assistance. During its first phase, Operation Flood linked 18 of India's premier milksheds with consumers in India's major metropolitan cities: Delhi, Mumbai, kolkata and Chennai. Thus establishing mother dairies in four metros. Phase II Operation Flood Phase II (1981–1985) increased the milksheds from 18 to 136; 290 urban markets expanded the outlets for milk. By the end of 1985, a self-sustaining system of 43,000 village cooperatives with 4.25 million milk producers were covered. Domestic milk powder production increased from 22,000 tons in the pre-project year to 140,000 tons by 1989, all of the increase coming from dairies set up under Operation Flood. In this way EEC 20 gifts and World Bank loan helped promote self-reliance. Direct marketing of

Phase III Phase III (1985–1996) enabled dairy cooperatives to expand and strengthen the infrastructure required to procure and market increasing volumes of milk. Veterinary first-aid health care services, feed and artificial insemination services for cooperative members were extended, along with intensified member education. Operation Flood's Phase III consolidated India's dairy cooperative movement, adding 30,000 new dairy cooperatives to the 42,000 existing societies organized during Phase II. Milksheds peaked to 173 in 1988-89 with the numbers of women members and Women's Dairy Cooperative Societies increasing significantly. Phase III gave increased emphasis to research and development in animal health and animal nutrition. Innovations like vaccine for Theileriosis, bypassing protein feed and urea-molasses mineral blocks, all contributed to the enhanced productivity of milch animals. 21

Far reaching consequences The year 1995-96 marked the termination of Operation Flood III, funded by a World Bank loan, EEC food aid and internal resources of NDDB. At the conclusion of Operation Flood III, 72,744 DCSs in 170 milksheds of the country, having a total membership of 93.14 lakh had been organized. The targets set have either been effectively achieved or exceeded. However, procurement targets could not be reached as private agencies started procuring milk from the cooperative villages, following the new delicensing policy under the Government's program of economic liberalization. The conditions for long-term growth in procurement have been created. An assured market and remunerative producer prices for raw milk, technical input services including AI, balanced cattle feed and emergency veterinary health services have all contributed to sustained increases in milk production. Three state-of-theart dairies designed to produce quality products for both the domestic and export markets have been commissioned. While the demand for milk was rising under Operation Flood the total cattle population remained more or less static. If milk production had to be increased

The buffalo and milk breeds of cattle had to be upgraded  Non-descript cows had to be crossbred with exotic semen to increase their milk production to make them more efficient converters22of feed.

Cattle: From stumbling blocks to building blocks. Traditionally dairying was a subsidairy occupation of the farmers of Kaira. However, the contribution to the farmer's income was not as prominent as his attachment to dairying as a tradition handed down from one generation to the next. The milk yield from animals, which were maintained mainly on the by products of the farm, was decidedly low. That together with the lack of facilities to market even the little produced rendered the scientific practice of animal husbandry irrational as well as unaffordable. The return on the investment as well as the prospects of being able to market the product looked very bleak. It was a vicious cycle reinforced by generations of beliefs. The Kaira Union broke the cycle by not only taking upon themselves the responsibility of collecting the marketable surplus of milk but also provided the members with every provision needed to enhance production. Thus the Kaira Union has full-fledged machinery geared to provide animal health care and breeding facilities. As early as late fifties, the Union started making high quality buffalo semen. Through village society workers artificial insemination service was made available to the rural animal population. The Union started its mobile veterinary services to render animal health care at the farmers' doorstep. Probably for the first time in the country, veterinary first aid services, by trained personnel, were made available in the villages.The Union's 16 mobile veterinary dispensaries are manned by fully qualified staff. All the villages are visited bi-monthly, on a predetermined day, to provide animal health care. A 24-hour Emergency Service is also available at a fee 23 (Rs. 35 for members and Rs. 100 for non-members). All the mobile veterinary vans are equipped with Radio Telephones.

The Kaira experiment: A new beginning in more ways than one. A system which involves participation of people on such a large magnitude does not confine itself to an isolated sector. The ripples of its turbulence affect other areas of the society as well. The cooperatives in the villages of Kaira are contributing to various desirable social changes such as: The yearly elections of the management committee and its chairman, by the members, are making the participants aware of their rights and educating them about the democratic process. Perpetuating the voluntary mix of the various ethnic and social groups twicea-day for common causes and mutual betterment has resulted in eroding many social inequilibria. The rich and the poor, the elite and the ordinary come together to cooperate for a common cause. Live exposure to various modern technologies and their application in dayto-day life has not only made them aware of these developments but also made it easier for them to adopt these very processes for their own betterment. One might wonder whether the farmer who knows almost everything about impregnating a cow or buffalo, is also equally aware of the process in the humans and works towards planning it. More than 900 village cooperatives have created jobs for nearly 5000 people in their own villages -- without disturbing the socio-agro-system -and thereby the exodus from the rural areas has been arrested to a great 24 extent.

National Dairy Development Board (NDDB) Gujarat Cooperative Milk Marketing Federation Limited

No. of Cooperative Unions = 12  (2.12 million farmers)

No. of Dairy plants = 19 No. of Village Societies = 11,962 Capacity = 6,595 Thousand Litres per Day Turnover during 2005-06 = Rs 37736 million Milk Product Range: Infant Milk Food, Instant Milk Mix, Ice-cream, Skim Milk Powder, Ghee, Dairy Whitener, Paneer Sweetened, Condensed Milk, Malai Peda, Gulabjamun Mix, Shrikhand, Pizza, Cheese, Butter Brand : Amul

Haryana Dairy Development Cooperative Federation Limited No. of Cooperative Unions = 6  No. of Dairy plants = 5 Capacity = 470 Thousand Litres per Day Milk Product Range: Ghee, Paneer, Table Butter, Dahi, Flavoured Milk, Milk Cake Brand : Vita 25

Anand Pattern – the three tier cooperative structure State Marketing Federation

All dairies in a state (GCMMF in Gujarat) 22 State Federations in India

District Milk Processing Unions Every district in the state 12 districts unions in Gujarat 170 unions all over India

Village Co-operative Societies All villages in a district 72,774 villages in India

Milk Producers

All milk producers in a village 2.1 million in Gujarat 9.31 million in India

Tiers in Anand Pattern

The State Federation Responsible for marketing the fluid milk and products of member unions. District Cooperative Milk Producers' Union is owned by dairy cooperative societies Provide inputs and services to DCSs:  feed, veterinary care, artificial Dairy Cooperative Society insemination. (DCS) is formed by milk producers Each DCS has a milk collection centre. Milk is tested for quality & paid based on the % of fat and SNF.

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Operation Flood ….. An achievement

NDDB began its operations with the mission of making dairying a vehicle to a better future for millions of grassroots milk producers. “Operation Flood", extending over 26 years and which used World Bank loan to finance India's emergence as the world's largest milk producing nation.  Meant to create a flood of milk in India's villages with funds mobilized from foreign donations. Rs 200 crores was invested in Operation Flood II, with the returns of Rs. 24,000 crores per year adding to the rural economy It lead to – Cost reduction and technology management Modernization of process and plant technology Interventions for productivity

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Facts at a Glance Reach The Dairy Cooperative Network... includes 170 milk unions operates in over 346 districts covers around 1,13152  village level societies is owned by around 12.3 million farmer members.

Milk Production India's milk production increased from 21.2 million MT in 1968 to 90.7 million MT in 2004-05. Per capita availability of milk  was 232 grams per day in 200405, up from 112 grams per day in 1968-69. India's 3.8 percent annual growth of milk production between 1993-94 and 2004-05 surpasses the 2 per cent growth in population; the net increase in availability is around 2 per cent per year. 28

Facts at a Glance Cont… Innovation Bulk-vending - saving money and the environment. Milk travels as far as 2,200 kilometers to deficit areas, carried by innovative rail and road milk tankers. Ninety-five percent of dairy equipment is produced in India, saving valuable foreign exchange. Automatic Milk Collection Unit (AMCU) and Bulk Milk Cooler (BMC) at grass root level – preserve quality and reduces post-procurement losses

Macro Impact The annual value of India's milk production amounts to about Rs. 950 billion. Dairy cooperatives generate employment opportunities for around 12.3 million farm families.

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Effect on Rural Development The cooperatives have provided gainful employment and brought the farmers close to the market. Modern technologies in animal breeding and feeding Modern consumer processing and marketing facilities have been created Reduced the seasonal price variations. Technical input services including animal insemination, balanced cattle feed / bypass proteins feed, better fodder varieties and emergency  veterinary health services helped in raising and sustaining milk production also ensuring a better quality of life in the villages. Created urban employment in dairy plants, marketing, transport and distribution. 30

Effect on Rural Development cont… A sustainable rural employment program. Dairy as economic activity for landless, marginal or small farmers The village cooperative is a clean well lit and orderly place, influencing the transformation of the villages Milk production and unexploitative marketing through the cooperatives is an assured source of income to farmers. The migrating population is settling down. Operation Flood has, as the largest rural employment scheme enabled the farmers to address not only the domestic but also global market opportunities.

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Effect on Rural Development cont… Dairy Farming is benefiting the farmers for the following reasons: Requirement of skilled labour is relatively less. Dairy product market is active round the year. Minimum investment on inventory. (No need to stock raw materials in huge quantities.) Entire establishment can be shifted to a new location (if need arises e.g. Fire, Floods etc.) One can insure animals. Less energy requirement. Biogas plant fed with cow dung can supply maximum energy to meet farms day to day requirement. Decomposed slurry of such plant can also be effectively used as organic manure. It is eco-friendly and does not cause environmental pollution as compared to other industries. 32

A Case

Dairy farmer Surendra Rai says he has always worried about making ends meet after he stops working. This was until recently - when he was offered the chance to take part in a Milk Cooperative scheme in Bihar, one of India's poorest and most backward states.

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Milk to flush out Vidarbha farmers' woes! Mumbai, Aug 06:

The national bank for agriculture and rural development (NABARD) believes that the milk cans can get back the life of farmers in drought hit Vidarbha region of Maharashtra. The bank, which conducted a study along with the NDDB, feels that setting up dairy cooperatives modelled on Gujarat's 'Operation Flood' could ease agrarian distress and stop suicides by farmers in the region. The two organisations have decided to create an institutional structure for collecting, processing and marketing milk in the region. NABARD and NDDB propose to create the formal linkages, costing about Rs 100 crore. Villagers would be motivated to purchase new animals by offering credit facility through banks. "We have to motivate people to take up the dairy business and develop a milk-van route and establish linkages with the dairies and chilling centres," Srinivasan said. 34

The Winning Edge….. A vast market for dairy products is being built as disposable incomes increase. The milk production is pre-dominantly rooted in the cooperative system. It's focus is on the small rural farmer having one or two cows/buffaloes, yielding 2-3 litres of milk per animal.

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Setback … A very large portion of the milk market in India is still in the hands of the un organized sector (only 22-24% is accounted for by private companies and cooperatives). Dairying is perceived as a subsidiary activity by farmers. Market disorder in the post-liberalization period. Among them are: Over-capitalization in the private dairy sector Ineffective enforcement of standards of processing, hygiene and quality A near absence of any monitoring mechanism to enforce market discipline. These threats need to be countered to protect the long-term interests of milk producers, their organizations, as well as of the consumer.

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Way Ahead … Identify the areas in which there is a need for better forward market linkages by identifying milk producer clusters and encouraging companies to procure milk from them. Strengthening the marketing to survive the onslaught of the private sector Efforts to reduce the growing gap between milk production and its marketing through the JV’s. Designing co-operative companies/JVs under the changed economic scenario Ratify NDDB's new direction in the Parliament to avoid back door privatization. Raising productivity of the dairy farms. Access to formal credit at market interest rate. Recruit, train and motivate increasing numbers of women to work for cooperatives

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Buffalo Milk Vs. Cow Milk No difference in nutritive value: There is practically no difference in the nutritive value and digestibility of milk and milk products obtained from cow and buffalo milks. Lower cholesterol content: Significantly, cholesterol content of buffalo milk is 0.65 mg/g as compared to the corresponding value of 3.14 mg/g for cow milk. More proteins: Animal bioassays have shown the Protein Efficiency Ratio (PER) value of buffalo milk proteins to be 2.74 and that of cow milk as 2.49. It will be seen that buffalo milk has about 11.42 per cent higher protein than cow milk. More important minerals: Buffalo milk is also superior to cow milk in terms of important minerals, namely calcium, iron and phosphorus which are higher by 92 per cent, 37.7 per cent and 118 per cent respectively than those present in cow milk. More vitamin A: Buffalo metabolizes all the carotein into vitamin A, which is 38 passed on to milk as such. range of the fat-rich dairy products.

More viable commercially: Buffalo milk is commercially more viable than cow milk for the manufacture of fat-based and SNFbased milk products, such as butter, ghee and milk powders because of its lower water content and higher fat content. Most significantly, the lower cholesterol value should make it more popular in the health conscious market. By the virtue of greater opacity of casein miscelles, coupled with higher levels of colloidal proteins, calcium and phosphorus, buffalo milk is more densely white and has superior whitening properties as compared to cow milk. Therefore, unlike the cow milk (which is pale-creamish yellow in color) and cow milk fat (which is golden yellow in color), buffalo milk is distinctively whiter. UHT-processed buffalo milk and cream are intrinsically whiter and more viscous than their cow milk counterparts, because of conversion of greater levels of calcium and phosphorus into the colloidal form. Buffalo milk is, therefore, more aptly suitable for the production of tea and coffee whiteners than cow milk.Higher innate levels of proteins and fat render buffalo milk a more economical alternative to cow milk for the production of casein, caseinates, whey protein concentrates and a wide 39