August 25I 2019 I BUSINESS TODAYI 73government supplies milk to mid-day meals, the cooperative can procured
more milk and that will reduce its overhead costs. “(Plus), it would have been a
permanent marketing source for us. We have to pay more to our farmers and
also find new options to market,” says Mishra of OMFED. The cooperative
pays `26 to its farmers. They could pay more, she adds, if they procure 1-1.2
million litres per day. For that they need higher subsidy from the government.
Being Bossy
Brand Amul is fondly called the Taste of India and is an immensely respected
brand. But this does not extend to its parent, GCMMF, whose expansion into
other states has drawn f lak.
Amul, with procurement of 24 million litres per day, has excess milk, which
it is selling in other states. It is also sourcing milk in those states. In West Ben-
gal, for instance, it procures 3,00,000-4,00,000 litres per day and carts the
remaining from Gujarat, which has made it the leading brand in the state. “By
paying the farmer immediately, we have won the farmer’s trust in West Bengal.
This is important for a successful dairy cooperative business,” says Sodhi.
Srikumar Misra, Founder of Odisha-based start-up, Milk Mantra, feels
that new age dairy entrepreneurs who are focusing on bringing efficiency to
the entire dairy value chain are not being adequately supported and that Amul
has got a disproportionate amount of government support, which is turning
out to be a dis-service to the dairy sector in underdeveloped regions. “Amul has
created such an over-supply in Gujarat that this milk is taken to several regions
across the country. This impedes the growth of fresh milk consumption and
growth in localised sourcing, impacting the income of local farmers.” he says.
A senior dairy industry expert alleges that Amul doesn’t give the same in-
centives, such as bonus during festivals, to its farmers in other parts of the
country as it does in Gujarat.
Mishra of OMFED says by allowing the likes of Patanjali and Amul to sell
milk in Odisha, the state government is curbing the growth of the state coop-
erative. “Our state is capable of 4.2 mil-
lion litre procurement per day. Then
why are we allowing Amul and Patan-
jali to sell milk here?” she questions.What Next?
The Indian dairy cooperatives need ur-
gent reinvention in order to say af loat.
“It’s high time the cooperatives work
like a business organisation,” says Ku-
mar of Lactalis India.
The central government also needs
to look more seriously at dairy as a
source of employment for rural India,
in addition to agriculture. Though the
new central government has formed
a Ministry for Animal Husbandry,
Kumar of Lactalis India believes that
dairy should be a separate ministry. “In
the next 10 years, the dairy sector can
provide 1.2 crore jobs. Every 1,00,000
litre of milk creates 6,000 jobs and
one can earn `5,000-6,000 per month
from this,” says Sodhi.
The dairy sector in India is vast and
has political and social implications.
Any solution will have to tackle these
factors as well.@ajitashashidharPRIVATE PLAY
Private players are looking to grow at
the cost of cooperativesLactalis India
is the largest private dairy com-
pany – revenue of `4,000 crore.
It has acquired Tirumala Dairy
(Chennai), Anik (Indore) and
Prabhat Dairy (Maharashtra)Companies such as Parag
Milk Foods, Godrej Agrovet,
Nestle, Britannia and a host of
regional private players such
as Milk Mantra and Milky Mist
are also in the frayParag Milk Foods
is a `2,000 crore business
while Godrej Agrovet’s dairy
arm, Creamline, is around
`1,300 croreLatest entrant
is the world’s biggest dairy
company, Fonterra, in part-
nership with Future GroupAll private players are in an
investment mode, as setting
up milk procurement infra-
structure and then convert-
ing the milk into value-added
products takes a long timeMost are struggling to
make money, but with
better investment on
innovations and technology,
are poised to overtake
the cooperatives