DAIRY COOPERATIVES IN INDIA

It was in 1904 when the seed of cooperation was sown in India with the passage of
first Cooperative Act. Since then, the cooperative movement has made rapid strides in
all fields of socio-economic activities. In the fields of agriculture credit, fertilizer
disbursement, sugar production, handloom, etc, the cooperatives have created a
strong niche. However, the contribution of cooperatives to Indias dairy industry is
enormous. The cooperatives have ushered in milk revolution in the country.

The dairy industry has made India proud in recent times. India is the leading producer
of milk in the world. Dairy cooperatives are the backbone of Indian dairy industry.
Dairy cooperatives have

excelled in their areas of cooperatives. The figures justify this. When the cooperative
dairy movement was started, the daily per capita milk consumption was 106ml. Today,
it is 250ml or 90 kg per year. Milk is the country's number one agricultural commodity.
The estimated value of milk to producers, most of them marginal, small, and landless
is more than $20.

What is the reason for success of dairy cooperatives? The reason is simple. It is
empowerment. These cooperatives are not controlled by the government. The
farmers own and manage them based upon the needs and demands of the
community. The germs of milk revolution were laid down way back in 1946 in a small
town called Anand in Western India.

Tired of exploitation by traders and local private dairy, the milk producers organized
themselves into village dairy cooperatives. These cooperatives federated into the
Kaira Milk Producers Union. Soon it had its first dairy plant. It started producing and
marketing milk products under the brand name Amul. Under the charismatic
leadership of V. Kurien, the father of milk revolution, the Amul model of cooperatives
soon became an example for others to emulate. The government wanted the Amul
model to be replicated in other parts of the country. Its own controlled dairy
cooperatives had failed. Amul is today the most popular brand of milk.

Operation Flood the worlds dairy development program inspired by the Amul model
and implemented by National Dairy Development Board- was implemented in three
phases in the country between 1970 and 1996. Milk was collected daily by village
dairy cooperatives and sent to milk producers' unions who sold it as liquid milk and
processed products through their federal marketing

cooperatives. The Operation Flood Program has had a tremendous impact. There has
been rapid growth in Indias milk production, around 4 to 5 percent annually.

The Operation Flood Program has also contributed to the socio-economic

development of rural milk producers. It has made the poor less poor. It has also
established an effective partnership between farmers and professionals in the dairy
industry. The professionals use the latest technologies in the dairy industry, based
upon clear-cut assessment of the situation. No doubt dairy cooperatives are the most
professionally managed sector of the Indian cooperatives.

The de-licensing of the dairy industry has not threatened dairy cooperatives. They
seem to march ahead despite the entry of the private sector and multinationals. Amul
has overtaken others in the ice-cream market. Britannia has been forced to withdraw
from the liquid milk market in many parts of the country. The biggest strength of dairy
cooperatives is their labour intensiveness. Cost effectiveness is another important
factor. Dairy cooperatives have effectively used the toil of farmers to develop self-
reliance. It is unique. The future is indeed bright for dairy cooperatives.

National Co-operative Dairy Federation of India

The NCDFI was registered in 1970 under the Multi State Cooperative Societies Act,
1984. Its primary objective is to facilitate the working of dairy cooperatives through
coordination, networking and advocacy. Important activities of the NCDFI are
coordinating the sale of different products by its members to the Ministry of Defence and
other institutions, management of Rail Milk Tankers, coordinating the sale of frozen
semen doses and farm produce of the Sabarmati Ashram Gaushala, providing support
to members and affiliated organisations in computerising their operations and
information systems and offering other need based services to members. The NCDFI
also functions as a representative of its members on different bodies including the
National Cooperative Union of India and the International Cooperative Alliance.

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 mil products' market. The dairy industry in India has been witnessing
rapid growth. The liberalized economy provides more opportunities for MNCs and
foreign investors to release the full potential of this industry.

The main aim of the Indian dairy industry is only to better manage the national
resources to enhance milk production and upgrade milk processing using innovative
technologies.

Potential for investment in the dairy industry

Some areas of Indian dairy industry can be toned up by the evocation of differentiated
technologies and equipment from overseas. These include:
1. Raw milk handling: The raw milk handling needs to be elevated in terms of
physicochemical and microbiological properties of the milk in a combined
manner. The use of clarification and bactofugation in raw milk processing can
aid better the quality of the milk products.
2. Milk processing: Better operational ratios are required to amend the yields and
abridge wastage, lessen fat/protein losses during processing, control production
costs, save energy and broaden shelf life. The adoption of GMP (Good
Manufacturing Practices) and HACCP (Hazard Analysis Critical Control Points)
would help produce milk products adapting to the international standards.
3. Packaging: Another area that can be improved is the range of packing machines
for the manufacture of butter, cheese and alike. Better packaging can assist in
retaining the nutritive value of products packed and thus broaden the shelf life.
A cold chain distribution system is required for proper storage and transfer of
dairy products.
4. Value-added products: There's vast scope for value-added products like
desserts, puddings, custards, sauces, mousse, stirred yoghurt, nectars and
sherbets to capture the dairy market in India.
The Indian dairy industry has aimed at better mananamegemt of the national resources
to enhance milk production and upgrade milk processing involving new innovative
technologies. Multinational dairy giants can also make their foray in the Indian dairy
market in this challenging scenario and create a win-win situation for both.
India's Milk Product Mix
Fluid Milk 46.0%
Ghee 27.5%
Butter 6.5%
Curd 7.0%
Khoa (Partially Dehydrated Condensed Milk) 6.5%
Milk Powders, including IMF 3.5%
Paneer & Chhana (Cottage Cheese) 2.0%
Others, including Cream, Ice Cream 1.0%
 • The country is the largest milk producer all over the world, around 100 million
MT
• Value of output amounted to Rs. 1179 billion (in 2004-05) (Approximately equals
combined output of paddy and wheat!!)
• 1/5thof the world bovine population
• Milch animals (45% indigenous cattle, 55 % buffaloes, and 10% cross bred
cows)
• Immensely low productivity, around 1000 kg/year (world average 2038 kg/year)
• Large no. of unproductive animals, low genetic potency, poor nutrition and lack
of services are the main factors for the low productivity
• There are different regions – developed, average, below average (eastern
states of Orissa, Bihar and NE region) in the dairy industry.

Amul
Type : Cooperative

Founded: 1946

Headquarters: Anand, India

Industry: Dairy

Revenue: $868 million USD (06-07)

Employees: 2.41 million milk producers.

HISTORY

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food

products marketing organisation. It is a state level apex body of milk cooperatives in
Gujarat 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

Amul (Anand Milk-producers Union Limited), formed in 1946, is a dairy cooperative

movement in India. The brand name Amul, sourced from the Sanskrit word Amoolya,
means priceless. It was suggested by a quality control expert in Anand. It is a brand
name managed by an apex cooperative organisation, Gujarat Co-operative Milk
Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.41 million
milk producers in Gujarat, India[1]. It is based in Anand town of Gujarat and has been a
sterling example of a co-operative organization's success in the long term. The Amul
Pattern has established itself as a uniquely appropriate model for rural development.
Amul has spurred the White Revolution of India, which has made India the largest
producer of milk and milk products in the world. It is also the world's biggest vegetarian
cheese brand [2].

Amul's product range includes milk powders, milk, butter, ghee, cheese, curd,
chocolate, ice cream, cream, shrikhand, paneer, gulab jamuns, basundi, Nutramul
brand and others.

Situation of farmers

Over five decades ago, the life of an average farmer in Kheda District was very much
like that of his/her counterpart anywhere else in India. His/her income was derived
almost entirely from seasonal crops. The income from milk buffaloes was
undependable. Milk producers had to travel long distances to deliver milk to the only
dairy, the Polson Dairy in Anand – often milk went sour, especially in the summer
season, as producers had to physically carry milk in individual containers. Private
traders and middlemen controlled the marketing and distribution system for the milk.
These middlemen decided the prices and the off-take from the farmers by the season.
As milk is perishable, farmers were compelled to sell it for whatever they were offered.
Often, they had to sell cream and ghee at throw-away prices. In this situation, the
private trader made a killing. Moreover, the government at that time had given
monopoly rights to Polson Dairy (around that time Polson was the most well known
butter brand in the country) to collect milk from Anand and supply to Bombay city in turn
(about 400 kilometers away). India ranked nowhere amongst milk producing countries in
the world in 1946. Gradually, the realization dawned on the farmers with inspiration from
then nationalist leaders Sardar Vallabhbhai Patel (who later became the first Home
Minister of free India) and Morarji Desai (who later become the Prime Minister of India)
and local farmer, freedom fighter and social worker Tribhovandas Patel, that the
exploitation by the trader could be checked only if they marketed their milk themselves.
Amul was the result of the realization that they could pool up their milk and work as a
cooperative.

AMUL BUTTER : ‘UTTERLY BUTTERLY DELICIOUS’

AMUL BUTTER was the first product which was officially launched by AMUL in 1945.
It has been a market leader during the last 4 decades.

AMUL BUTTER is made from Butter, Common Salt, permitted natural colour- Annatto

Composition:

Milk Fat 80%

Moisture 16%

Salt 2.5%

Curd 0.8%

Calorific Value:

720 kcal./100g

Special Features:

Made from fresh cream by modern continuous butter making machines. Marketed in
India since 4 decades.

Product Specification:

Meets AGMARK standard and BIS specifications No.IS:13690:1992

PRICE: Amul Pricing Strategies

At the time Amul was formed, consumers had limited purchasing power, and modest
consumption levels of milk and other dairy products. Thus Amul adopted a low-cost
price strategy to make its products affordable and attractive to consumers by
guaranteeing them value for money.
Despite competition in the high value dairy product segments from firms such as
Hindustan Lever, Nestle and Britannia, GCMMF ensures that the product mix and the
sequence in which Amul introduces its products is consistent with the core philosophy of
providing butter at a basic, affordable price to appeal the common masses. This helped
AMUL BUTTER to create its brand image in the household sector of the society.

Rs.122 Rs.25

PLACE: A Global Distributor

GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading
House" status. GCMMF has received the APEDA Award from Government of India for
Excellence in Dairy Product Exports for the last 9 years.

Currently Amul has 2.41 million producer members with milk collection average of 5.08
million litres/day. Besides India, Amul has entered overseas markets such as Mauritius,
UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South
African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now
it has fresh plans of flooding the Japanese markets [6]. Other potential markets being
considered include Sri Lanka.

PROMOTION: Initial Promotional Strategy

The butter, which had been launched in 1945, had a staid, boring image, primarily
because the earlier advertising agency which was in charge of the account preferred to
stick to routine, corporate ads. They didn’t help in creating a brand image of AMUL
butter which was their then motive. The image they presented was, well, boring.
A brand - Amul – A Taste of India

However, in 1966, a man named Sylvester daCunha, from the ad agency of ASP, took
over the Amul account. And in 1967 it began, innocently enough. In India, food was
something one couldn't afford to fool around with. It had been taken too seriously, for
too long. Sylvester daCunha decided it was time for a change of image.

Scott Bradbury, the marketing genius behind Nike and Starbucks, once said “ A great
brand is a story that is never completely told. A brand is a metaphorical story that’s
evolving all the time. Stories create the emotional context people need to locate
themselves in the larger experience” He could easily have been talking about the Amul
moppet.

The moppet who put Amul on India's breakfast table

The year Sylvester daCunha took over the account, the country saw the birth of a
campaign whose charm has endured fickle public opinion, gimmickry and all else. The
Amul moppet, the little girl who created a home in the hearts and minds of millions and
millions of Indians. No easy task. And to be there for almost 34 years!

Call her the Friday to Friday star because Every Friday, since 1967, this little girl
appears at billboards, strategically placed all over India, focusing on the item of the
week – tongue in cheek, of course. Round eyed, chubby cheeked, winking at you, from
strategically placed hoardings at many traffic lights. She is the Amul moppet everyone
loves to love (including prickly votaries of the Shiv Sena and BJP). How often have we
stopped, looked, chuckled at the Amul hoarding and product wrappers with the equally
recognisable tagline Utterly Butterly Delicious Amul that casts her sometime as the coy,
shy Madhuri, a bold sensuous Urmila or simply as herself, dressed in her little polka
dotted dress and a red and white bow, holding out her favourite packet of butter.

There are no boundaries and nothing is off limits. From the political scene, to
entertainment, from local news to international, from sports to stars, she has a line for
everything. Often said to be playing the role of a “social observer with evocative humor”,
the billboards became, and still are, a topic of conversation amongst millions. With their
“hing-lish” (a combination of Hindi and English) punch-lines, they have won the
maximum number of awards in India for any ad campaign ever! This little thumbalina,
seems to have the masses, right where she wants them – wanting more of her and of
Amul. No other brand comes close to what Amul has been able to accomplish.

ADVERTISING

Its advertising has also started using tongue-in-cheek sketches starring the Amul baby
commenting jovially on the latest news or current events. This formed a large chunk of
the collective memory of us Indians. We grew with them as the ads grew with us. They
are quirky, poke fun at no one in particular and are pure eye-candy! We almost admire
the speed with which the ad-people come up with copy and illustration for the ads, that
change every few days!!

From the Sixties to the Nineties, the Amul ads have come a long way. While most
people agree that the Amul ads were at their peak in the Eighties they still maintain that
the Amul ads continue to tease a laughter out of them

The Amul ads are one of the longest running ads based on a theme, now vying for the
Guinness records for being the longest running ad campaign ever.

Where does Amul's magic actually lie?

Many believe that the charm lies in the catchy lines. That we laugh because the humour
is what anybody would enjoy. They don't pander to your nationality or certain
sentiments. It is pure and simple, everyday fun.
BRANDING

The first products with the Amul brand name were launched in 1955. Since then, they
have been in use in millions of homes in all parts of India, and beyond. There is
something more, though, that makes the Amul brand special and that something is the
reason for the commitment to quality and value for money. Amul is the brand name of 2
million farmers, members of 10,000 village dairy cooperative societies throughout
Gujarat. This is the heart of Amul, it is what gives strength to Amul, and it is what is so
special about the Amul saga.

The Amul Pattern has established itself as a uniquely appropriate model for rural
development. Amul has made India one of the largest milk producers in the world.

Amul, therefore, is a brand with a difference. That difference manifests itself in a larger
than life purpose. The purpose – freedom to farmers by giving total control over
procurement, production and marketing.

Our commitment to the producer and our contract with the consumer is the reasons we
are confident that cooperative brands, like Amul, will have an even bigger role to play in
the next fifty years.

MARKETING STRATEGIES

4 MAIN STRATEGIES

What goes into the ‘contract’ that is a brand name?

First is quality.

No brand survives long if its quality does not equal or exceed what the buyer expects.
There simply can be no compromise. That’s the essence of the contract. In the case of
a food product, this means that the brand must always represent the highest hygienic,
bacteriological and organoleptic standards. It must taste good, and it must be good.

Second, the contract requires value for money.

If our customer buys an Amul product, she gets what she pays for, and more. We have
always taken pride in the fact that while we earn a good income for our owners – the
dairy farmers of Gujarat – we don’t do it at the cost of exploiting the consumer. Even
when adverse conditions have reduced supplies of products like butter, we have
resisted the common practice of raising prices, charging what the market would bear.
Rather, we have kept prices fair and done our best to ensure that retailers do not gain at
the consumers’ expense.

The third element of the contract is availability.

A brand should be available when and where the customer wants it. There is no benefit
achieved in creating a positive brand image, and then being unable to supply the
customer who wants to buy it. In our case, over the years we have built what is probably
the nation’s finest distribution network. We reach hundreds of cities and towns through a
cold chain that not only ensures that our products are available, but they reach the
customer at the farthest end of the country with the same quality as you would find in
Ahmedabad or Vadodara.

The fourth part of the contract is service.

We have a commitment to total quality. But, occasionally, we may make a mistake – or,
our customer may think we’ve made a mistake, and the customer, as they say, is
always right. That is why, for Amul, every customer complaint must be heard – not just
listened to. And, every customer complaint must be rectified to the extent humanly
possible.

For close to fifty years now, Amul has honoured its contract with the consumer. The
contract that is symbolised by the Amul brand means quality. It means value for money.
It means availability. And it means service.

Amul v/s Mother Dairy

Gujarat Co-operative Milk Marketing Federation (GCMMF), marketing its products under
the Amul brand, has claimed to have surpassed milk sales of Mother dairy in Delhi in
branded packaged segment, where the latter has been market leader since long.
However, Mother dairy which is part of National Dairy Development Board (NDDB) has
refuted the claims of Amul, and said that it was still the number one brand in Delhi with
an average sale of 28-30 lakh litres per day.
"Amul milk sales crosses 15 Lakh litres a day in Delhi and NCR Market making it the
number one brand there in branded packaged milk segment," an official statement
issued by GCMMF said.
"With this achievement, Amul is now the leader in packaged branded milk segment in
top 3 metros that of Delhi, Mumbai and Kolkata," it added.
Spokesperson for Mother dairy said "Mother dairy remains to be leader in the branded
packaged milk segment in Delhi and it outsells its competitor by a margin of at least 100
per cent."
Incidentally, Amul is selling milk at price which is Rs 2 per litre higher than Mother Dairy
for full cream milk and Re 1 per litre more than Mother Dairy in Toned milk segment.

Mother Dairy turns the heat on Amul

2010-02-18 18:47:07

The fight for marketshare in the branded packaged milk segment has intensified in Delhi
and the National Capital Region (NCR) with Mother Dairy trashing Amul's claim that it is
the new leader in these areas. Mother Dairy says that it sells 2.8 million litres per day
and not 1.45 million litres per day, as indicated by Amul. The latter had said on February
16 that it was leading in the branded packaged or pouch milk segment in Delhi and
NCR with sales of over 1.5 million litres per day.
Amul claims to be no.1 in Delhi's branded packaged milk market
Paul Thacil, chief executive officer, (dairy & foods), Mother Dairy Fruit & Vegetable Pvt
Ltd, says that the brand's position is intact in its traditional markets of Delhi and NCR.
He says, "We understand the growing demand for milk and milk products in the region.
We will enhance our milk sales to 3 millon litres per day in the near term."
Amul is also looking to boost its milk sales to over 2 million litres per day this summer in
view of the growing demand in the region. The liquid milk market in the capital is over 6
million litres per day. This includes both packaged milk and loose milk.
Nigerian team to study Amul
Amul, according to R S Sodhi, chief general manager, marketing, Gujarat Cooperative
Milk Marketing Federation, operates in the packaged milk segment only in Delhi and
NCR. "We don’t play in the loose milk segment, which is also quite large at over 2.5
million litres per day in Delhi and NCR. Mother Dairy is the leader there.
One reason for Amul’s lack of presence in the loose milk segment in the capital is the
absence of its own milk booths there. Amul depends totally on 9,000 retail outlets in the
region to push sales there. Sodhi says that the cooperative is looking at enhancing its
retail presence in the capital to push up sales.
Danone dairy products to hit shelves by Dec
Mother Dairy meanwhile has a network of 14,000 retail outlets and 845 exclusive stores
to push sales. That clearly works to its advantage, say observers. "Mother Dairy has
been around for a long time in the capital. It has a strong distribution network which
ensures that milk delivery is not hampered," says an executive with a food & beverage
firm.
Amul, in contrast, entered the Delhi market in 2005 only. It has four dairies at the
moment in the region that pack milk for it. "There are no plans at the moment to
increase the number of dairies. We may take that call later," says Sodhi.
Even then Amul has been been looking at ways and means to increase its share in the
liquid milk market in different metros. The aim is to try and sustain its leadership position
in these areas. For instance, Amul is the largest player in the packaged milk segment in
Mumbai supplying 650,000 litres per day in the city. In Kolkata, the brand is at the top
again supplying 400,000 litres per day in the city.
Delhi has been one market however that hasn’t been easy to crack for Amul, given the
domination of Mother Dairy for over 35 years now. A strong network and retail
distribution has meant that Mother Dairy is competitively priced to Amul in the region. A
litre of Mother Dairy’s full-cream milk is available at Rs 2 less than Amul’s variant. A litre
of Mother Dairy’s toned milk, on the other hand, is even cheaper, available at Rs 22 to
Amul’s Rs 23.