Business Today – August 25, 2019

CORPORATE > DAIRY COOPERATIVES

70 I BUSINESS TODAY I August 25 I 2019

WHAT AILS DAIRY COOPERATIVES?

Around 35% of the milk produced in India comes

from the organised sector. The cooperatives

used to dominate the organised milk market,

but in the past six-seven years, there

has been a shift. The private

dairy companies are

collecting 16-19% of the milk,

while cooperatives’ collection

has dropped to 15-16%.

Lack of stable leadership: Most dairy

cooperatives are headed by bureaucrats

who hold the position for just one-two

years, and often don't have an under-

standing of the nuances of the

business

Political interference:

Dairy cooperatives of

most states are used

by political parties as

vote banks

Unprofessional: Most

dairy cooperatives

are unable to attract

professional talent

Overdependence on

subsidies: Dairy coop-

eratives run on the back

of government subsi-

dies, but most of them

are able to make profits

Lack of marketing

focus: The state

cooperatives have no

vision of converting

the milk into

value-added products

and branding them

WEAK LINKS

Barring Amul (GCMMF),

Nandhini (Karnataka

Milk Federation),

Saras (Rajasthan Milk

Federation), Sudha

(Bihar Milk Federation)

and Mother Dairy,

the rest are struggling.

24

million litres

8.7 GCMMF

million

litres

Nandhini

1.7-3

million litres

Saras, Sudha

and Mother

Dairy

300,000-600,000

litres

Odisha Milk Fed-

eration, Mahanand

Maharashtra

MILK COLLECTED PER DAY

bitions of becoming the GCMMF chairman. Since he was backed by the Con-
gress, he wasn’t favoured by the ruling BJP. This ref lected in the union’s balance
sheets, milk procurement decreased, the federation didn’t pick up its products
and it landed in severe debt,” says a senior dairy expert, not wanting to be named.
Politics has torn apart the dairy cooperative fabric across the country. Dr Ver-
ghese Kurien, the father of the White Revolution, had envisioned dairy coopera-
tives as farmer organisations led by a team of professional managers whose role
would be to connect the farmers to the market. His vision has sadly eroded. Of
the 187 million litres of milk procured per day in India, 30 per cent is procured
by the organised sector – half by cooperatives and half by the private sector. A de-
cade ago, less than 10 per cent of the organised sector comprised private players.
There were around 175 cooperative milk unions a decade ago; this has dropped
to 145. Barring Amul (GCMMF), Nandhini (Karnataka Milk Federation), Saras
(Rajasthan Milk Federation) and Sudha (Bihar Milk Federation), which have
consistently increased milk procurement and processing, the others have failed
to grow.
Mahanand, the dairy federation of Maharashtra, for instance, used to pro-
cure close to 3-3.5 million litres of milk per day in its heydays, but its procure-

ment over the last decade has dipped

to just 3,00,000-4,00,000 litres per

day. Similarly, about 20 years ago,

Parag (Uttar Pradesh) used to be the

third biggest dairy cooperative in the

country, collecting close to 1.5-2 mil-

lion litres of milk per day. But today

it barely collects 3,00,000-4,00,000

litres a day. It has 10 dairy plants

across the state, but most are lying

unused. States such as West Bengal,

Odisha and Jharkhand have been un-

able to increase their procurement

beyond 2,00,000-6,00,000 litres

per day for the last few decades. West

Bengal’s dairy federation had part-

nered with the private dairy company

Metro Dairy between 1992 and 2017.