1.1 Dairy Industry: An Overview -...

1

1.1 Dairy Industry: An Overview

Industry is one of the major constituents of the comprehensive term ‘Business’

which may be defined as the regular or current production or purchase and sales of

goods undertaken with the main object of earning profit and acquiring wealth

through the satisfaction of human wants, and in the terms of Economics, business

may be described as a programmed of inputs (investment) and output (return)

aiming at the maximization of output with lowest input. Industry as a part of

business activity is concerned with the raising, producing, processing or fabricating

products or services which may be used either by the final consumers or by other

industrial units for further production.

Industry may, broadly, be classified into four types viz., (a) Extractive (b) Genetic

(c) Manufacturing and (d) Constructive industry. Historically, they may be

categorized into (a) Primary or Natural industries, and (b) Factory industry. In the

former are included (1) Hunting (2) Fishing (3) Animal husbandry (4) Forestry (5)

Agriculture (6) Mining (7) and all other industries, which use, predominantly

natural resources as the basis for their productivity activities and whose products

are utilized mainly by the ultimate consumers. While the later covers those

industries which undertakes, on massive scale, conversion of raw material into

finished products by extensive use of plant and machinery metallurgical industries,

engineering industries, textile industries, chemical and allied industries, food

industries, generation and distribution of electricity, etc. In the process of

industrialization, the primary industries get gradually and progressively submerged

with the factory industries.

Dairy industry occupies an important place in animal husbandry. It embraces the

production of milk, its preparation for sale as well as the manufacture of dairy

products. The Central Statistical Organization, Department of Statistics.

Government of India, have under the annual survey of industries, classified dairy

industry under industries major group-20, Food Manufacturing Industries.

2

A dairy industry depends on milk. Milk is raw material for dairy product. Milk is

the ‘nature’s perfect food’ for all ages. It has almost all the vital nutrients needed

for growth and well being of the human body. Milk is the richest source of calcium

and essential amino acids which is good for bone formation. It is particularly

beneficial for people recovering from sickness, children, sport person, aged ones,

women etc.

The dairy industry of India has grown from an almost completely unorganized but

vastly complex industry of a large magnitude to an organized industry during the

last 55 years with an annual milk production of about 29 million metric tones in the

year 1979-80. India’s milk production in 2001 is forecasted at 81 million tones. In

India it took nearly 30 years to achieve self- sufficiency in milk production. The

country had produced 123 million tones of milk in 2010-11, 127.9 million tons in

2011-12. The annual growth rate for production of milk is increased about 5% in

2011-12 as compared to 2010-11. India continued to rank third amongst the

countries of the world. The first two position being held by Union of Soviet

Socialist Republics and United States of America.

The dairy development in India has twin objectives of increasing total milk supply

on commercial basis and diversifying agricultural structure by developing dairy as a

supplementary or principal occupation which would help increasing the income of

the small and marginal agriculturists and/or landless labourers. Dairy industry

occupies an importance place in Indian economy. It embraces the production of

milk, its preparation for sale as well as manufacture of dairy products.

The growth of Indian dairy section has been spectacular during the past three

decades. The Indian dairy industry is not only a vital producer of an essential food

item but it also is one of the largest employers in the country in both the rural sector

as well as the semi urban and urban region. It gives an opportunity to about eight

crores families across India.

Apart from the nutritional importance of milk for human consumption, dairying

provides employment to the vest number of persons with no means of production of

their own and put them to productive work so as to enable them to contribute to the

3

national product and earn their share in it. It processes tremendous potential for

providing employment to the massive rural population. It can equitably distribute

the gain and thus assists even the weakest sections of our society. Further, milk is

one of the few commodities which give the producer a large share of what the

consumer pays for it. Thus, dairying is a very important instrument for the

upliftment of the rural economy of our country. Dairy development on modern lives

will generate additional income and employment in rural areas itself and can act as

an effective instrument for social change in rural India.

The composition of the milk production in India has been dominated by buffalo

milk with 76 per cent of the total milk production as compared to 94 percent of cow

milk in the total production of milk in the ward. Although mulch buffaloes have

come to be comparatively more prolific milk procedures in India. The importance

of cow continues as a supplier of cheap milk as also bullocks. Livestock keeping in

general and dairying in particular has been the integral party of Indian agriculture.

In additional, dairying provides a source of nutrition and additional income to our

farmers.

Inefficient and poor maintenance of large number of cattle in the context of

available resources could be responsible for the fact that although there are 12

percent more dairy animals in India than four leading countries put together, India

produces less than 12 percent of the milk produced by these leading countries of the

world.

1.2 Dairy Industry: Over The Time

1.2.1 Traditional Dairying

Traditionally, all the milk in the past had been produced in the villages in India.

Even today the bulk of the country’s milk supply comes from the cattle owners in

the rural areas. In the old days, the farmers produced milk usually for their own

consumption. Most of the milk was converted by them into butter, ghee and butter

milk, which constituted important food items for the family. As marketing facilities

for milk did not exist in those days, the surplus milk was generally turned into ghee

4

for sale in the villages or in the near-by town markets. Later on, this pattern

changed and most of the surplus milk was either sold by the cattle-owners to the

consumers, in the nearby areas or collected by the middlemen for sale in the urban

markets.

1.2.2 Modernisation of Dairy Industry

Modernization of the dairy industry in India gained momentum with the

commencement of India’s first five Year plan in 1951. With the aim of catering to

the requirement of clean milk for the growing population in urban areas, the initial

government action in this regard consisted of organizing milk schemes for the large

cities. The basic objectives of these schemes was to facilitate arrangement for the

efficient flow of milk produced in the rural areas to the dairy plants located in cities

and distribution of the processed milk to the urban consumers. The working of the

milk schemes was quite helpful for the development of the dairy industry on

modern lines in India.

1.2.3 Co-operativization

The establishment of milk co-operatives is another feature of the modern dairy

industry in India. For successful functioning of economic enterprises in our

villages, it is necessary that they are given a corporate identity. In most developed

countries, co-operative have emerged as the most cohesive organization of farmers.

They provide the middle course between the acquisitive and individualistic trends

of economy on one hand and too much centralization and regimentation on the

other. They have the merit of combining freedom and opportunity for the small man

with benefits of large scale management and organization as also good- will and

support from the community.

In India, though the co-operative movement was initiated by the co-operative credit

societies Act, 1904, dairy co operative could not be promoted till the passing of the

co-operative societies Act, 1912. though, with the establishment of the first co-

operative dairy society at Allahabad (U.P.) in 1913, the movement of dairy co-

operative got initiation and spread subsequently in different parts of our country. Its

5

real large sale and systematic break through could be noticed since 1946 when

Kaira District Co-operative Milk producers’ Union Limited (KDCMPUL)

popularly known as ‘Amul Dairy’ which was set up at Anand in the Gujarat state.

The genesis of co-operative movement can be traced back to the first half of the

18th century. Industrial revolution in U.K. had augmented the production at the cost

of ethics and values of mankind as man was replaced by machine. Because of lust

and lure for the production, it had directly resulted in the exploitation of the

mankind and so co-operative movement took birth in U.K. for improving the

condition of labourer. From England, co-operative movement spread out all over

the world and had been changed in to the great movement.

Table 1.1 : Co-operative movement in a various countries

No. Type of co-operative Name of country

1 Dairy Co-operatives Denmark, New-Zealand

2 Farming Societies Russia, Yugoslavia and Palestine

3 Labour Societies Italy

4 Insurance Co-operatives England

5 Co-operative Education England

6 Marketing Co-operatives Canada, U.S.A., and Australia

7 Land Mortgage Credit Germany, England and France

8 Consumer's Co-operatives England, Russia and Sweden

9 Credit Co-operatives Germany, Italy, Sweden and India

10 Producers Co-operatives France and England

1.3 Genesis of Co-operative Movement in India

1.3.1 Before independence

At the end of 19th century, most of the rural masses in India suffered from poverty,

ignorance, improvidence and ancestral debt and occasional outbreaks of natural

calamities. All these factors led to rural indebtedness. The rural poor was being

exploited by the moneylenders by way of charging unfair rates of interest. With the

purpose of saving the peasants from the clutches of money lenders, provincial

6

governments enacted several measures of relief like Deccan Agricultural Relief Act

(1879), Land Improvement Loan's Act (1883) and Agriculturists' Loan's Act

(1884). These measures were not much of help due to strict and awkward official

procedures.

In 1901 the committee under the chairmanship of Sir Edwand Law was appointed

by the Government to study the prevailing economic condition in India. The

committee recommended the introduction of Cooperative Credit Societies Act (No.

10), 1904 came into force. Introducing the Bill in the Imperial Legislative Council,

Sir Devzil Ibberson aptly remarked: "Only along the co-operative route will India

find the way from poverty to plenty"

1.3.2 After independence

In the post-independence era, co-operation has been assigned a notable role in

bringing socio-economic changes through the process of democratic planning with

accent on assisting the weaker sections of the community. Supporting this

viewpoint, R.B. Tyagi observed: "In fact, co-operation has begun to be felt as the

only panacea for all our maladies, both social and economic and specially of the

rural sector." According to a Government publication, "co-operatives in the

country's economy will not only avoid excessive centralization and bureaucratic

control likely to result from planning itself, but, also curb the acquisitive instincts

of the individual producer or trader working for himself." For these reasons, various

Five Year Plans have envisaged a great deal of scope for the organisation of co-

operative activity.

The first Five Year Plan of India recognized co-operation as an indispensable

instrument of planned economic action in democracy, combining initiative, mutual

benefit and social purpose." Reiterating the approach enunciated in the First Five

Year Plan, the Second Five Year Plan maintained that, "the building up of co-

operative sector as part of the scheme of planned development is thus, one of the

central aims of the national policy." The Third Five Year Plan observed that "a

rapidly growing co-operative sector with special emphasis on the needs of the

peasant, the worker and the consumer becomes a vital factor for stability, for

7

expansion of employment opportunities and lot swift economic development."

Based on the concept of growth with stability and social justice, the Fourth Five

Year Plan visualized a bright future for co-operatives.

During the Fifth Five Year Plan also, co-operatives were recognized as an

important institutional framework to ameliorate the condition of weaker sections,,

particularly in providing inputs and working as an important limb of the National

Public Distribution Scheme. The Plan stated, "there is no other instrument as

potentially powerful and full of social purpose as the co-operative movement." The

Sixth Five Year Plan pointedly recognized the non-exploitative character of co-

operatives, the voluntary nature of their membership, the principle of one man one

vote, decentralized decision-making and self-imposed curbs on profits extremely

qualifying them as an instrument of development combining the advantages of

private ownership with public good. The Seventh Five Year Plan aims at

developing the primary agriculture credit societies as multipurpose viable units,

promoting professional management and strengthening of effective training for

improving operational efficiency.

1.3.3 Progress of Co-operatives

The co-operative movement in India is one of the largest in world. Since

independence, it has progressively expanded in terms of membership, resources and

transactions.

A salient feature of the Indian co-operative movement is that it has not only

numerically expanded but has continuously diversified its activities over the years.

It has left almost no sector of economy, untouched. In addition to traditional

activities like credit, marketing, distribution etc., it has penetrated into fields like

fisheries, housing, handicrafts, handloom etc.

The Government's emphasis on the timely supply of agriculture credit and other

inputs to the farmers, through co-operative societies at the village level and

processing and marketing of their outputs through farmer-owned co-operatives, has

given an impetus to the co-operative movement and has also helped to protect the

8

interests of the farmers. At the initiative, and with the assistance from the

Government, the policies, procedures and programmers of co-operatives have also

been increasingly oriented to helping the weaker sections and to developing the

backward areas.

The Central Government over the years has set up various expert committees and

working Groups to study specific problems and issue. Since independence, 34 such

committees have been set up.

By and large, co-operatives in developing countries have failed to fulfill their

objective or strengthening the economically weak. They have thus, been unable to

bring about the socio-economic structural change. Rather, it has been found that in

India. Though 45 per cent of the rural population is reported to be covered by the

co-operatives, according to the Sixth Plan the weaker sections of the community are

still not adequately represented in the membership roll. Thus, the fruit of co-

operatives are reaped by the rich and influential people at the expense of the rural

poor. It is, therefore, necessary to evolve suitable ways and means to increase the

flow of benefits to these sections. One of the alternatives is that co-operatives

should be made to extend credit facilities only to the weaker sections of society,

while credit needs of big cultivators should be met by financial institutions other

than the primary credit societies.

Due to rapid economic development from 1969 onwards, the Central Government

resorted to the multi-agency approach by setting up public and private sector

institutions. These institutions have, however, emerged as competitors to the

budding co-operatives in almost all the fields and consequently its growth has

slowed down. It is suggested that the Government may find out ways and means

whereby duties and responsibilities may be clearly demarcated. At the same time,

there is need of an effective co-ordination between these agencies so that they play

a supplementary, complementary and mutually stimulating role against the

exploitative practices of private sector.

At present, there is no independent Ministry at the national level which can take

care of all the facets of the third emerging sector of the economy in a rational

9

manner. In fact, co-operation has been given a step motherly treatment by the

Central Government. It was tagged with a number of Ministries at various times,

for example, Ministry of Food, Ministry of Community Development, Ministry of

Agriculture and Irrigation, Ministry of Industries and Civil Supplies. At present, co-

operation merely forms one of the divisions in the Department of Agriculture and

Co-operation (Ministry of Agriculture and Rural Development). Although there are

constraints to multiply the number of departments at the centre, yet looking at

significant role assigned to the co-operatives in the socio-economic development of

the country through the participation of the neglected, weaker and down-trodden

sections of the community, it is suggested that as and when it is feasible,

Government may set up an independent Department for Co-operation.

1.3.4 Beliefs in Dairy Business

Further to my interactions with scores of people thinking of entering dairy business

all across (especially India) the country, it was quite evident that the general beliefs

are

1. Dairy farming is an easy business

This is because dairy farming is done by a farmer, who in most cases is not much

learned and has been doing this business for quite a lot of years and is making

money. However the main constraint in his dairy farming is that he has been

following the traditional methods in everything viz., feeding and management

(which comprises more than 80% of the farming costs) by virtue of which he is not

in profits but just making both ends meet along with little help from his agricultural

income. This business is easy provided you are well aware of the basics and are

able to apply scientific methods which can help improve the overall profitability. At

the same time, it must be understood that dairy has to be closely observed day in

and day out as there is no holiday in dairy farming.

2. Animal provides milk throughout the year

The animal provides milk only after it gives a calf (offspring) and not otherwise.

On an average a cow gives milk for 270-300 days whereas the buffalo provides it

10

for 240-270 days. The period (called lactation) is followed by a dry period (during

which it does not give milk but just eats) is called as intercalving period after which

she gives birth to the next calf. In India the average intercalving period in cows is

around 450 days and in buffaloes its 500 days or may be more also. The main goal

in successful dairying will be to reduce this dry period.

3. Dairy business breaks even in the first year

As in all businesses dairy business does not break even in first year. The main costs

in dairy farming are:

a. Capital Cost: For purchase of animals, construction of shed and purchase of

machinery, cans etc. This cost occurs only once and is depreciable over a

period of time totally.

b. Administrative Costs: It includes appointment of a farm manager, supervisor,

skilled and unskilled labours depending upon the requirements as well as the

size of the farm. This is a fixed cost for a certain period.

c. Recurring Cost: It includes the feeding and management along with vaccination,

insurance, treatment, AI and other miscellaneous costs. This is required daily

and is liable to fluctuate all times. It will be essential to control these costs

which will have a direct bearing on the production (of milk) as well as

reproduction (birth of next calf). At the same time balancing of feed will also

determine the reduction of the intercalving period which has a bearing on total

profitability.

4. Dairy business can be done by being dependent on labours

This is possible provided that the owner is aware of all the intricacies as well as the

loopholes in dairying. It is a well known fact that any labour is not at all concerned

with profitability but (his) netp at the end of the month. As such he is likely to use

his own parameters for optimizing the profitability of the farm. Thus it will be

extremely imperative for the owner to know and understand all the details of dairy

farming before starting the same. This will enable him to guide his labours towards

the right path and help in minimizing the losses.

11

1.4 Dairy Industry in India

Dairy industry plays a dynamic role in India's agro-based economy. Dairy is now a

highly specialized field today that involves production, procurement, storage,

processing and distribution of dairy products. The dairy industry involves

processing raw milk into products such as consumer milk, butter, cheese, yogurt,

condensed milk, skimmed milk powder and ice cream, using processes such as

chilling, pasteurization, and homogenization.

India is the largest producer and consumer of milk in the world. The Indian dairy

sector is characterized by a very large number of small herds. Production of milk

from buffaloes exceeds that of cows, which are considered sacred by Hindus. India

has an extensive government supported dairy cooperative structure. Milk from the

small herds is collected by the cooperatives with centralized cooling facilities and

transported to the end-users in urban centers. Most of the milk produced (over 80%)

is distributed as liquid milk for home consumption or manufacturing of traditional

products like ghee, paneer and mithais. From burfi to kulfi, from kalakhand to

shrikhand, from yogurt to ice creams extend the delectable world of Indian milk

delicacies. India surpassed the US in 1998 with a production of 92 million tonnes to

become the largest milk producing country in the world. In 2006, India's milk

production crossed 100 million tonnes, representing 15% of world milk production.

From being milk impoverished nation to the top producer has been an astonishing

success.

About 110,000 dairy cooperative village societies, involving 12 million farmer

members had been organized by 2003-04 to supply milk to processing units and

directly to consumers. Until the early 1990s, milk processing was reserved for the

cooperative sector through licensing. As part of the domestic economic reforms and

commitments to the WTO regulations, the Indian dairy sector was liberalized in a

phased manner starting in 1991. The government removed all restrictions on setting

up new milk processing capacity in March 2002

The dairy scene with an anticipated milk production of 127.9 million tonnes, an

increase of around 5 per cent over the year 2010-11, India continued to be the

12

largest milk producing nation in 2011-12. This accounted for about 17 per cent of

world milk production. More people in India now consume milk. The 66th Round

of National Sample Survey Organisation data on consumer expenditure showed that

while 85 per cent of the population in urban areas consumes milk in their homes, it

is 76 per cent in rural areas. The dairy cooperatives collected 10.5 million tonnes of

milk, an increase of around 10 per cent as compared to 2010-11. Milk marketing by

the cooperatives stood at 8.6 million tonnes, an increase of around 4 per cent

compared to the previous year. The co-operatives paid a higher procurement price

to milk producers to offset the high input cost for milk production. At the instance

of Government of India, NDDB imported 50,000 tonnes of milk powder and 6,000

tonnes of butter under the Tariff Rate Quota (TRQ) to ensure availability of liquid

milk during the lean season and to meet the requirements of cooperatives and city

dairies

The credit of the huge success behind the dairy industry must be attributed in great

measure to Operation Flood which 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. The success

behind Operation Flood was the Gujarat-based Amul (Anand Milk Union Limited)

which in turn became a mega company based on the cooperative approach. Dr.

Varghese Kurien gave the professional management skills and necessary thrust to

the cooperatives and is considered as the architect of India's White Revolution. The

Amul model has helped India to emerge as the largest milk producer in the world.

More than 15 million milk producers pour their milk in 1,44,500 dairy cooperative

societies across the country. Their milk is processed in 184 District Co-operative

Unions and marketed by 22 State Marketing Federations, ensuring a better life for

millions.

Milk production is primarily a supplementary occupation for small landholders or

landless labourers. There are no official counts of dairy farms and estimates vary

widely. Some estimates indicate that approximately 70 million rural households are

13

engaged in milk production. The average herd size is two milking animals and

average daily milk production per herd is about four litres. The average yield per

cattle is very low in the country, because cattle are fed primarily on dried straw or

residues from crop production. Dairying is practiced throughout India, but

concentrated in the north-western states where the climate is temperate. The milk

surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat,

Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The top 6 states, viz.,

Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat

together account for 58% of the national production.

Dairy sector, mainly an offshoot of agriculture sector in India, has taken shape of an

industry in a big way today. Intimately interwoven with the socio-economic fabric

of rural people in India, dairying has played a crucial role in providing nutritional

security to the millions of households. It has also strengthened our economy all

along by supplementing family incomes and generating gainful employment in the

rural sector.

Indian dairy industry of late has become the major growth area and goes far beyond

being an important agri-business sector of the national economy. Besides being the

largest milk producing country with 5 per cent annual increase in milk production,

India has a large market of dairy products due to the constantly increasing demand

for variety of milk products in the urban as well as rural sectors. The rising demand

for value added milk products at the national level and opening of the markets at

the international level under the changing global scenario and WTO have opened

up new opportunities and threats alike for the Indian dairy industry

Our country is the world leader in the milk production thanks to the maximum

cattle heads it has, and farmers and co-operative societies. Main aim of the Indian

dairy industry is only to better manage the national resources to the highest milk

producer in the entire globe – India boasts of that status. India is otherwise known

as the ‘Oyster’ of the global dairy industry, with opportunities galore to the

entrepreneurs globally. Anyone might want to capitalize on the largest and fastest

growing milk and milk products' market. The dairy industry in India has been

14

witnessing rapid growth. The liberalized economy provides more opportunities for

MNCs and foreign investors to release the full potential of this industry. The

enhance milk production and upgrade milk processing using innovative

technologies.

The growth of the Indian dairy section has been spectacular during the past three

decades. But a sector growth depends heavily on the country’s trade policy and

especially so in the changing environment after the setting up the world trade

organization (WTO).

The Indian dairy industry is not only a vital producer of an essential food item but it

also is one of the largest employers in the country in both the rural sector as the

semi-urban and urban regions. The Indian dairy has called for continuous price

monitoring of dairy products of both the international as well as national level in

order to curb dumping.

As India is the largest milk producing country in the world, industry expert says

that the adverse impact of the recent policies going to have a far reaching

consequence on the economy as a whole.

Overall, the Indian dairy sector is experiencing an upheaval with new product

launches, repositioning of brands and entry of newer players. This will also prompt

several global players to enter the Indian market. The growth of disposable

incomes, change in family structures, more women joining the work force and

focus on healthy-nutritious and quality products are likely to result in demand for a

shift towards dairy products that are not just functional and convenient but also

meet the consumers' aspirational needs.

15

Table 1.2 : The Dairy Industry around the World

(Milk Production in Million Tonnes)

Country 2000 2005 2010

India 79.66 95.62 117

U.S.A 76.02 80.25 87.46

China 12.37 32.02 41.14

Pakistan 25.57 29.44 35.49

Russian Federation 32.28 31.15 32.14

Brazil 20.53 25.53 31.82

Germany 28.35 28.49 29.67

France 25.74 25.71 24.21

New Zealand 12.24 14.64 17.01

United Kingdom 14.49 14.47 13.96

Poland 11.89 11.95 12.30

Netherland 11.16 10.85 11.65

Mexico 9.44 10.03 10.84

Argentina 10.12 9.91 10.50

Australia 10.85 10.13 9.02

Canada 8.16 7.81 8.24

Ireland 5.16 5.38 5.24

Romania 4.62 5.55 5.06

Denmark 4.72 4.58 4.91

Switzerland 3.91 3.96 4.11

Bangladesh 2.14 2.62 3.40

Austria 3.36 3.14 3.29

South Africa 2.54 2.87 3.23

Sweden 3.35 3.21 2.92

Chile 2.00 2.31 2.54

Finland 2.45 2.43 2.35

Afghanistan 1.66 1.73 1.82

Nepal 1.17 1.35 1.58

Norway 1.74 1.59 1.58

Indonesia 0.79 0.85 1.32

Thailand 0.52 0.89 0.85

Mauritania 0.32 0.37 0.39

Viet Nam 0.10 0.23 0.34

Sri Lanka 0.16 0.17 0.21

World 578.88 648.00 720.98

Source: The Statistics Division of the Food and Agriculture Organization of the United Nations.

16

1.5.1 Assistance to Co-operative

The scheme aims at revitalizing the sick Dairy Cooperatives Unions at the District

level and Co-operative Federations at the State level. Under the scheme

rehabilitation programme are prepared by National Dairy Development Board

(NDDB) in consultation with Milk Union Federation/State Government. A central

grant is released to milk union/federations through NDDB.

To bring about structural changes in unorganized sector, measures like milk

processing at village level, marketing of pasteurized milk in a cost effective

manner, quality up gradation of traditional technology to handle commercial scale

using modern equipments and management skills, a new scheme viz. Dairy Venture

Capital Fund was initiated in the Tenth Five Year Plan. The assistance under the

scheme is provided to the rural/urban beneficiaries under a schematic proposal

through bankable projects with 50% interest free loan component. The scheme is

implemented through NABARD and the funds released by GOI to NABARD are

kept as revolving fund. Under the scheme the entrepreneur has to contribute 10%

and arrange 40% loan from local bank. Government of India provides 50% interest

free loan through NABARD.

Table 1.3 : State-wise Procurement of Milk in India

(Milk Procurement in Tonnes)

States 2010-11 2011-12

North Region

Haryana 511 534

Himachal Pradesh 60 68

Jammu and Kashmir ** **

Punjab 1037 1110

Rajasthan 1629 1742

Uttar Pradesh 504 497

West Region

Chhattisgarh 25 30

Goa 38 41

Gujarat 9158 10450

Madhya Pradesh 588 721

Maharashtra 3053 3130

17

South Region

Andhra Pradesh 1371 1503

Karnataka 3742 4277

Kerala 688 802

Tamil Nadu 2097 2161

Puducherry 35 30

East Region

Assam 5 7

Bihar 1091 1061

Jharkhand 5 5

Nagaland 2 2

Odisha 276 300

Sikkim 12 13

Tripura 2 3

West Bengal 273 219

Table 1.4 : State-wise Dairy Co-operative Societies in India

States 2010 2011

North Region

Haryana 7019 7029



Punjab 7069 7639

Rajasthan 16290 16809


West Region

Chhattisgarh 757 794

Goa 178 178

Gujarat 14347 14631



South Region


Karnataka 12372 12925

Kerala 3666 3695


Puducherry 102 102

18

East Region

Assam 155 188

Bihar 9425 11331

Jharkhand 53 53

Nagaland 49 49

Odisha 3256 3337

Sikkim 287 289

Tripura 84 84

West Bengal 3019 3045

Table 1.5 : State-wise Milk Producer Members in India

States 2010 2011

North Region

Haryana 313 313



Punjab 385 403

Rajasthan 669 683


West Region

Chhattisgarh 31 33

Goa 19 19

Gujarat 2970 2970



South Region


Karnataka 2124 2191

Kerala 851 859


Puducherry 36 36

East Region

Assam 4 5

Bihar 523 614

Jharkhand 1 1

Nagaland 2 2

19

Odisha 187 191

Sikkim 10 10

Tripura 6 6

West Bengal 213 215

1.5 Dairy Industry in Gujarat

(In the form of Milk Producers’ Co-operative Union)

Dairy industry has developed on co-operative lines in Gujarat and it has shown the

way of developing dairy industry on co-operative lines to other states. In our

country, however the milk producer co-operative got momentum in Gujarat, with

the organization in 1946, of the Kaira District Co-operative Milk Producers’ Union

Ltd. (KDCMPUL) is called Amul Dairy situated at Anand. Since, then district

followed this pattern of organizing with co-operative in Gujarat particular, and

across the country in general.

Now a days, there are 16 district unions in Gujarat and a large number of co-

operative dairies in villages affiliated to the respective district union. The Gujarat

Co-operative Milk Marketing Federation (GCMMF) handled the work load of 16

district unions of Gujarat. It frames the general policy of the union. GCMMF is

India's largest food product marketing organization with an annual turnover (2011-

12) US$ 2.5 billion. Its daily milk procurement is approx 13 million lt. (peak

period) per day from 16,117 village milk cooperative societies, 16 member unions

covering 24 districts, and 3.18 million milk producer members.

The Gujarat Co-operative Milk Marketing Federation is totally depended upon

farmers. The base of the GCMMF is only farmers. It also shows that GCMMF

purchase raw material and sale the product on behalf of the 16 district unions. The

district union collects milk and produce milk items from farmers. Thus, this

operation made successfully by farmers.

1.5.1 Beginning of Dairy Co-operative Movement in Gujarat

Over six decades ago the life of a farmer in Kaira was very much like that of

farmers anywhere else in India. His income was derived almost entirely from

20

seasonal crops. Many poor farmers faced starvation during off-seasons. Their

income from milch buffaloes was undependable. The milk marketing system was

controlled by contractors and middlemen. As milk is perishable, farmers were

compelled to sell their milk for whatever they were offered. Often they had to sell

cream and ghee at a throwaway price.

They were in general illiterate. But they could see that the system under which

contractors could buy their produce at a low price and arrange to sell it at huge

profits was just not fair. This became more noticeable when the Government of

Bombay started the Bombay Milk Scheme in 1945. Milk had to be transported 427

kilometers, from Anand to Bombay. This could be done only if milk was

pasteurized in Anand.

After preliminary trials, the Government of Bombay entered into an agreement with

Polsons Limited to supply milk from Anand to Bombay on a regular basis. The

arrangement was highly satisfactory to all concerned – except the farmers. The

Government found it profitable; Polsons kept a good margin. Milk contractors took

the biggest cut. No one had taken the trouble to fix the price of milk to be paid to

the producers. Thus under the Bombay Milk Scheme the farmers of Kaira District

were no better off ever before. They were still at the mercy of milk contractors.

They had to sell their milk at a price the contractors fixed. The discontent of the

farmers grew. They went in deputation to Sardar Patel, who had advocated farmers’

co-operatives as early as 1942.

Sardar Patel reiterated his advice that they should market their milk through a co-

operative society of their own. This co-operative should have its own pasteurization

plant. His advice was that the farmers should demand permission to set up such a

co-operative. If their demand was rejected, they should refuse to sell their milk to

middlemen.

Sardar Patel pointed out that in undertaking such a strike there should be some

losses to the farmers as they would not be able to sell their milk for some time. If

they were prepared to put up with the loss, he was prepared to lead them. The

farmers’ deputation readily accepted his proposal.

21

Sardar then sent his trusted deputy, Mr. Morarjibhai Desai, to Kaira District to

organize milk co- operative – and a milk strike if necessary. Mr. Desai held a

meeting in Samarkha village on January 4, 1946. It was resolved that milk

producers’ co-operative societies should be organized in each village of Kaira

District to collect milk from their member-farmers. All the milk societies would

federate into a Union which would own milk processing facilities. The Government

should undertake to buy milk from the Union. If this wasn’t done, the farmers

would refuse to sell milk to any milk contractor in Kaira District. The Government

turned down the demand. The farmers called a ‘milk strike’. It lasted 15 days. Not a

drop of milk was sold to the milk merchants. No milk reached Bombay from

Anand, and the Bombay Milk scheme almost collapsed. After 15 days the milk

commissioner of Bombay, an Englishman, and his deputy visited Anand, assessed

the situation and accepted the farmer’s demand.

This marked the beginning of the Kaira District Co-operative Milk Producers’

Union Limited, Anand. It was formally registered on December 14, 1946. Its

objective was to provide proper marketing facilities for the milk producers of the

district. The Union began pasteurizing milk in June 1948, for the Bombay Milk

Scheme – just a handful of farmers in two village co-operative societies producing

about 250 liters a day.

In the early stages, rapid growth brought in its wake serious problems. Their

solution provided the stimulus for further growth. For example, as the co-operative

movement spread in the district, it was found that the Bombay Milk Scheme could

not absorb the extra milk collected by the Union in winter, when buffaloes yielded

an average of 2.5 times their summer yield. Thus by 1953, the farmer-members had

no regular market for the extra milk produced in winter. They were again forced to

sell a large surplus at low rate to middlemen. The only remedy was to set up a plant

to process the extra milk into products like butter and milk powder. The logic of

this step was readily accepted by the Government of Bombay and the Government

of India, except for a few doubting Thomases. The government of India helped the

Union to get financial help from UNICEF and assistance from the Government of

22

New Zealand under the Colombo Plan. Technical aid was provided by F.A.O. An

Rs.50 lakh factory to process milk powder and butter was blueprinted. Its

foundation stone was laid by the then President of India the late Dr. Rajendra

Prasad on November 15, 1954. The project was completed by October 31, 1955, on

which day the late Pandit Jawaharlal Nehru, the then Prime Minister of India,

declared it open. The new dairy provided a further fillip to the co-operative

movement among milk producers. The union was thus enabled to organize more

village co-operative societies and to handle more and more milk each year. This

event also brought a breakthrough in dairy technology as the products were made

processing buffalo milk for the first time in the world. Kaira Union introduced the

brand “Amul” for marketing its product range. The word “Amul” is derived from

Sanskrit word ‘Amulya’ which means ‘priceless’ or precious’. In the subsequent

years Amul made cheese and baby food on a large commercial scale again

processing buffalo milk creating a history in the world.

1964 was the turning point in the history of dairy development programme in India.

Late Shri Lal Bahadur Shastri, the then Prime Minister of India who visited Anand

on 31s October for inauguration of Amul’s Cattle Feed Plant, having spent a night

with farmers of Kaira and experiencing the success wished and expressed to Mr

Kurien, the then General Manager of Amul replicating Amul model throughout our

country which will bring a great change in the socio-economic conditions of the

people. In order to bring this dream into reality, 1965 The National Dairy

Development Board (NDDB) was established at Anand and by 1969-70 NDDB

came out with the dairy development programme for India popularly known as

“Operation Flood” or “White Revolution”. The Operation Flood programme, even

today, stands to be the largest dairy development programme ever drawn in the

world. This saw Amul as model and this model is often referred in the history of

White Revolution as “Anand Pattern”. Replication of “Anand Pattern” has helped

India to emerge as the largest milk producing nation in the world.

23

1.5.2 Three Tier Model - The Anand Pattern

The Anand Pattern is essentially an economic organizational pattern to benefit

small producers who join hands forming an integrated approach in order to

economy of a large scale business. The whole operation is professionally managed

so that the individual producers have the freedom to decide their own policies. The

adoption of modern production and marketing techniques helps in providing those

services that small producers individually can neither afford nor manage.

It has succeeded largely because Anand Model involves people in their own

development and because their interests are safe in their own hands. Under

Operation Flood the entire institutional infrastructure set up at the village level, the

district level and the state level is owned and operated by the farmers themselves.

The Anand Model co-operatives have progressively eliminated middlemen,

bringing the producers in direct contact with consumers.

The Anand Pattern succeeded because it gave a fair price to the farmer and high -

quality milk and milk products to the consumer. What would have been

middlemen’s profits in the earlier system got absorbed into development projects

for primary producer or lower cost for the consumer. In short, the Anand Pattern

meant the utilization of resources in the most profitable manner at grass-root level.

1.5.2.1 Primary Village Co-operative Society (The First Tier)

Primary Village Co-operative Society: An Anand Pattern village dairy cooperative

member by buying a share and committing to sell milk only to the society. Each

DCS has a milk collection centre where members take milk every day. Each

member's milk is tested for quality with payments based on the percentage of fat

and SNF. At the end of each year, a portion of the DCS profits is used to pay each

member a patronage bonus based on the quantity of milk poured. This also acts as a

vital link for various productivity enhancement and development programmes of

farmers.

24

1.5.2.2 District Union (The Second Tier)

A District Cooperative Milk Producers' Union is owned by dairy cooperative

societies. It is a Union of primary village co-operative societies within a district.

The Union buys all the societies' milk, then processes and markets fluid milk and

products. Union also provides a range of inputs and services to village co-operative

societies and their members: feed, veterinary care, artificial insemination to sustain

the growth of milk production and the cooperatives' business. Union staff train and

provide consulting services to support village co-operative society leaders and staff.

1.5.2.3 The State Federation (The Third Tier)

The cooperative milk producers' unions in a state form a state federation which is

an apex marketing body is responsible for marketing of milk and milk products of

member unions. The Federation also plays a role in the overall development of the

district unions federated to it maximizing farmer profit and productivity through

cooperative effort is the hallmark of the Anand Pattern.

25

ANAND PATTERN-THREE TIER MODEL

26

1.5.2.4 Development and Growth

The dairy co-operative movement in Gujarat is similar to the co-operative

movement in India. “AMUL” is the pioneer of the dairy co-operative in Gujarat and

in India also. The Kaira District Milk Producers Union which is known as “AMUL

DAIRY”- ANAND was started in 1946. In the starting the Amul dairy collect just

250 liters of milk per day with the help of two co-operative societies of the union.

Due to Amul Dairy farmers were obtaining fair and sufficient reward on the basis

of fat content of the milk. They were paid promptly also. So, more and more

farmers joined the union, and the union got much strength. It turned today around

more than 20 lakh litre per day, being collected from 1163 village co-operative

societies with the help of 634675 farmer members.

1.6 About Gujarat Cooperative Milk Marketing Federation

Ltd. (GCMMF)

Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), is India's largest

food product marketing organisation with annual turnover US$ 2.54 billion in

2012-13. Its daily milk procurement is approx 13 million lts. per day from 16914

village milk cooperative societies, 16 member unions covering 24 districts, and

3.18 million milk producer members. It is the apex organisation of the dairy

cooperatives of Gujarat, popularly known as 'AMUL', which aims to provide

remunerative returns to the farmers and also serve the interest of consumers by

providing quality products which are good value for money. Its success has not

only been emulated in India but serves as a model for rest of the World. It is

exclusive marketing organization of 'Amul' and 'Sagar' branded products. It

operates through 48 sales offices and has a dealer network of 5000 dealers and 10

lakh retailers, one of the largest among such networks in India. Its product range

comprises milk, milk powder, health beverages, ghee, butter, cheese, pizza cheese,

ice-cream, paneer, chocolates, and traditional Indian sweets, etc.

GCMMF is India's largest exporter of dairy products. It has been accorded a

"Trading House" status. Many of our products are available in USA, Gulf

27

Countries, Singapore, The Philippines, Japan, China and Australia. GCMMF has

received the APEDA Award from Government of India for Excellence in Dairy

Product Exports for the last 13 years. For the year 2009-10, GCMMF has been

awarded "Golden Trophy" for its outstanding export performance and contribution

in dairy products sector by APEDA. For its consistent adherence to quality,

customer focus and dependability, GCMMF has received numerous awards and

accolades over the years. It received the Rajiv Gandhi National Quality Award

in1999 in Best of All Category. In 2002 GCMMF bagged India's Most Respected

Company Award instituted by Business World. In 2003, it was awarded the IMC

Ramkrishna Bajaj National Quality Award for adopting noteworthy quality

management practices for logistics and procurement. GCMMF is the first and only

Indian organisation to win topmost International Dairy Federation Marketing

Award for probiotic ice cream launch in 2007.

The Amul brand is not only a product, but also a movement. It is in one way, the

representation of the economic freedom of farmers. It has given farmers the

courage to dream, to hope, to live.

1.6.1 Milk Producers' Unions in Gujarat

1. Kaira District Co-operative Milk Producers' Union Ltd., Anand

2. Mehsana District Co-operative Milk Producers' Union Ltd, Mehsana

3. Sabarkantha District Co-operative Milk Producers' Union Ltd., Himatnagar

4. Banaskantha District Co-operative Milk Producers' Union Ltd., Palanpur

5. Surat District Co-operative Milk Producers' Union Ltd., Surat

6. Baroda District Co-operative Milk Producers' Union Ltd., Vadodara

7. Panchmahal District Co-operative Milk Producers' Union Ltd., Godhra

8. Valsad District Co-operative Milk Producers' Union Ltd., Valsad

9. Bharuch District Co-operative Milk Producers' Union Ltd., Bharuch

10. Ahmedabad District Co-operative Milk Producers' Union Ltd., Ahmedabad

11. Rajkot District Co-operative Milk Producers' Union Ltd., Rajkot

12. Gandhinagar District Co-operative Milk Producers' Union Ltd., Gandhinagar

28

13. Surendranagar District Co-operative Milk Producers' Union Ltd.,

Surendranagar

14. Amreli District Co-operative Milk Producers Union Ltd., Amreli

15. Bhavnagar District Co-operative Milk Producers Union Ltd., Bhavnagar

16. Kutch District Co-operative Milk Producers' Union Ltd., Anjar

Table 1.6 : Overview of GCMMF

Year of establishment 1973

Member 17 District milk pro. Union Ltd.

(16 member and 1 nominal member)

No. of producer member 3.18 million

No. of village societies 16914

Total milk handling capacity per day 16.8 million liters per day

Milk collection (total 2012-13) 4.66 billion liters

Milk collection ( daily Avg. 2012-13) 12.7 million liters

Cattle feed Mfg. capacity 5890 mts. Per day

Sales turnover 2012-13 Rs. 13735 crores

Source: Annual Reports of GCMMF.

1.7 About National Dairy Development Board (NDDB)

The National Dairy Development Board's creation is rooted in the conviction that

our nation's socio-economic progress lies largely on the development of rural India.

The National Dairy Development Board (NDDB) was founded in 1955 to replace

exploitation with empowerment, tradition with modernity, stagnation with growth,

transforming dairying into an instrument for the development of India's rural

people.

The National Dairy Development Board was created to promote, finance and

support producer-owned and controlled organizations. NDDB's programmes and

activities seek to strengthen farmer cooperatives and support national policies that

are favorable to the growth of such institutions. Fundamental to NDDB's efforts are

cooperative principles and cooperative strategies.

29

NDDB began its operations with the mission of making dairying a vehicle to a

better future for millions of grassroots milk producers. The mission achieved thrust

and direction with the launching of "Operation flood,” a programme extending over

26 years and which used World Bank loan to finance India's emergence as the

world's largest milk producing nation. Operation flood's third phase was completed

in 1996 and has to its credit a number of significant achievements.

As on March 2009, India's 1,33,349 village dairy cooperatives federated into 177

milk unions and 15 federations procured on an average 25.1 million liters of milk

every day. 13.9 million Farmers are presently members of village dairy

cooperatives.

Since its inception, the Dairy Board has planned and spearheaded India's dairy

programmes by placing dairy development in the hands of milk producers and the

professionals they employ to manage their cooperatives. In addition, NDDB also

promotes other commodity-based cooperatives, allied industries and veterinary

biologicals on an intensive and nation-wide basis.

1.7.1 Operation Flood

Operation Flood is one of the world’s largest rural development programmes,

launched in 1970, 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 fair market prices in a transparent manner on

a regular basis. 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

Reasonable prices for consumers

30

1.7.2 Programme Implementation

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 EEC 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 four major metropolitan cities: Delhi, Mumbai, Kolkata and

Chennai.

Phase II

Operation Flood’s Phase II (1981-85) increased the milksheds from 18 to 136 and

290 urban markets expanded the outlets for milk. By the end of 1985, a self-

sustaining system of 43,000 village cooperatives covering 4.25 million milk

producers had become a reality. 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 gifts and

World Bank loan helped to promote self-reliance. Direct marketing of milk by

producers' cooperatives increased by several million liters a day.

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. Milk sheds peaked to 173 in 1988-89 with the numbers of women

members and Women's Dairy Cooperative Societies increasing significantly.

http://www.nddb.org/English/

http://www.nddb.org/Hindi/Genesis/Pages/Operation-Flood.aspx

31

Phase III gave increased emphasis to research and development in animal health

and animal nutrition. Innovations like vaccine for Theileriosis, bypass protein feed

and urea-molasses mineral blocks, all contributed to the enhanced productivity of

milch animals.

From the outset, Operation Flood was conceived and implemented as much more

than a dairy programme. Rather, dairying was seen as an instrument of

development, generating employment and regular incomes for millions of rural

people.

1.8 Profile of Selected Dairy Units in Gujarat

1.8.1 Bharuch District Co-operative Milk Producers’ Union Limited

(Dudhdhara Dairy/Bharuch Dairy/Bharuch Union)

Bharuch district is one of the potential

districts in Narmada. The milk shed area

of the Bharuch district is from Baroda to

Surat. In the past, the dairy plant was

installed in 1959 with the capacity of

65,000 LPD. Before the year 1959, milk

producers’ of Bharuch district in a bad

situation. They didn’t have any

systematic network for selling the milk in

the city and people couldn’t get quality milk.

In the year 1959 District Registrar Shri Chaturbhai Patel had announced the concept

of the co-operative dairy to the people of Bharuch district in open meet. By getting

motivation from Amul co-operative dairy pattern and with the effort of all leaders

and milk producer societies from Bharuch, Jambusar, Honsot, Nandod etc. talukas

first time proposal for Bharuch dairy on co-operative basis and sent for registration

to Puna on 18/12/1959 and the journey Dudh Dhara Dairy begins.

The organization has started unit (chilling center) at Rajpipla. We added new units

(chilling centers) at Dediapada and Jambusar in February 2009 and May 2009

32

respectively. At present this organization is collecting milk from 654 Dairy Co-

operative Society located at different villages. Various Dairy Co-operative Societies

are equipped with Milko-Tester.

The dairy operations are being run in accordance with Good Manufacturing

Practices (GMP). The products of the organization are liquid milk, ghee and white

butter. The organization is well equipped with the state-of-the-art-technology for

quick and efficient milk reception, processing, quality control, manufacturing and

storage. Developmental efforts enables the dairy to upgrade its products constantly

and stringent quality control ensures that only products meeting the most exacting

standards to reach our discerning customers.

The dairy is manned by highly qualified, competent and experienced managerial

staff and dedicated work force to provide highest quality of products and best of the

services to customers. The production facilities are backed up by quality assurance,

training, financial management, system management. The dairy has a well equipped

laboratory to test the entire range of products that it produces to provide sound back

up to quality and food safety assurance program.

To further improve the efficiency and effectiveness of the organization’s

performance, it was decided to go in for implementation of ISO 9001:2000 Quality

Management Systems and ISO 22000:2005 Food safety systems to eventually get

certification and international recognition.

Table 1.7 : Development and Growth of Dudhdhara Dairy

Year No. of VCMPs No. of members Milk Procurement

(kg.)

2003-04 363 38060 15334452

2004-05 368 38060 18512292

2005-06 350 38060 15214063

2006-07 327 38200 12383223

2007-08 321 38200 13603036

2008-09 469 42500 17761746

2009-10 551 45000 27262073

2010-11 575 47000 32807903

Source: Annual Reports of Dudhdhara Dairy.

33

1.8.2 Valsad District Co-operative Milk Producers’ Union Limited

(Vasudhara Dairy/Valsad Dairy/Valsad Union)

Valsad District Co-operative Milk Producers’ Union Limited has been registered in

1973 and started dairy development activities on Anand patterns since 1975. A

survey conducted by National Dairy Development Board in the year 1973-74

recommended that the low yielding animals and poor economic condition of rural

farmers coupled with adverse geographical condition would come in the way of

developing this district.

The milk union did not have processing facilities of its own till November 1981 and

all the milk procured from

the rural procedure of this

district used to be sent to

the neighboring dairy

plant of Surat district. In

1981, dairy plant of 30000

liters per day capacity was

established at Alipur

village taking commercial

loan from financial

institution and assistance from the state government. In the beginning there was not

enough milk in the district, even to meet the requirement of new 30000 LPD

capacity plant. The milk union took up the responsibility to develop dairying in this

district and introduced cross breeding of the local un-productive animals to harvest

a new generation of high yielding animals to achieve the breakeven point of the

plant’s installed capacity.

The rural population in tribal belt, under the union’s operation is poor and has very

scanty agriculture income. The tribal area is facing with water scarcity during the

summer season. Hilly and rocky surface play crucial part in non development to

this was from agriculture point of view. The farmers are also marginal and do not

have any other reliable source of income. “VASUDHARA” has focused on this

34

segment and today it gets nearly 80% of its total milk from tribal area. The dairying

has always been considered as a subsidiary income in economy and probably has

not been given its due as major economic activities.

Table 1.8 : Development and Growth of Vasudhara Dairy

Year No. of VCMPs No. of members Milk

Procurement

(kg.)

2003-04 632 690 82780167

2004-05 678 742 97243146

2005-06 881 921 112023623

2006-07 986 994 114609982

2007-08 1009 997 111507996

2008-09 1042 1000 101214067

2009-10 1064 1022 116973386

2010-11 1096 1038 138660468

Source: Annual Reports of Vasudhara Dairy.

1.8.3 Banaskantha District Co-operative Milk Producers’ Union Limited

(Banas Dairy/Banaskantha Dairy/Banas Union)

The dream of late Galbabhai

Patel, founder chairman and

the selfless sage to uplift

Socio-economical status of

village farmers came true

after creation of Co-

operative milk union for

Banaskantha district, on the

foot print of “AMUL Dairy”

of Kaira (Presently Anand)

district, the model of a true

co-operative. Consequently eight village level co-operative milk societies in

Vadgam and Palanpur Taluka of district were registered and started collecting and

35

pouring milk at Dudh Sagar Dairy, Mehsana from 10th March 1966. With this

grass-root level work, followed by the registration of the milk union under co-

operative Act on 31st January 1969 as “Banskantha District Co-Operative Milk

Producers Union Limited” Palanpur, popularly known as “BANAS DAIRY” came

in to existence.

Banas dairy is a well known dairy in Gujarat and is a leading supplier of milk

products to Banaskantha district. Banas Dairy Ltd. is a large-scale unit. Banas dairy

markets its products under a very powerful brand name “AMUL”. It produces a

wide variety of products like milk, milk powder, ghee, ice-cream, Amul butter and

Amul cool etc.

Banaskantha District Co-operative Milk Producers’ Union Limited known as Banas

Dairy is a co-operative organization established in the year 1969 under the Gujarat

Co-operative societies Act 1961 with the support of NDDB as a part of their

Operation Flood Program launched to bring about white revolution in the country.

It manufactures a large number of dairy products under AMUL, SAGAR and

BANAS brands. Their product range includes Amul pasteurized milks, Amul

longer shelf life milk, Amul butter milk, Amul ghee, Sager ghee, Amulya powder,

Sager tea and coffee whitener, Sagar SMP, Amul SMP, Amul shakti powder, a

wide range of Amul ice–creams, Banas peda, Banas tea etc. The products of dairy

are marketed through Gujarat Co-operative Milk Marketing Federation, Anand. It

also provide a large number of technical inputs to over 1.8 Lac farmer households,

which are organized through 1200 old village level Co-operative Milk Societies.

Thus, the products are mainly marketed under world famous brand names “AMUL

and SAGAR”. The dairy has also recently started exports of ghee and milk powders

to Middle East, Far East, Australia and African Nations. It was one more feather in

the cap of Banas dairy when it got ISO 9002 and HACCP certification. The dairy

has taken benefit of custom duty exemption for import of capital goods under the

EPCG scheme of GOI, and has saved large sum of approx, Rs.11 Crore.

A total geographical area of the Banaskantha district is 12248 square km of which

72% is cultivable while 12% land is irrigated by tube wells canals, etc. The area

36

covered under forest is only sq.km. of total 15.99 lac livestock population 6.54 lac

Cattle and 9.45 lac Buffalo as per the cattle census 2007.Frequent droughts due to

average rainfall as low as 22” writes on the wall, serve shortage of water

accompanied by high TDS (3000 to 5000 mg) and as high as 2-5 ppm fluoride

content in water, makes live hood almost difficult.

The district enfolds the human population of about 25 lac predominantly depending

upon the income source from agriculture and allied activities like keeping milk

animals. Majority of population dwells in rural hinterland. However agriculture

mainly depends upon the rainy season as there is a severe shortage of ground water

besides poor quality of soil profile.

Year of Establishment

The Banas Dairy was registered on 31st January 1969.

The Plant Banas, it was Established on 14th January 1971.

The Plant Banas II, it was Established on 2nd October 1998.

Table 1.9 : Development and Growth of Banas Dairy


Procurement

(kg.)

2003-04 1212 N.A 279662

2004-05 1225 187325 358282

2005-06 1255 201869 425439

2006-07 1295 227930 437026

2007-08 1337 260000 528454

2008-09 1351 297510 649472

2009-10 1345 307518 688356

2010-11 1368 311885 717663

Source: Annual Reports of Banas Dairy.

37

1.8.4 Surat District Co-operative Milk Producers’ Union Limited (Sumul

Dairy/Surat Dairy/Surat Union)

SUMUL or Surat Milk Union Limited, which is now renamed as The Surat District

Co-operative Milk Producers' Union Ltd., is one among the 17 district unions

which acts as manufacturing units of dairy products for Gujarat Co-operative Milk

Marketing Federation Limited, the

marketers of Amul brand of

products.

Surat district has been a pioneer in

India in channeling trade in cotton

and milk through co-operatives.

Before SUMUL stepped in,

traditional private milk traders

were dominant in the area.

The private trade was monopolizing the milk market and exploiting both the milk

producers and consumers alike. The milk procurement price which used to be fixed

by the traders (traditional Bhatias) was very low and was fluctuating from time to

time at their sole discretion. These have capitalized on the absence of any

infrastructure and processing facilities and have managed to keep producers from

deriving equitable benefits from the marketable surplus generated. As such their

income from milk was very low and they had no incentive for modern dairy

farming. The farmers resented the system, but were helpless in the face of these

traditional constraints and to their own lack of resource lessness.

Dairying on the other hand, was never popular with tribal's (a major rural

population in the district) as practically no infrastructure existed for milk marketing

in their talukas, inaccessibility to their villages as well as taboos regarding keeping

of buffaloes prevented the entire population of tribal's from considering dairying as

a source of income. The tribal's kept their cows to produce bullocks rather than

milk, which was insufficient even to nurse the calves. Most of the tribal's were

unaware of the usual milch breeds, and animal husbandry.

38

Hygienic and pure milk was almost unknown in the market. In fact unbridled

adulteration of milk was practiced by these traders to meet the growing demand of

milk in the city. To salvage the poor producers from the clutches of these private

traders, organization and integration of procurement, processing and marketing of

milk and milk products by the producers themselves on a sound co. operative line

was essential; this would also ensure elimination of middlemen, equitable

distribution of benefits to Rural Milk Producers and indirectly to urban milk

consumers as well. Hence, the Surat District Co-operative Milk Producers' Union

Ltd., SUMUL is trade name and literally meaning sound price, came into existence

on August 22, 1951.

Objectives

1. To provide year round milk market for their surplus milk and to earn reasonable

returns for the milk to improve their quality of life.

2. To procure milk and process it into good quality milk and milk products to

market it at most economically and efficiently to give maximum overall net

returns to the producers and general satisfaction to the consumers.

3. To provide essential technical inputs and services to the producers at their door

steps in an economic and efficient manner and also in a way most acceptable to

them to increase milk production and to reduce the cost of production.

Table 1.10 : Development and Growth of Sumul Dairy

Year No. of VCMPs No. of members Milk Procurement

(kg.)

2003-04 1006 217615 207302486

2004-05 1041 218975 230392432

2005-06 1048 221057 251746629

2006-07 1051 222307 240784166

2007-08 1055 223207 243337021

2008-09 1063 224437 282870876

2009-10 1068 225389 295069162

2010-11 1179 228164 296456069

Source: Annual Reports of Sumul Dairy.

39

1.8.5 Panchmahal District Co-operative Milk Producers’ Union Limited

(Panchamrut Dairy/Panchamahal Dairy/Panchamrut Union)

The Co-operative Dairy Movement in India initiated with the establishment of

AMUL in 1946. Following that the co-operative district milk unions in different

districts took shape. During early 70’s, when the co-operative leaders of erstwhile;

Panchmahal district, thought to have a district co-operative milk union at district

head quarter Godhra, the neighbouring districts of Sabarkantha, Kheda and Baroda

had already the existence of well established co-op. dairy network. On proposal of

district leaders to have a separate milk co-operative union at Godhra; the initial

survey conducted by

National Dairy

Development Board;

Anand revealed no

possibilities of

establishment of an

independent co-operative

Milk Producers’ Union

Ltd., at Godhra; due to

very low productivity of

native milch animals and

availability of insufficient

quantity of surplus milk. But the leaders were determined and committed for their

goal to establish a milk union and under the inspiration and guidance from late Shri

Maneklal Gandhi, Late Shri Ratilal Trivedi and Late Shri Dahyabhai Naik, in

May,1973 The Panchmahal Dist. Co-op. Milk Producers’ Union Ltd., got registered

under Gujarat State Co-op. Act. 1962. Initially, due to lack of milk processing

facilities in district, the milk procurement around 7000 kg per day from about 40

village primary dairy co-op. societies was diverted to the neighboring milk unions

of Sabarkantha, Kheda and Baroda. The then Chief Minister of Gujarat Hon’ble late

Shri Babubhai Jashbhai Patel laid the foundation stone for the establishing Dairy

building at Godhra; in presence of prominent co-operative leaders of the district;

40

including late Shri Maneklal Gandhi; in the year 1977.The milk chilling plant

having capacity to chill 30,000 ltrs of milk per day was established in 1978 with the

financial help from Draught Prone Area Project, Panchmahals. The concept

of Total Quality Management (TQM) was adopted by the Organization in 1996

which brought revolutionary changes in functioning of the organization. The

organization then was accredited as conforming to the ISO 9001:2000 and HACCP

International Standards; in the year 2000. The Organization observed lots of

technological changes and expansion of the milk processing capacity to 4 lakhs kgs

per day; with commissioning of State of art milk drying plant having the drying

capacity of 15 MT per day. The Cattle Feed Factory also was established during the

year 2002. The Milk Chilling Units at Limdi and Shivrajpur started functioning

during this period only.

Table 1.11 : Development and Growth of Panchamrut Dairy


Procurement

(kg.)

2003-04 1566 194000 239000

2004-05 1600 208000 258000

2005-06 1656 215000 275000

2006-07 1714 223000 296000

2007-08 1769 230000 324000

2008-09 1830 238000 403000

2009-10 1894 246000 449000

2010-11 1915 249000 449000

Source: Annual Reports of Panchamrut Dairy.

41

1.8.6 Sabarkantha District Co-operative Milk Producers’ Union Limited

(Sabar Dairy/Sabarkantha Dairy/Sabar Union)

The Sabarkantha District Co-operative Milk Producers' Union Ltd was established

in the year 1964 by collecting raw milk from 19 primary co-operative milk societies

and supplying it unprocessed to Ahmedabad Municipal Dairy. Municipal Dairy

being a consumer oriented dairy it could not accept more quantity of milk during

flush season and this had forced the Union to rotationally stop the milk collection

from societies during flush season. The milk union could not expand its activities

for the first seven years due to inadequate financial resources. In the year 1971

under Operation Flood-I Programme me of Indian Dairy Corporation (a

Government of India undertaking) a dairy project was sanctioned for handling 1.50

lakh liters of milk per day. The total cost of the dairy plant was Rs.2.52 crore,

which was received from the erstwhile Indian Dairy Corporation through the

Government of Gujarat.

In the year 1971 under Operation Flood-I programme of Indian Dairy Corporation;

a dairy project was sanctioned for handling 1.50 lakh liters of milk per day. The

foundation stone of Sabarkantha District Co-operative Milk Producers' Union Ltd.

was laid by Dr. Verghese Kurien, Chairman,National Dairy Development Board on

June 11, 1971. The reception and pasteurization of milk was started on May 12,

1973 and condensing and

spray drying plant was

commissioned in the year

1974. Under Operation

Flood-II programme the

dairy plant was expanded

to handle 4.00 lakh liters of

milk per day.

The 1st chilling center of

the Union was established

near Dhansura with the financial assistance received from Small Farmers

42

Development Agency. The chilling center was commissioned in October, 1976.

The milk processing capacity of this chilling center was 30,000 liters of milk per

day.

The 2nd chilling centre of the Union was established at Khedbrahma; one of the

four tribal talukas. The other three are Meghraj, Vijaynagar and Bhiloda. The

chilling centre was inaugurated by her excellency the Governor of Gujarat State

Smt Sharada Mukherjee in March 1979. In October, 1976, the initial milk

processing capacity of this chilling center was 25,000 liters of milk per day.

The 3rd chilling centers of the Union was established at Shamlaji, another tribal

dominated area The milk processing capacity of this chilling centers was 25,000

liters of milk per day. The milk collection from Bhiloda and Meghraj talukas was

processed at this new chilling center. The milk processing capacity of these two

chilling centers was further expanded with the financial support from the State

Government.

Table 1.12 : Development and Growth of Sabar Dairy


Procurement (kg.)

2003-04 1653 268568 270067301

2004-05 1670 272811 307352636

2005-06 1690 280038 322054448

2006-07 1698 288359 323367731

2007-08 1714 290021 369519961

2008-09 1732 300603 409314686

2009-10 1758 315673 407308419

2010-11 1779 322649 403102922

Source: Annual Reports of Sabar Dairy.

1.8.7 Kaira District Co-operative Milk Producers’ Union Limited (Amul

Dairy/Kaira Dairy/Amul Union)

The seeds of this unusual saga were sown more than 65 years back in Anand, a

small town in the state of Gujarat in western India. The exploitative trade practices

43

followed by the local trade cartel triggered off the cooperative movement. Angered

by unfair and manipulative practices followed by the trade, the farmers of the

district approached the great Indian patriot Sardar Valla bhbhai Patel for a solution.

He advised them to get rid of middlemen and form their own co-operative, which

would have procurement, processing and marketing under their control.

In 1946, the farmers of this area went on a milk strike refusing to be cowed down

by the cartel. Under the inspiration of Sardar Patel, and the guidance of leaders like

Morarji Desai and Tribhuvandas Patel, they formed their own cooperative in

1946. This co-operative, the Kaira District Co-operative Milk Producers Union Ltd.

began with just two village dairy co-operative societies and 247 litres of milk and is

today better known as Amul Dairy. Amul grew from strength to strength thanks to

the inspired leadership of Tribhuvandas Patel, the founder Chairman and the

committed professionalism of Dr Verghese Kurien,who was entrusted the task of

running the dairy from 1950.The then Prime Minister of India, Lal Bahadur Shastri

decided that the same approach should become the basis of a National Dairy

Development policy. He understood that the success of Amul could be attributed to

four important factors. The farmers owned the dairy, their elected representatives

managed the village societies and the district union, and they employed

professionals to operate the dairy and manage its business. Most importantly, the

co-operatives were sensitive to

the needs of farmers and

responsive to their demands. At

his instance in 1965 the

National Dairy Development

Board was set up with the basic

objective of replicating the

Amul model. Dr. Kurien was

chosen to head the institution

as its Chairman and asked to

replicate this model throughout the country. The Amul model has helped India to

emerge as the largest milk producer in the world. More than 15 million milk

44

producers pour their milk in 1,44,500 dairy cooperative societies across the country.

Their milk is processed in 184 District Co-operative Unions and marketed by 22

State Marketing Federations, ensuring a better life for millions.

Table 1.13 : Development and Growth of Amul Dairy


Procurement

(kg.)

2003-04 1059 598707 253856435

2004-05 1073 615415 276150374

2005-06 1084 628566 297436246

2006-07 1097 630132 324410536

2007-08 1113 631633 401718616

2008-09 1147 634678 468587136

2009-10 1151 635599 498033310

2010-11 1163 634675 515961530

Source: Annual Reports of Amul Dairy.

45

References

Books

1. Basu. P (2009), “Villages, Women, and the Success of Dairy Co-operatives in

India”, Cambria Press, Amherst, NY.

2. Mathur, B. S. (1985), “Co-operation of India”, Sahitya Bhavan, Agra.

3. Sharda V. (1986), “Theory of Co-operation”, Himalaya Publishing House,

Mumbai.

4. Shrivastava, Mohan and Singh, Jaishankar (2008), “Dairy Development in

New Millennium”, Deep and Deep Publications, New Delhi.

5. The Amul Story, A Saga of Co-operative Effort, The Kaira District Co-

operative Milk Producers’ Union Limited, Anand, Gujarat.

6. Venkatasubramanian. V, Singh A. K. and Rao SNV. (2003), “Dairy

Development in India (An Appraisal of Challenges and Achievements)”,

Concept Publishing Company, New Delhi.

7. Wilfred Candler, Nalinikumar (1998), “India: The Dairy Revolution, The

Impact of Dairy Development in India and World Bank’s Contribution”, The

World Bank, Washington, D.C.

Journals

1. Reddy, B. Parameswara (2010), “Growth and Trend Discerning of Indian

Dairy Industry”, Asia Pacific Journal of Social Sciences, Vol. II, No.2, June-

December, pp.105-125.

2. Ambhore, Shanker (2010), “Dairy Co-operative: An Overview”, Journal of

Shodh Samiksha Aur Mulyankan, September, Vol. II, No.20, pp.18-19.

3. Jatakia, Tushar D. (2006), “Analysis of Productivity of Co-operative Dairy

and Milk Supply Units of Gujarat State”, Ph.D. Thesis, Saurashtra University,

Rajkot, November, pp. 119-124.

4. Bandyopadhyay, Manob Kanti (1996), “Dairy Co-operative and Rural

Development (With Special Reference to Comparative Study Between the

Kaira District Co-operative Milk Producers’ Union Limited and the

Himalayan Co-operative Milk Producers’ Union Limited”, Finance India, Vol.

X, No.2, June, pp. 406-411.

46

5. Shrivastava, Mohan and Singh, Jaishankar (2008), “Dairy Development in

New Millennium”, Deep and Deep Publications, New Delhi.

6. Shah, Tushar, Nagarbrahman D. and Shah, Janat (1992), “A Problem in Milk

Pricing by Indian Dairy Co-operative: Key Issues and Present Policies”,

Indian Dairyman, Vol. 45, No.8.

Websites

1. www.amuldairy.com

2. www.sumul.com

3. www.panchamrutdairy.org

4. www.banasdairy.coop

5. www.sabardairy.org

6. www.dudhdhara.coop

Annual Reports

1. Annual Reports of Kaira District Co-operative Milk Producers’ Union Ltd.

2. Annual Reports of Surat District Co-operative Milk Producers’ Union Ltd.

3. Annual Reports of Valsad District Co-operative Milk Producers’ Union Ltd.

4. Annual Reports of Panchmahal District Co-operative Milk Producers’ Union

Ltd.

5. Annual Reports of Banaskantha District Co-operative Milk Producers’ Union

Ltd.

6. Annual Reports of Sabarkantha District Co-operative Milk Producers’ Union

Ltd.

7. Annual Reports of Bharuch District Co-operative Milk Producers’ Union Ltd.

8. Annual Reports of NDDB.

9. Annual Reports of GCMMF.

http://www.amuldairy.com/

http://www.sumul.com/

http://www.panchamrutdairy.org/

http://www.banasdairy.coop/

http://www.sabardairy.org/

http://www.dudhdhara.coop/

1.1 Dairy Industry: An Overview -...

Documents

Transcript of 1.1 Dairy Industry: An Overview -...