AMUL & India’s Dairy Sector

Context - Gujarat Cooperative Milk Marketing Federation turns 50.

Brief History in background:

• Amul Milk Union Limited or  Amul India got established on 19 December 1946 in the town of Anand in Gujarat in India. 
• It was a move against the brokers and agents who arbitrarily determined the milk prices and exploited the milk producers. Polson, another dairy company, was dominating the business! The government had given the company control in the work of collecting milk from Kaira and supplying it to Mumbai and its sub-areas. Polson brought the milk at low rates from the farmers.
• These unfair trade practices made the farmers very angry! In the year 1942, Sardar Patel had also pointed out the ulterior motives of Polson and the British government in a letter
• The angry farmers went to their local leader Shri. Tribhuvandas Patel. Together they approached Sardar Vallabh Bhai Patel. Sardar Patel advised the farmers to set up a cooperative (Kaira District Co-operative Milk Producers Union) and supply milk directly to the Mumbai milk division, not Polson. He asked Morarji Desai, another Congressmen and freedom fighter, to organize the milk farmers. 
• Pasteurization unit was started at Anand. Kaira district cooperative. Anand milk producer union limited (AMUL) was formed at Anand in 1946. 
• Union set up milk cooperative societies in every village that would buy milk from farmers twice a day
• The cooperative was further led by Dr. Verghese Kurien and H.M. Dalaya. Dalaya's ingenuity of creating skimmed milk powder using buffalo's milk, for the very first time and later putting it into commercial scale with Kurien's assistance created an early modern-day dairy in the cooperative in Anand (Gujarat). 
• National dairy development board was setup and Kurien was appointed as its head. It was the start of white revolution (operation flood).
  • Phase 1 – 1970-1980 – 4 metropolitan cities were connected
  • Phase 2 – 1980 – 1985 – 43000 cooperatives and 4.5 mn farmers joined. Raksha vaccine for cattle health was introduced. 
  • Phase 3 – 1985 – 1990s – 10 mn farm families -> 2.5 crore ltrs of milk per day

A three-tier Model of Amul

Amul is an amazing organization that is simple and yet awe. It operates on a three-step method which ensures that each body performs its function efficiently. The three tiers are:

• Village Dairy Cooperative Society Every manufacturer is a member of the cooperative village which is a manufacturer's community.
• District Milk Unions -Village Dairy Cooperative Society members elect their representatives which collectively forms the District Milk Union.
• State Milk Federation-The State Milk Federation is responsible for the distribution and sale of milk products on the market.

Snapshot of India’s dairy sector

• Dairy sector contributes one-fourth of total income generated in agriculture sector and this share has been rising. 
• Per capita production of milk in India has now exceeded the recommended dietary allowance (RDA). 
• India is the largest milk producing nation in the world with one-fourth of global production.  
• Per capita absorption of milk and milk products has almost doubled during the last 20 years. 

Challenges in India’s Dairy sector:

• International market share: Despite being the top producer, India’s share of milk and dairy products in global dairy export is less than 1% as compared to other exporters such as Germany (14.4%), New Zealand (12.9%), Belgium (7.6%), Netherlands (6.69%) and France (6.65%). India faces tough competition with other global players regarding sanitary standards and certification difficulties, particularly in developed markets. 
• Low productivity: India’s productivity per animal is very low. The significant reasons are limited availability and affordability of quality feed and fodder, traditional feeding practices, lack of veterinary, limited supply of quality animals, and ineffective cattle and buffalo breeding programs.
• Production Inefficiency: Inadequate farm management, Inadequate access to finances, lack of affordable technology, and access to information led to low production efficiency in India.
• Safety and Quality issues: India faces quality issues due to contaminated water, milk adulteration, use of pesticides, mycotoxins, heavy metals, and veterinary drugs.
• Cold chain infrastructure: –There is a lack of required infrastructure of chilling plants and bulk coolers to prevent contamination and spoilage at village level. 
• Power availability:- Many chilling plants suffer due to shortage of electricity and do not run optimally leading to poor quality and shelf life of milk. 
• Quality testing infrastructure and trained work force:- Adequate quality testing infrastructure is not available at milk collection centres. The problem is compounded by the lack of trained manpower to undertake quality testing. 
• Increased emission of greenhouse gases by ruminants: Doubling population of female bovines means GHG emissions by dairy animals has doubled in the last 50 years. 
• High antibiotic usage in dairy sector: Chemicals are indiscriminately used in commercial dairy which adversely affects quality of livestock and milk. Urine and dung of animals with chemicals affects soil microbes

Way Ahead?

• Investments in milk value chain and tapping markets of high-end developed countries.
• Milk as a solution for nutritional deficiency: Milk should be promoted as a critical input for addressing nutritional deficiency and improving health outcomes in India, especially in children & women.  
• Export competitiveness & FTAs involving milk: India’s domestic milk industry is opposed to FTAs that involves liberalisation of trade (import) in dairy products. If India wishes to capture overseas dairy markets than our milk industry needs to export competitive. Thus, India’s dairy industry needs to increase its competitiveness and confidently compete with imports and export markets. 
• Milk valued added products: Focusing on exports of milk value added and processed products rather than liquid milk alone. 
• Milk Quality: Compliances with high sanitary & phyto-sanitary standards of countries particularly in developed markets.
• Livestock health: Steps to promote vaccination and disease free areas like foot mouth disease free areas, as some developed countries require this.
• Adopting food systems approach: Integrated livestock and crop systems are organised in a complementary and in synergy. India’s agriculture is transitioning to natural & organic farming for this animal dung and urine are critical inputs. Using by-products from dairy to produce organic & bio-inputs is a win-win for both dairy and crop sector. 
• Dairy pricing: Currently, fat content in milk is the sole criteria for pricing of milk. There is a need to develop measurements and standards around other traits like solid-not-fats in milk. 
• Sustainability of dairy sector: There is a need to monitor the presence of antibiotics and other chemicals in milk and check it.