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Journal For Studies in Management and Planning "Role of Dairy Cooperatives in Inclusive Growth-A Revolutionary Case of AMUL"
Journal For Studies in Management and Planning "Role of Dairy Cooperatives in Inclusive Growth-A Revolutionary Case of AMUL"
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**Mr. Ajit Kumar Kar, Assistant Professor, Biju Pattnaik Institute of Information Technology &
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Abstract
“Cooperatives are model for Inclusive
The cooperative sector is one of the well Growth”- Dr. D. Subbarao
designed segments of Indian economy and
has contributed significantly for the growth Growth with the proper pace and pattern,
and development of SMEs in India. In the
which again are interlinked and addressed
cooperative segment the growth of dairy
cooperatives during the last three decades together, can be called as inclusive growth.
has been quite impressive. It plays a
In this 21st century growth with rapid pace
predominant role in balancing the rural
inequality by promoting growth in income, has become a bare necessity for substantial
employment and social justice. Dairy
poverty reduction in particular and for long
cooperatives have enabled India to achieve
self-sufficiency in milk and dairy products. run sustainable growth in general. The
AMUL- a pioneering and successful case of
challenges which are appearing in the path
dairy cooperative, has changed the lives of
poverty stricken farmers through its of inclusive and equitable growth are not
Operation Flood Programme, which is one
less for a developing economy like India, as
of the world’s largest rural development
programme. Considering the fact, this paper the interest of all segments of people need to
is an attempt to represent Amul as a
be addressed here. To make the growth
revolutionary dairy cooperative which has
transformed the face of India’s Dairy Sector process more equitable and inclusive, the
thereby contributing to social inclusion.
12th Five Year Plan (2012-2017) aimed at
AMUL- the pioneering dairy with its
innovative strategy has helped dairy “faster, sustainable and more inclusive
cooperatives to come together and make
growth”. India is predominantly an
India the world’s largest producer of milk.
agricultural country and the contribution of
Keywords: Dairy cooperatives, Milk,
national GDP from agriculture is only 16 to
Inclusive growth, Amul model
17 percentage and involving around 55 to
1. Introduction:
58 per cent of population (National early 1960s, production has been increasing
Cooperative Union of India, 2012). In spite exponentially for the last two decades,
of this the rural mass of India is always growing from 56 million tons in 1991-92 to
being deprived of the basic necessities. 127.9 in the year 2011-12. It is also
Hence, poverty, food security, expected that India’s milk production will
unemployment, quality education, and lack be equal to that of whole European Union
of other basic infrastructures are the by 2021 (National Dairy Development
common problems of rural India. Co- Board, 2012). The whole credit for this goes
operative societies act as the catalyst to to the dairy sector which is now the leading
combat the above said problem to a greater agricultural output in the country. IMARC
extent as they promote inclusion and social (International Market Analysis Research
upliftment through their unique approach and Consulting) Group, one of the world’s
towards business. leading research and advisory firms, finds in
its new report entitled “Indian Dairy Market
Co-operatives are significant economic Report & Forecasts 2012-2017” that driven
players in a developing economy like India by a strong growth in both urban and rural
which in general contribute to sustained demand for milk products in India is
economic growth and in particular assist to expected to surpass US$ 163 Billion by
tackle rural poverty, expand poor people’s 2017. India has achieved this level by
access to financial services, provides involving the poor farmers and other people
opportunities for self determination and as producers, distributors and consumers.
empowerment, social cohesion and According to NDDB statistics, twelve
transformation to name a few . Cooperatives million Indian farmers (primarily small,
in India covers a wide array of activities like marginal farmers and landless labourers) are
credit & banking, fertilizer, sugar, dairy, engaged in milk production, are organized
marketing, consumer goods, handloom, in 122,500 village Dairy Cooperative
handicraft, fisheries and housing. Among Societies (DCS), supplying 23 million
these the success of dairy cooperative has kilograms of milk per day, operate in more
made India the world’s largest milk than 346 districts.
producer. From a milk-deficit status in the
2. Objective of the Study
The prime objective of this study is to money lenders and to improve their
analyze the inclusive approach of AMUL to economic condition. Madras province was
reach Bottom of Pyramid thereby promoting the birth-place of this movement. With the
social upliftment. setting up of an Agricultural Co-operative
Banks the movement took root in our land
3. Methodology
and slowly gained strength. The golden era
of Co-operative movement began after India
The description of economic success of
had won freedom. Within two decades of
AMUL and its contribution to inclusive
independence the membership of primary
growth and social upliftment are based on
societies had increased four times while the
secondary data. The paper emphasis the role
share capital and working capital increased
of Amul as a role model in empowering and
23 and 31 times respectively
improving the social status of members of
(Bandyopadhyay, 1996). India is the
dairy cooperatives and hence data related to
world’s largest producer of dairy
Amul is collected from the official website
products by volume and has the world’s
of Amul and GCMMF.
largest dairy herd. The country accounts
4. Dairy Cooperatives of India for more than 17% of world’s total
milk production and is also the world’s
th
The last decade of 19 century had witness
largest consumer of dairy products,
the beginning of co-operative movement in
consuming almost all of its own milk
India, with the twofold objective to protect
production (Global Agriculture Information
the farmers from the hands of the private
Report, 2012).
Table 1: Key Statistics for India’s Dairy Industry
(Source: National Dairy Development Board, Global Agriculture Information Report &
Agricultural and Processed Food Products Export Development Authority, 2012)
(Anand Milk Union Limited) in India Gujarat, led by Sardar Vallabhai Patel,
successfully developed such model and was established the first cooperative society: the
solely responsible for white revolution in Kaira District Cooperative Milk Producers’
India. Union Limited (KDCMPUL) which was
started with just two village cooperative
5.1 Background
societies and 247 liters of milk and today its
better known as Amul Dairy. With the high
AMUL meant different things to different
degree of success of Amul, the then Prime
people. To a milk producer, it’s a life
Minister of India, Lal Bahadur Shastri
enriching experience; to a consumer, it’s an
decided that the same approach should
assurance of having wholesome milk; to a
become the basis of a National Dairy
mother, it’s a reliable source of nourishment
Development policy. This instance in 1965
for her child and to the country, it’s a
the National Dairy Development Board was
weapon for rural development and self
set up with the basic objective of replicating
reliance. Amul, the biggest dairy
the Amul model. Dr. Verghese Kurien was
cooperative in India has derived its name
chosen to head the institution as its
from a sanskrit word Amoolya which means
Chairman and asked to replicate this model
“priceless”. This largest dairy cooperative is
throughout the country. The Gujarat
based at Anand, in the state of Gujarat. The
Cooperative Milk Marketing Federation
establishment of Amul has back-ground of
(GCMMF) was established in the year 1973
long struggle and movements. It had its
as an apex organization solely responsible
genesis in pre-independence India when the
for marketing the milk and milk products of
dairy sector was dominated by private
cooperative unions particularly in the state
companies that exploited the poor farmers.
of Gujarat.
In 1946, the milk producers in the state of
AMUL at a glance
Year of Establishment: 1946
Location: Aanand, Gujarat
Founder: Verghese Kurien
Chairman: Shri Ramsinh Prabhatsinh Parmar
Financier: Government
Legal Structure: Dairy Cooperative
Value Chain Approach: Relational chain, Producer-driven
Number of Producer Members: 6,76,349
Number of Village Dairy Cooperative Societies: 1195
Total Milk Handling Capacity:14.5 Million liters per day
Milk Collection (Daily Average): 1.7 Million liters
Sales Turnover (2012-13): 28500 (₹) Million
The Amul Model of dairy development is a village society further appoints a secretary
three-tiered structure with the Dairy Co- and member secretary of the management
operative Societies (DCS) at the village committee for management of day to day
level affiliated to a milk union at the District functions. A district dairy cooperative- the
level which in turn is further federated into a second tier has membership of village dairy
Milk Federation at the state level. The first societies of the district and is governed by a
tier- Village dairy cooperative society has board of Directors consisting of 9-18 elected
membership of milk producers of the village representatives of the village societies. It
and is governed by an elected management also appoints a professional MD for
committee consisting of 9-12 elected management of day to day function. The
representatives of the milk producers. The state level co-operative i.e., GCMMF is the
third tier solely responsible for national and to delegate the various functions; milk
international marketing of milk and milk collection is done at the Village Dairy
products. Societies, milk procurement & processing at
All the chairmen of the district cooperatives the District Milk Union, and milk & milk
are the members of GCMMF and this state product marketing at the State Milk
level cooperative is managed by a board Federation. This helps in eliminating not
consist of the elected members from the only internal competition but also ensuring
chairmen of district cooperatives. The that economies of scale are achieved.
above three-tier structure was set up in order
Benmilk dairy and in Odisha Omfed have instrument of rural development. Dairy
an IAS as the Chairman/ Managing cooperatives across India are prime example
Director. As he is not in one federation of cooperatives which have promoted and
permanently that does not give him the sustained rural development. Today India
feeling of ownership which is very essential has progressed from a milk-deficit country
for a co-operative to be successful (Prasad to the largest milk-producing nation in the
& Satsangi, 2013). Where as in the case of world and for this the whole credit goes to
Amul the Chairman is an agriculturist/ the Amul pattern of dairy cooperatives. In
farmer by profession and the Managing the process, they have generated millions of
Director is appointed by the board of days of employment for the rural poor and
directors which is comprises of the farmers improved their socio-economic condition.
members who come from the respective 5.4.1 Dairying a tool for poverty
societies. So, at each level the decision alleviation
making lies in the hands of the producers
The Swarnjayanti Gram Swarozgar
only, which give them a feeling of
Yojana (SGSY) of The Government of
ownership.
India (Ministry of Rural Development)
5.4 Economic impact of AMUL in rural which is a special programme for
development poverty alleviation through self-
The rural India represents 68 percent of employment is being implemented by
India’s population with the total rural Amul in its special project on
population of 845,151,713 (World Bank “Improving Socio-economic Conditions
Report, 2012). As per the UNDP report of BPL Families of Kheda District
currently India’s poverty rate is 32.7% and through Animal Husbandry and
per capita income is $1,330. We cannot Dairying”. The Swarnjayanti Gram
dream for a poverty free nation without Swarozagar Yojana, a holistic self-
thinking about the rural segment. Mahatma employment programme started with the
Gandhi had repeatedly asserted that the ‘real basic objective to bring below poverty
India’ lives in its villages. He stressed line families above poverty line by
emphatically on leveraging the ‘cooperative providing them in generating assets to
form of organization as an effective become self-employed.
More than 8,755 beneficiaries have Before Amul, Polson dairy was the only
covered by Amul under this programme dairy in Anand which used to control the
for a novel cause. Under this project to marketing and distribution system of
bring these poor households into milk. As milk is perishable, milk
mainstream economy by transforming producers were compelled to sell milk at
dairying into active income-generation a very low price to these middlemen.
enterprises, the beneficiaries were given Patel’s vision of organizing the farmers
membership of dairy co-operatives. to enable them to gain control over
Apart from this, under the project Amul procurement, processing and marketing
has also provided training to 12,647 while eliminating the middlemen was
women and men in dairy husbandry, successful by the Amul model. This
constructed a number of cattle sheds, model directly linked the farmers with
developed green fodder plots, the final customer. There are no
distributed chaff cutters and stainless middlemen; the cooperative collects the
steel cans (Amul dairy, 2013). Further, it milk directly at the producers’
facilitates loan disbursement from banks doorsteps.
to the needy by acting as a guaranteer on
behalf of the farmers for the loan
repayment.
The prime reason behind the success of Programme. Presently Amul is providing
Amul pattern is its strategy to give benefit employment opportunity to millions of
both to the farmers and customers i.e., people both directly and indirectly in rural
farmers in the terms of fair price for their and urban areas. Amul has created white-
milk and for customers its high quality milk collar jobs too.
and milk products. What would have been
5.4.5 Health and sanitation for all
middlemen’s profits in the earlier system
got absorbed into development projects for
Amul not only make its producer members’
primary producer or lower cost for the
financially self sufficient but also take care
consumer. The Operation Flood Programme
of their health and provide sanitation to all.
of Amul has succeeded in linking and
One of the most successful Integrated Rural
creating a better network among the milk
Health & Development Programme of Amul
producers throughout India, thereby
is Tribhuvandas Foundation. Because of its
reducing seasonal and regional price
contribution in fulfilling the basic health
variations while ensuring that the producer
care needs of the villages, primary treatment
gets fair market prices in a transparent
for various common ailments and active
manner on a regular basis.
involvement in promoting preventive health
practices, Tribhuvandas Foundation of
5.4.4 Promoting employment
Amul has become one of Asia’s largest
Cooperative dairying on the Amul Pattern community healthcare service providers
forms a source of assured employment and a presently covering more than 700 villages
sustainable basis of competitive advantage (Amul dairy, 2013). It also provides
for India. Although Operation Flood was continuous training and retraining to Village
not designed to eradicate the problems of Health Workers who are chosen from
poverty and unemployment, it is true that villages with the help of the Dairy Co-
millions of landless, marginal, and small operative Societies
farmers who were engaged in milk
production benefited greatly from the
increased income and employment
opportunities generated by Operation Flood
Amul has started another novel scheme promote education are; Amul Schloar
related to rural sanitation with the support of Felicitation Programme, Amul Vidya Shree
District Rural Development Agency for state wise 10th toppers and Vidya
(DRDA) and set a target for itself whereby Bhushan for state wise 12th toppers. Vidya
not a single milk producer will attend to Bhushan is India’s first of its kind award
nature’s call in the open. Further, the that recognizes and rewards brilliant minds
scheme aimed at providing interest free of India.
loans to its milk producers in Anand and
5.4.7 Training for all
Kheda districts to set up ‘pucca’ toilet
blocks (Amul dairy, 2013). In five years’
Since its inception, Amul believes the
time, dairy wishes to achieve the target of
development of the institution lies in the
providing 100 per cent toilet facilities in all
development of the people – producer
villages where Amul has a milk society.
members. Thus, it organizes various training
Amul has prepared a model low-cost toilet
programmes based on the need of the
block that cost ₹11,500 per unit. DRDA
farmers and village society. Few of the
support this initiative through subsidy
successful programmes of Amul includes;
ranging between ₹4500-₹4600 for BPL/ VMS (Vision, Mission & Strategy)
APL families and it also provide interest Workshop, Milk Day Celebration, Amul
free loan refundable in 5 years’ time. Darshan, Management Development
Programme, Zonal Meeting, Village Group
5.4.6 Strengthening education in villages
Discussion, Awareness and Refreshers
Amul’s vision is to see educated, talented Training, Dairymen Training, Development
and strong youth in a developed India. To Review and Self managing Leadership
achieve the said vision, Amul introduced Programme . It has developed in-house
scholarship schemes in 1992 to encourage modules for training and competence
outstanding children of farmers in pursuing building to improve and upgrade of their
higher studies. This effort has motivated knowledge; communication skills to
greatly children to excel in their studies and understand the customer, be responsive to
spread education in rural areas. Some other customer requirements, and communicate
similar programmes introduced by Amul to clearly for trouble shooting of problems. In
order to strengthen knowledge and skill base In the last five years (2007-2011) the milk
of young girls and women of the villages producers have planted around 311.98 lakhs
about milk production management, Amul trees. The most striking feature of these
along with technical collaboration and entire programmes was that it has been
resources of Anand Agriculture University, initiated by milk producer members of the
has initiated "Mahila Pashupalan Talim dairy cooperatives. The unique fact about
Karyakram"; for women resource persons of the programme was that the milk producer
the Member Unions and in the year 2011, members took up the oath to protect tree
418 women resource persons have been sapling till it survives and grow into tree.
trained under this programme. The prime The programme which was initiated with a
objective of these training programmes is to novel idea for giving back to nature was a
bring together all the members of huge success as the entire plantation activity
cooperative to work collectively in order to was coordinated at all the three tiers of
strengthen the cooperative through Anand pattern. This effort to provide green
continuous improvement which in return cover to the earth was also acknowledged
would improve the income and quality of when the state level apex body of Gujarat
life of the farmers. Apart from this, Amul Dairy Cooperatives- GCMMF received four
also carry out Cooperative Development successive prestigious “SRISHTI’s G-Cube
Programmes in order to chase its target of Award”- 2007, 2008, 2009 and 2010 for
producing 25 lakh litres of pure and quality Good Green Governance in the “Service
milk per day. Category”. Further, “Amul Green”
movement has also been awarded by
To improve the socio-economic conditions
International Dairy Federation for best
and livelihood of dairy-farmers, Amul has
environment initiative in the “sustainability
come up with various schemes to increase
category” during the 4th Global Dairy
cattle holding per farmers thereby their
Conference held at Salzbugr Congress
income. Further, dairy demonstration farm
Center, Austria on 28th Aril, 2010.
has been set up to demonstrate scientific
method of farming. GCMMF had formed a specific organization
named “Amul Relief Trust” (ART) under
5.4.8 Corporate Social Responsibility
the Chairmanship of Dr. V. Kurien in 2001
Comparative Study Between the Kaira [8] National Dairy Development Board
District Co-operative Milk Producers’ (2012). National Statistics. Retrieved 15th
Union Limited and the Himalayan Co- July 2013, from
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[4] Global Agriculture Information [9] Prasad, Ruchira & Satsangi (2013),
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from in relation to organizational design and
http://www.thefarmsite.com/reports/content operational efficiency”, International
s/inddoct12.pdf Journal of Scientific & Engineering
[5] Gujarat Cooperative Milk Marketing Research, Vol. 4, No. 2
Federation, www.amuldairy.com as [10] UNDP,
accessed on 15th July 2013. http://hdrstats.undp.org/en/countries/profiles
[6] Indian Dairy Market Report & /IND.html as accessed on 16th July 2013.
Forecasts 2012-2017, IMARC Group. [11] World Bank Report, 2012 Retrieved
Retrieved 14th July 2013, from 20th July 2013 from
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in-india/ and-rural-development
[7] National Cooperative Union of
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July 2013.