Chapter-IV

Role of Dairy Cooperatives in Dairy Development

4.1 Introduction:

Organising dairy industry on cooperative lines has been an avowed policy of

the government of India. Because of their economic advantages, democratic character

and social purpose, cooperative organizations are considered as preludes for the all

round development of dairy industry. The cooperative sector, which balances the

interests of producers and consumers, is best suited for dairy development. In the

opinion of Dr.V.Kurien, the chief architect of Anand model “Only one institutional

structure has proven effective in getting dairy development done, that is unified

organization of producers which is responsible for procuring, processing and

marketing of members’ milk, owned and controlled by milk producers and therefore

responsive to prodecers’ need” (Kurien 46). The cooperative has the distinct

advantage of integrating the interests of small producers with the benefit of wooden

sophisticated tools and techniques of organization and management. Cooperative

institutions enjoy the goodwill, patronage and unstinted support from the community,

harmonise the interests of all concerned, the primary producers, consumers, the

community and the organization itself. They possess inherent potentialities and inbuilt

provisions to serve the cause of rural development. The tenth Dairy Industry

Conference endorsed the paramount position held by cooperative organizations in the

healthy growth of dairy industry in the country in the following words: “With a view

to enhance milk production effectively steps should be taken to develop this aspect on

cooperative lines. To bring in the necessary linkage and coordination between

production and marketing it should be ensured that all the necessary inputs should be
 88

canalized through one agency handling the milk from producers to consumers” (Dairy

India 1997 7).

The following are the advantages that accrue to the producers and consumers

through the cooperative form of organization.

i) It brings rural producers and urban consumers to direct contact eliminating

middlemen.

ii) It gives incentives to producers by providing assured market, remunerative

price, regular payment and yearly bonus out of profit.

iii) It gives scope for functional specialization and division of responsibility

between primary societies and the federations, the former concentrating on

production and the latter taking care of marketing.

iv) Payment made to producers on the basis of quality of milk ensures the supply

of unadulterated good quality milk.

v) All the needs of the producers like cattle feed, forage seeds, veterinary aid are

met by cooperatives themselves at the doors of the producers.

vi) Producers are educated in the latest knowledge on dairy farming through

cooperatives.

. vii) Government of India aids from other agencies are easily routed through

cooperatives.

viii) Milk producers, as members of cooperatives, can get loan from the financial

institutions easily for the purchase of milch animals.

ix) Cooperatives ensure involvement of milk producers in the management and

decision making and provide collective bargaining power to the producers.

x) Cooperatives provide scope for leadership development among milk producers

and are less susceptible for Government of India interference.

 89

4.2 Evolution of Dairy Cooperatives:

Efforts for organizing dairy industry and trade on cooperative lines were made

immediately after the enactment of Cooperative Societies Act 1912. Attempts were

made in different parts of the country to organize dairy societies. At the early stage,

three different types of dairy cooperatives were established by the consumers,

distributors and producers, though ultimately the producers’ cooperative found

patronage and encouragement. (1) Consumers’ societies were very few in number.

The Bumpur Cooperative Dairy, Bumpur near Asansol and the Ahmedabad

Cooperative Ghee Supply Society were the examples of this type of society. Such

societies purchase or hire lands, operate the dairy and supply milk to the members.

Basically, they are consumer owned organizations. But these types of societies did not

make any progress. (2) Distributors’ cooperatives were a rare phenomenon. In the

absence of either consumers’ or producers’ societies they rendered useful public

services. Though their object is the improvement of welfare of the distributors, they

incidentally aim at supplying better quality milk to the public than is ordinarily

available. The supply of milk would be made systematic, prompt and timely. One

such society was subsequently liquidated. (3) Producers’ cooperatives is the most

widely prevalent one in this country. They are called either milk supply societies or

milk producers’ societies. This type of society is the genuine organization of milk

producers and promotes the interests of the producers without affecting the

consumers’ interests. This kind has a greater growth potential. Since the beginning of

the First Five Year Plan the official policy has been to encourage the producers’

organization in this sector.

The dairy cooperative movement in the country has a fairly long history. The

Katara Cooperative Dairy Limited, Allahabad is probably the oldest existing dairy
 90

organization registered under the Cooperative Societies Act of 1912, The Calcutta

Cooperative Milk Union Limited was registered in 1919 after operating a number of

societies for two years. Milk is collected from member societies, pasteurized and

distributed through deliverymen paid on monthly basis. The milking is done in a

central place under the supervision of the society and is marketed to a private dairy.

The Madras Milk Supply Union came into being in 1927-28.

The Lucknow Cooperative Milk Supply Union was registered in 1938 as a

federation of primary societies. However real progress in the dairy cooperative

movement started only after the World War II. Phenomenal growth of towns and

cities and their growing milk demand also created a favourable climate for the

development of cooperatives. Many such societies and unions came into being

thereafter. These societies and unions were by and large producers’ organizations,

owned and controlled by milk producers. The isolated cases of consumers and

distributors organizations that we come across are nevertheless uncommon.

Immediately after achieving independence, the popular government of India

attached significance to the development of dairying so much that it played a key role

in dairy sectors’ advancement by keeping dairy industry in the priority list. It was also

felt necessary with a view to making the supply of milk on regular basis and secondly

for supplying gienically produced and moderately priced milk and milk products to

the consumers. Emphasis was laid on organizing dairies on cooperative lines for the

benefits of producers and consumers alike. Under the “Grow More Food” campaign

dairying on cooperative lines got a sudden fill up with all round support of the

government of India so much so that the government made the promotion of dairying

on cooperative basis as part of its developmental economic policies during various

Five Year Plans.

 91

The growth of milk cooperatives and their unions had been impressive during

the last 5 decades. The following table indicates the spectacular growth of dairy

cooperatives.

Table. 4.1 Dairy Cooperative Societies Organized (Anand pattern)

Region 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998-
90 91 92 93 94 95 96 97 98 99
North 21301 22126 21150 20787 21323 22069 23456 24661 26040 28015

East 4365 4364 4452 4573 4922 5065 5523 5468 5868 6323

West 17974 18580 19113 19520 20116 20854 21607 22014 23275 23670

South 17176 18345 19668 20946 21284 22228 22662 22719 22924 26660

Total 60816 63415 64383 65826 67645 70216 73248 74862 78017 81668

^Source : Dairy Cooperatives: Progress at a Glance-1998-99, Page-19

The number of dairy cooperative societies has increased from 60816 to 81668 during

the period 1989-90 to 1998-99. For the North zone the growth in the number of dairy

cooperative societies is 31.5% while for the East zone it is 33.8%. For the West zone

it is 31.6% and for the South it is 55.2%. Though the aggregate is maximum for the

North zone, the growth performance is the best for the South zone.
 92

Table 4.2 shows the number of farmer members in the dairy cooperative

societies in different zones of India

Table 4.2 Farmer members (Total): Zone wise.

Zone 1989-90 1990-91 1991-92 1992-93 1993-94
North 1202086 1239616 1249280 1291341 1291526
East 210120 222938 230631 235414 256626
West 2445344 2514222 2765987 2951157 303976
South 3145899 3404858 3771197 3967750 4162660
Total 7003449 7481634 8017095 8445662 8750538

Zone 1994-95 1995-96 1996-97 1997-98 1998-99

North 1339160 1411238 1467457 1530162 566359
East 268533 302410 312049 338553 369824
West 3139544 3283543 3378802 3467925 3505363
South 4377054 4437883 4583185 4695947 4775676
Total 9124291 9435079 9741493 10032587 10217222
*Source: Dairy Cooperatives- Progress at a Glance 1998-99, P-77

The total number of farmer members in the dairy cooperative societies has

increased from 7003449 to 10217222 during the period from 1989-90 to 1998-99.

Thus there is a 45.8% increase during this period. The number of women members has

more than doubled, from 1039978 in 1989-90 to 2092218 in 1998-99.

 93

Table - 4.3 Procurement of milk by DCS - Zone wise (000’ kg/day)

Zone 1989-90 1990-91 1991-92 1992-93 1993-94

North 1339.98 1260.15 1349.40 1723.25 1685.59
East 217.08 200.03 187.06 259.47 329.24
West 5124.28 5245.68 4833.31 5298.41 5356.91
South 3132.38 2996.29 3054.56 3469.89 3846.40
Total 9813.72 9702.15 9424.33 10651.02 11218.14

Zone 1994-95 1995-96 1996-97 1997-98 1998-99

North 1951.69 1826.02 2025.32 2287.11 2364.02
East 303.05 347.93 407.75 460.06 420.91
West 4983.89 5255.52 6218.74 6420.02 6489.50
South 3670.49 3656.82 3749.55 3903.92 4384.89
Total 10409.10 11086.29 12401.36 13071.11 13659.32
*Source : Dairy Cooperatives - Progress at a Glance 1998-99, P-137.

Rural milk procurement by the daily cooperative societies has increased from 9813.72

thousand kg/day to 13659.32 thousand kg/day during 1989-90 to 1998-99. The

growth performance of the zones are : North zone 76.42%, East zone 93.8%, West

zone 26.6% and South zone 39.9%. The milk procurement in the year 1998-99 is the

maximum for West zone and minimum for East zone.

4.3 The Anand Pattern :

The 2 tier structure of dairy cooperatives evolved by Kaira District

Cooperative Milk Producers’ Union Limited, popularly known as “AMUL” met with

great success. The Anand Union which started with a handful of members from 2

village milk producers societies and handled 250 litres of milk a day has grown into

gigantic organization. The pattern of working evolved by the Ananda Union has come

to be known as Ananda pattern. It is a philosophy and a method of organization

evolved over a period of experience with proven success. The various coordinates that
 94

go to make the system may be referred to as the “Anand Pattern”. In the last four

decades of its working, the Anand Union has evolved a system and has perfected it,

which is capable of being replicated elsewhere.

The important characteristics of the Anand Pattern are :

a) The structure of the Anand Pattern milk cooperatives consists of a two tier system

of the district cooperative milk producers’ union at the district level and the

village level. The village level societies are the grass root level organizations

which are federated to the district level unions.

b) It is entirely a producer owned organization. The management is in the hands of

the democratically elected leaders of the producers, which ensures member

participation and redressal of their grievances.

c) While organizing the society its potentiality for success and the economic viability

is properly assessed and ensured. Furthermore, the proposed society is allowed to

work for a period of 3 months before it is registered. Only if the society is proved

to be viable during this probationary period, it is recommended for registration.

d) Every society is constantly guided, supervised, rectified and controlled by the

union. Besides there is a continuous and concurrent audit of all societies on a

quarterly basis to ensure clean administration.

e) It provides a packet of technical inputs such as artificial insemination, cattle feed,

veterinary services to the members to enhance milk production. Such services are

provided at the doorsteps of the producers at an economical cost.

f) A scientific system of pricing milk has been evolved and the payment is made on

the basis of the fat and solid non-fat content of the milk, which is tested separately

for each producer. This provides encouragement for the supply of quality milk.
 95

g) A substantial part of the surplus earned by the society is paid back to the quality of

milk supplied during the year.

h) The Anand pattern societies do not encourage lending to the members. Neither

they undertake any lending operations nor do they stand as guarantors for any

financing agencies.

i) The societies undertake extensions, film shows, milk yield competitions etc.

j) After achieving financial stability and building up reserve the dairy cooperatives

undertake rural developments activities for the welfare of the members and the

general public by making contributions for schools, health centers, libraries,

electricity, telephone, road etc.

k) The full proof system of pricing and payment twice a day to the producers leave

no scope for misappropriation. The price of milk is determined and is paid on the

spot. This makes the account keeping up-to-date.

l) The secretaries of the village societies are trained in artificial insemination and

first aid.

m) The Anand Pattern societies do not undertake any significant local marketing.

These characteristicks of Anand Pattern are considered as their unique

features. The Anand Pattern Milk Producers’ Societies differ in several respects with

the traditional milk supply societies. The prominent among them are -

- The system of pricing and payment is on the basis of quantity in the traditional milk

supply societies whereas the quality is also taken into account in the Anand Pattern

societies

- The milking is done in the common milking yard of the society in traditional milk

supply societies. But it is done by the producers in the respective houses/farms in the

Anand Pattern.
 96

- The traditional societies are loan oriented, but the Ananda Pattern societies are not

so.

- The input programmes such as supply of cattle feed, AI, and veterinary aid are the

necessary ingredients of Anand Pattern, where as it is not so in the traditional type.

- There is an inbuilt intensive system to the producers in Anand pattern. As high as

50% of the net profit is ploughed back by way of bonus to members. Against this the

bonus paid in traditional societies is much less.

The pattern developed in Anand had all the potentialities to gather momentum

and spread into a popular farmers’ movement throughout the state of Gujarat and later

the Nation. The message of Anand Pattern spread like a wild fire and received with

great enthusiasm.

The factors responsible for the rapid growth of dairy cooperatives, as

identified by National Dairy Development Board are :

a) Felt need of the producers (it was not thrusted upon)

v

b) Bye-laws catering to the needs of the producers

c) Attachment and loyalty of the members to their milk society

d) Dedicated leadership with vision for service

e) Reduction in exploitation, uniform price for all, no cheating and assured payment

etc.

f) Sound relation between primary societies and union, and treading activities in

business like manner

g) Less dependence on personnel borrowed from government

h) Dividing line between policy workers and managers

i) Support of government and other institutes

j) Training and motivation to all concerned

 97

k) Job security to staff with good remuneration

l) Continuous contact with farmers by executors

m) Proper planning and fruitful implementation of plans

n) Sound management

o) Techno economic soundness

p) Less political interference

q) Readiness of people to accept new ideas

r) Effective supervision and control over primary societies.

s) Linking together of producers, processors, distributors and consumers

t) It is not government sponsored with Government Umbrella.

The Anand Model has proved to be a successful business proposition and an

agency for the development of dairy industry on scientific lines. It has come to be

established as the most effective institutional structure for dairy development. This

results in multiple benefits to the rural community. They are :

i) Rural people are benefited by the additional income they derive throughout the

year and their purchase power increases.

ii) It ensures better nutrition through the consumption of surplus milk products.

iii) The family labour which generally remains unemployed find gainful

employment.

iv) It reduces the rural poverty, particularly in drought prone areas.

Considering the potentialities of the Anand pattern dairy cooperatives to render

immense benefits to rural society, the late Prime Minister Shri Lai Bahadur Sastri

stressed the need for its replication.

 98

If we can transplant the spirit of Anand in many places, it will also result in

the rapid transformation of the socio-economic conditions of the rural areas and in our

achieving the objectives of a socialistic pattern of society.

One of the main objectives of project is the replication of Anand Pattern in its

different facets in various milk sheds of the country. Organization of producers’

cooperatives establishing dairies and chilling centers, providing A.I. facilities and

health cover to the animals of producers and to undertake the production enhancement

programmes like fodder development, supply of cattle feed and providing calf

subsidiary etc are the important steps introduced as the of Operation Flood

programme.

The replication of Anand Pattern actually started in 1970. The Operation

Flood programme and the World Bank project for dairy development, supply of

cattlefeed and providing calf etc. are the important steps introduced as the Operation

Flood programme. The Operation Flood programme and the World Bank project for

dairy development provided necessary fund for the task of organization of village

milk cooperatives, creation of milk unions, state diary development corporations,

establishment of dairy plants, cattle feed plants, training of personnel, procurement

and sale of milk, and provision of input services.

4.4 The Modus Operand! in Anand Pattern.

A farmer, after meeting the requirements of his family, supplies the surplus

milk to the nearby dairy cooperative society, twice a day both in the morning and

evening. Taking the quantity and the quality of the milk into consideration he is paid

by the society. The milk testing equipments are available at the society and proper

records are maintained by the secretary of the society. All the activities are monitored
 99

by an elected governing body of nine farmer members including the chairman and

two women members.

The society, after meeting the requirements of the village through local sale,

supplies the surplus milk to the District Milk Union. For this the Union sends hired

vans, twice a day, through its organized milk routes and touches all societies. The

societies which are inaccessible by road, head loaders are arranged to carry the milk

to the road points. Since milk is a highly perishable commodity, a very strict time

schedule is maintained. For any loss due to transport lapses the money is deducted

from the private transporters bill. Hence the societies are relieved of the anxieties after

delivering the milk to the milk vans in time.

The union, in turn, after procuring the milk through various milk routes,

immediately chills the milk at its chilling centers by reducing the temperature. As a

result the longevity of the milk is enhanced. If required, the union supplies the milk to

contiguous areas and sends the surplus milk to the dairies run by the federation.

The milk procured by the federation in its dairies is pasteurisied, homogenized

and standardized as per the specifications. It is also forfitfied with vitamin A and then

polypacked by automatic machines, before being distributed though urban outlets.

Apart from the remunerative price for the milk supplied, a farmer is provided

with various technical inputs through the society to increase the milk yield and reduce

the cost of production. This input includes preventary services, balanced pelleted

cattle feed at subsidized rate, free fodder seed minikits etc.

Thus the main aim of NDDB is to replicate the Anand pattern of dairy

cooperative system through the Operation Flood programme.

 100

4.5 Spread Effects of Dairy Cooperatives :

Dairy cooperatives are acclaimed as effective instruments for economic

upliftment of the rural poor as they provide opportunities for gainful employment and

income. The opportunities provided by dairy cooperatives for the easy sale of milk,

periodic payment and incentive bonus act as stimuli to the farmers to take up dairying

on a more permanent and regular basis, and on a little longer scale albeit, within the

framework of their farm size and investment and fodder resources. The unprecedented

regular cash flow injected into the rural economy by the dairy co-operative supplies a

new framework to the rural economy which in itself is an epoch-making event.

Increased adoption of dairying have resulted a metamorphosis and have led to some

desirable changes on the economy of milk producer-members of co-operatives.

4.5.1 Economic Benefits

Of all the benefits that accrue due to the development of dairy cooperatives, it

is the economic incentive yielding direct and tangible returns for the milk producers

which provided lasting solution to the dairy cooperatives. The benefits on the

producers’ households are varied and many, such as increase in the number of milch

animals owned, improvement in milk production, higher price, better income and

employment to the family members of the productive traits of the animals.

A study conducted in the institute of Cooperative Management, Ahmadabad

brought out the following economic impact of the dairy cooperatives :

i) The possession of wet animals by different categories of milk producers were

higher in the village served by cooperatives than in the villages which did not

have dairy cooperatives.

ii) The milk producers of dairy village obtained significantly higher milk yields

than of their counterparts in control villages not served by cooperatives.

 101

iii) The level of adoption of improved animal husbandry practices was

considerably superior in the village served by cooperatives.

iv) Dairy farming was the next important occupation in rural areas, which shared

about 27% of the total income of the villagers in the dairy village.

v) There was a significant improvement in the price received by the milk

producers of dairy village than that received at the control village.

vi) The dairy farmers of the dairy village obtained significantly higher income

than that obtained by their counterparts.

The above observations lead to the broad conclusion that the milk

cooperatives were instrumental in elevating the income of their milk producers who

had adopted dairying occupation for generation of income and gainful employment in

the rural areas.

4.5.2 Social Benefits

The social dimension of the benefits of cooperative dairying is intangible and

longterm in nature. It is this social dimension which renders the dairy cooperatives

more relevant to rural transformation than even the economic dimension.

1. Firstly it cuts at the very root, of the age old caste system, by providing means

for upward social mobility of the low caste milk producers and ex-untouchables.

2. The dairy cooperatives stimulate the desire for social participation of milk

producers across social and economic divisions. The traditional power politics

and group rivalry and ethnic conflicts are relegated to the background as a result

of the fact that the dairy cooperatives have injected into the rural people an

organization culture and a rational economic perceptions, which help them to

judge persons by their ability to run the milk cooperatives efficiently.

3. It is an instrument of ethnic reshuffle and a great social equalizer.

 102

4. The role of women in the traditional rural society is consistently undermined

and under-rated. The milk cooperatives make valuable contribution to enhance

the status of rural women.

5. Rural dairy cooperatives are an effective means to fight rural poverty. Poverty is

mostly confined to certain sections of the rural society who are in the lower

rungs of the social ladder. It is this section, which is largely benefited by the

milk cooperatives. Regular income from the sale of milk enlarge their

perception on saving and investment and enhances their level of aspirations.

6. The rural dairy cooperatives introduce the modem concept of organization and

democratic management of the villagers. This concept of organization and

management of an economic institution is applied to other facts of life and other

social and economic actions.

7. The perception of health and family planning changes vastly as a result of the

health care and veterinary services undertaken by dairy cooperatives. Their

expectations increase considerably and they show extraordinary interest in

family planning and small family norm, nutrition and health.

8. The dairy cooperatives have great education value to the rural masses. The

various education and extension media such as news letters, film shows,

demonstration act as constant sources of education and information. Various

procedures of dural and operational aspects of the dairy cooperatives also

expose the farmers to the new concepts of milk testing, pricing, processing and

to the system of accounting and maintenance of records.

Thus, the establishment of milk cooperatives act as catalysts for bringing

about a number of social change directly or indirectly. As aptly put by D.S

Thakur, “the milk cooperative has in it the seeds of an entire social revolution.
 103

Besides serving as effective instrument for milk production and marketing, these

cooperatives help to break down the barriers of caste, class and sex and to

stimulate interest in all worthy social services including literacy drives and

family planning. (Thakur 29)”

4.6 Conclusion:

For an all round development of dairy industry the importance of cooperative

structure cannot be ignored. This has been realized and recognized by the government

of India. This organisation benefits both producers and consumers as well.

Cooperative societies create a direct link between the producers and the consumers by

expelling the middlemen out. As a result, producers avail a sure market and get good

return for the milk. Cooperative societies also fulfill the need of the dairy farmers. It

makes the dairy farmers realize that the dairy business can definitely be a profitable

one.

Since the Independence, the government of India has been trying its level best

to drive the dairy sectors on cooperative lines. During the last five decades,

cooperative societies have achieved a remarkable progress. Till 1998-99, the total

number of dairy co-operative society has reached 81668 and the number of farmer

members 10217222.

So if we transplant the spirit of Anand, then it will help immensely in inviting

a welcoming change in the socio economic condition in the rural areas.

 104

References:

1. Dairy India 2002.

2. Kurien, V. The Larger Dimensions of Dairy Industry in India.

3. Thakur, D.S. Benefit of Milk Co-operative to Small Farmers and Landless in

Gujarat (Mimeographed).

4. Baxi, J.J., 1994, ‘Growth strategies for eo-operatives.’ Indian dairyman, April

issue 1994.

5. Bhogal, T.S. Singh, L.R., and Singh, I.P., 1994. ‘Sustainability of rural

employment and income through dairying and the role of assured market,1

therein. Ibid.

6. Mahadeven, A.P., 1994. ‘Milk marketing front by co-operative/organized

sector.’ Indian Dairyman, April issue.

7. Data source based on (or derived from) NDDB/OF data cited in the interview

with V. Kurien-published in Ind. Dairyman, August 94 issue, pp 493.

8. Deshpandey, D.V., 1994. ‘Achievements of dairy industry’ Indian Dairyman,

Oct issue, pp 603.

9. India Today, 1996. ‘White Revolution-Operation Flood,’ article appeared in

July 31, issue of the magazine.

10. Kurien V., 1994. ‘India is on the Threshold of achieving white Revolution.’

Indian Dairyman, Nov. issue, pp 93

11. Kurien, V., 1995. ‘Restoring Democracy in Cooperative Movement’ Interview

published in H.T. of Dec. 15.

12. Dilip Shah, 1990, ‘ Lessons on Anand Pattern’ Published in Financial Express

ofFeb. 15.