Business Today – August 25, 2019

August 25 I 2019 I BUSINESS TODAY I 71

The partnership eventually had to be called
off as a public-private partnership didn’t
make sense.
“The dairy sector needs continuous in-
vestments but the government never allowed
us to make those investments. If elections
were round the corner, they wouldn’t allow
us to increase milk prices. It was tough,” says
a former employee of Metro Dairy.

Political Bickerings
Maharashtra’s Mahanand dairy was one of
the pioneers of the dairy cooperative move-
ment in the 1940s, but is unfortunately now
one of the worst run. In the last two decades,
it has split into several smaller s, manned by
various political parties. Unlike Amul, which
has a milk union in every district, Maharash-
tra has six-seven unions per district, and each has
its own chairman, staff and brand. According to an industry expert, the state
has over 200 cooperative milk brands — among the big ones are the Kolhapur
Union, which sells under the brand name Gokul, and the Pune Union, with the
brand Katraj. In fact, Gokul sells more milk (5,00,000-6,00,000 litres) per day
in Mumbai than Mahanand. “Maharashtra is a classic example of a disjointed
political system. Milk union leaders break off due to political ideologies and form
smaller unions with their loyalists. Mahanand hasn’t been able to do anything
about it,” explains a senior dairy industry executive.
There is also the matter of money. While other state cooperatives pay upwards
of 26 per litre of milk, Maharashtra is known to pay about21 per litre.
Apart from this, despite having multiple brands, most of these milk unions
do not convert their milk into value-added products. They convert milk into
skimmed milk products and sell to private dairy companies. So, when milk
powder prices crash, the state gets affected the most. Maharashtra also has the
highest number of private dairy companies like Schreiber Dynamix (which co-
packs for brands such as Laughing Cow, Britannia and now Fonterra), Parag
Milk Foods and others. But Amul sells the highest quantity of milk here; the likes
of Nandhini and Mother Dairy (Delhi) are also present.
In Uttar Pradesh, political fighting led to the government completely over-
looking the interests of the state-run cooperative, Parag. In fact, during 2002-
07, the state cooperative sold most of its procurement to Mother Dairy (Delhi).
Thereafter, instead of revamping its own cooperative, the government promoted
Amul, which has set up plants in Varanasi, Kanpur and Lucknow. “This demor-
alised Parag and the cooperative has been virtually destroyed,” shares an expert.
“Politics is a speed breaker for our growth,” admits Rakesh Singh, Managing
Director, Karnataka Milk Federation. He believes that Nandhini (which pro-
cures 8.4 million litres of milk per day) would have easily overtaken Amul had it
not been for politics. “The office of the chairman of most dairy cooperatives has
become an extension of their political office,” he says. Dairy cooperative elections
are often marred by incidents of kidnapping of candidates, or voters being taken
on expensive junkets.

Leadership Challenge
When GCMMF was established, the vision was to set up a farmers’ organisa-
tion managed by professionals. “He (Kurien) ensured that political parties or
state government had no role to play in the day-to-day operations,” says Rahul
Kumar, CEO, Lactalis India. However, only Amul has professional leadership.
The heads of most cooperatives are bureaucrats who are in the role for not more
than one-two years at a stretch and have limited understanding of the sector.

The Orissa Milk Federation (OM-

FED), for instance, at one point had

two to three managing directors in a

single year. “We don’t have a full time

MD, hence, the dairy sector doesn’t get

the attention it needs. Our MD is the

animal husbandry secretary and water

resources secretary and he has no time

for dairy,” says Sarojini Mishra, Chair-

person, OMFED.

GOT IT RIGHT

R.S. SODHI, MD, Amul

The Gujarat Cooperative

Milk Marketing Federation

(Amul) is the biggest dairy

cooperative in India

REVENUE:

`32,000 crore

Has a network of

3.6 million farmers

Is run by professional

management

A three-tier structure

establishes a direct

linkage with farmers

without middlemen

Milk producers (farmers)

control procurement, pro-

cessing and marketing

Has a long-term strategy

Is a distribution powerhouse;

also buys and supplies

milk in other states

Has many value-added

products

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